CIArb Features

The Evolution of Third Party Dispute Finance

13 Sep 2018

Dispute finance, in its modern form, originated in Australia in the mid-1990s following the enactment of legislation permitting insolvency practitioners to enter into contracts to finance litigation characterized as company property. The rise of litigation funding in Australia was also spurred on by the introduction of class action lawsuits in 1992 as a means of enabling the courts to deal with group claims in an efficient way.

In 2006, the Australian High Court in the well-known Fostif case held that third-party litigation funding arrangements served a legitimate purpose in lawsuits and were not an abuse of process or contrary to public policy. With litigation funding now legitimized and the use of class action lawsuits on the rise, litigation finance became a widely used service, akin to a form of legal aid, albeit for profit and provided by the private sector. In 2017, more than 50% of the major class actions filed in Australia were funded by