AICD submission to ALRC Inquiry into Class Action Proceedings

The AICD recognises that Australia’s class actions framework provides an accessible mechanism for individuals to achieve resolution of disputes and access to justice within Australia’s court system, but shares the concerns of the ALRC that the regime, particularly as it relates to securities class actions, is subjecting companies and ongoing shareholders to unintended consequences.

The AICD supports the proposed review of the legal and economic impact of continuous disclosure obligations and provisions relating to misleading and deceptive conduct on listed entities. We consider that a review would present a timely opportunity to consider whether the relevant laws and the existing class action regime are operating as intended. The AICD also strongly supports proposals regarding the introduction of a licensing regime for third party litigation funders, as well as proposals to amend procedural rules regarding class actions to address the issues associated with competing class actions being filed. In terms of proposals regarding contingency fees, the AICD is of the view that existing fee mechanisms provide a sufficient degree of flexibility in relation to legal fees to promote access to justice. In any event, given concerns regarding the operation of the current class actions regime, we recommend that no change be made to fee arrangements which could lead to an increase in class action activity at least until the review contemplated by the ALRC has been completed to avoid exacerbating unintended consequences.