A new publication from Allianz Global Corporate & Specialty (AGCS), produced in partnership with law firm Clyde & Co, looks at the development of securities class actions against companies and their directors and officers (D&Os) and explores the interrelationship with the growth of litigation funding.
- Class actions have long been prevalent in the USA but in recent times they (or other forms of collective action) have spread around the globe, driven by a combination of corporate scandals, legislative reform and developing appetite for litigation outside of traditional markets, such as North America. In particular, securities class actions present a significant risk to companies and their D&Os.
- Litigation funding is increasingly common in both consumer and shareholder collective redress actions and in a number of jurisdictions it has acted as a catalyst for the use of collective actions.
- Against this backdrop, the Collective Actions And Litigation Funding And The Impact On Securities Claims: A Global Snapshot publication explores the spread of securities class actions and the growing development and use of litigation funding around the globe.
- It also highlights jurisdictions where class actions are developing outside the securities claims context (primarily consumer claims), as mass consumer actions can also have significant implications for companies and their D&Os. Alongside the positions in jurisdictions where securities class actions are most developed, such as the USA, Australia and Canada, the publication also provides a snapshot of the current position in: Argentina, Austria, Brazil, China, Denmark, Dubai, England & Wales, Finland, France, Germany, Hong Kong, Ireland, Italy, Mexico, the Netherlands, Norway, Poland, Russia, Saudi Arabia, Scotland, Singapore, South Africa, Spain, Sweden and Switzerland.
The spread of collective actions
The heat map below illustrates which jurisdictions present high, medium and low risk for collective actions and the impact of litigation funding. In all jurisdictions, there is a movement towards developing or expanding collective action mechanisms, albeit in some jurisdictions collective or class actions are only available for certain types of dispute, such as consumer cases. The risk of facing a collective action continues to increase (as opposed to decrease) across all jurisdictions.
Source: Clyde & Co.
What is litigation funding?
Litigation funding is having an increasingly significant impact on dispute resolution across the globe. It has been pivotal in the development of collective actions against financial institutions and commercial entities and their D&Os in particular in a number of jurisdictions around the world. Litigation funding involves an agreement between a party to a dispute and a funder that provides monies in exchange for a return on the funder’s investment. Returns can take the form of an agreed amount or a share of the proceeds of the dispute. In the event that the claim does not succeed, the costs are covered by the funder.
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