Litigation Finance in Australia: Class Actions and the AFSL Regime

How Australia pioneered commercial funding, and the licensing and court-approval framework that governs it.

Australia was among the first jurisdictions to develop a commercial litigation finance market and remains one of the most active globally. The High Court's 2006 decision in Campbells Cash and Carry v Fostif confirmed the legality of third-party funding and effectively ended champerty and maintenance as meaningful restrictions on commercial funding. That ruling opened the door to a sophisticated market, led for many years by funders such as IMF Bentham, now Omni Bridgeway, which established the norms and pricing conventions that define Australian practice.

Class actions are the centerpiece of the Australian market. Part IVA of the Federal Court of Australia Act provides an opt-out class action mechanism, and funded shareholder, consumer, and product liability class actions have become a prominent feature of Australian litigation. The opt-out structure produces large classes, and the combination of funding and a claimant-friendly procedural framework has made Australia one of the most active funded class action jurisdictions in the world.

Regulation has tightened over time. Since 2020, funders operating class action funding arrangements have been required to hold an Australian Financial Services Licence, bringing them within the regulatory perimeter administered by ASIC. The licensing regime imposes conduct and disclosure obligations on funders. Single-plaintiff commercial funding outside the class action context currently faces lighter regulation, though the boundaries remain an active area of policy debate.

Australian courts exercise meaningful oversight of funded class actions. Courts scrutinize funding arrangements to ensure they are in the interests of class members, examining the funder's commission, the distribution of any recovery, and the protection of class members' rights. Common fund orders and competing class actions add further procedural complexity. Funders structure Australian arrangements to withstand this judicial scrutiny, recognizing that court approval is integral to the value of a funded class action.

Criterica Capital funds Australian commercial litigation and class actions, structuring arrangements to comply with the AFSL regime and the standards courts apply under Part IVA. Our underwriting draws on outcome data spanning Australian court records. Firms and claimants pursuing significant Australian matters can contact our international team to discuss funding structures.

Discuss your matter with our institutional team.