Comparative Notes on the use of Commercial Litigation Funding in Insolvency: Australia and South Africa

Authors

DOI:

https://doi.org/10.17159/1727-3781/2023/v26i0a15975

Keywords:

Litigation funding, commercial litigation funding, third-party litigation funding, insolvency litigation

Abstract

This article explores the application of third-party litigation funding (TPLF), also referred to as commercial litigation funding, in insolvency litigation by way of a comparison of the legal position in Australia and South Africa. It proposes that TPLF could offer significant benefits by enabling liquidators of insolvent estates to pursue and enforce claims through civil proceedings with the aim of swelling the assets of the insolvent estate, ultimately to the advantage of the creditors. Since both jurisdictions share elements of English law, both were confronted with the English law doctrines of champerty and maintenance initially being regarded as impediments to the development and/or use of TPLF. Currently, and mainly due to developments in terms of case law, the concept of TPLF has in principle been accepted in both jurisdictions. However, in Australia the development originally transpired in the field of insolvency litigation. In South Africa the context was more in the confines of general litigation. It is submitted that the South African system could benefit by considering various aspects of the Australian system regarding the use of TPLF in insolvency litigation. It remains a question whether or not the respective systems would benefit by adopting comprehensive regulatory measures to regulate TPLF.

 

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Author Biographies

  • Sulette Lombard, Associate Professor in Law

    Sulette Lombard. BLC (University of Pretoria), LLB (University of Pretoria), LLM (University of South Africa), LLD (University of Pretoria). Associate Professor in Law, University of South Australia (Justice and Society). Email: sulette.lombard@unisa.edu.au.  Associate Professor in Law, University of South Australia (Justice and Society). Email: sulette.lombard@unisa.edu.au

  • Andre Boraine, Professor in Law

    André Boraine. BIur, LLB, LLM, LLD (University of Pretoria). Professor in Law, University of Pretoria, (Faculty of Law). Email: andre.boraine@up.ac.za

References

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Australia

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South Africa

Boschpoort Ondernemings (Pty) Ltd v ABSA Bank Ltd 2014 2 SA 518 (SCA)

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United Kingdom

Guy v Churchill (1888) 40 ChD 481

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Legislation

Australia

Bankruptcy Act, 1966 (Cth)

Corporations Act, 2001 (Cth)

Federal Court of Australia Act, 1976 (Cth)

United Kingdom

Bankruptcy Act, 1869 (UK)

Companies Act, 1862 (UK)

South Africa

Companies Act 61 of 1973

Companies Act 71 of 2008

Constitution of the Republic of South Africa, 1996

Contingency Fees Act 66 of 1997

Insolvency Act 24 of 1936

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Published

21-11-2023

Issue

Section

Articles

How to Cite

Lombard, S., & Boraine, A. (2023). Comparative Notes on the use of Commercial Litigation Funding in Insolvency: Australia and South Africa. Potchefstroom Electronic Law Journal, 26, (Published on 21 November 2023) pp 1 - 30. https://doi.org/10.17159/1727-3781/2023/v26i0a15975

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