Australia
Australia introduced class actions at the federal level in the early 1990s. The Australian class action model has features that are similar to the U.S. Federal Rule of Civil Procedure 23, e.g., it is an “opt-out” system, and others that are different, particularly with respect to the class certification process and to litigation funding, which does not allow contingency fees. In certain key respects, Australian class action procedures are more “plaintiff-friendly” than in the U.S. Although class actions were slow to take off, they have increased significantly in the past few years. Today, Australia is considered to be one of the most active jurisdictions for class actions in the world. Securities class actions have been particularly important lately, but a number of product liability cases involving pharmaceuticals, medical devices and food products have also been filed. Some of these cases are reproductions or “copy-cat” lawsuits of actions filed in the U.S.
The recent increase of class actions in Australia is partly due to a new form of litigation funding made available in 2006 by a decision of the High Court of Australia, which allowed private funders to finance class actions. For more information regarding developments on litigation funding in Australia, read ILR’s “Developments and Updates on Litigation Funding in Australia – August 2010” and for information regarding the impact of the Australian litigation funding system, read ILR’s “Third Party Funding: Ethical and Legal Ramifications in Collective Actions.”
Third party litigation funding (“TPLF”) has become a formidable industry in Australia and is now spreading rapidly to other countries around the world. Meanwhile, the Australian plaintiffs’ bar has grown significantly in resources and is considered very entrepreneurial. Australian plaintiffs’ firms have developed strong cooperation ventures with third party litigation funders, and now they are working in concert to grow their domestic and international activities, including in the U.S., Canada, and Europe.
At the state level in Australia, only the state of Victoria has adopted substantial class action rules. The Victorian procedures, implemented in 2000, are virtually identical to those of the Federal Court. Other Australian states are considering class action legislation, including New South Wales, which has just introduced a draft Civil Procedure Amendment (Supreme Court Representative Proceedings).
The New South Wales proposed class action reforms include features that could dramatically expand the pro-plaintiff environment in Australia and increase lawsuits activities at the state level. In particular, the NSW proposal includes clauses that could harm the administration of civil justice in New South Wales over time, including (1) a deficient class certification process; (2) an “opt-out” basis; (3) the use of “cy pres” awards; and (4) the expansion of third party litigation funding. For more details on ILR’s position on this bill, read ILR’s submission to the NSW Attorney General. For more information on cy pres, read ILR's new study, "Cy Pres: A Not So Charitable Contribution to Class Action Practice."
These developments at the state level are consistent with the general approach in the Australian Federal Court, which is highly “plaintiff-friendly.” Unlike in the U.S., there is no requirement that a class be certified by a judge, and there is no requirement that common issues between the group members predominate over individual issues. Predictably, there have been no federal government initiatives to reform what some observers have seen as problems with current class action procedures and use of TPLF. Indeed, a recent federal government initiative was actually intended to facilitate the use of TPLF. Earlier in 2010, the government announced its legislative intention to overrule a judicial decision clarifying that these arrangements are not managed investment schemes under the Australian corporation laws requiring a license for operation. While the government has not progressed on this proposed change, the environment continues to be highly favorable both to the use of class actions and of TPLF to finance lawsuits in the nation’s courts.
