Formal Regulation of Third Party Litigation Funding Agreements? A South African Perspective

Keywords: Access to justice, Champerty, Maintenance, Non-lawyers, Pactum de quota litis, Public policy, Third party litigation funding agreements

Abstract

In South Africa third party litigation funding agreement as a tool that provides access to justice is not legislated with regard to non-lawyers. This article is based on research conducted to determine whether regulating this type of agreement would facilitate in fostering the policy that favours access to justice. A brief comparative study showed that English law permits third party litigation funding agreements in the Courts and Legal Services Act 1990. However, unlike in South African law, English law also has a body that regulates the conclusion of third party litigation funding agreements. The Association of Litigation Funders introduced a voluntary Code of Conduct for Litigation Funders in 2011 and an updated one in 2016, which regulates the conclusion of third party litigation funding agreements. The Code of Conduct protects the litigant against abuse by the funder and the funder against non-compliance by the litigant. Despite being a "self-regulatory" legislative initiative that governs most of the funding agreements in England, this Code does not bind non-members of the Association. In South Africa there is no such voluntary regulation of third party litigation funding agreements. Consequently, litigants may be prejudiced by the litigation funder in instances where a funder receives a disproportionate percentage of the capital award. The study on which this article draws investigated whether there is a need for an effective legislative response that regulates third party litigation funding agreements in South Africa. It was found that there is a need for formal regulation with regard to third party litigation funding agreements because there are no clear guidelines on the conclusion of the agreements in South Africa.

 

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Author Biography

Mpho Justice Khoza, The University of South Africa

Department of Private Law

Lecturer

References

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List of Abbreviations

All ER All England Reports

All SA All South African Law Reports (LexisNexis)

Cal L Rev California Law Review

Ch Law Reports Chancery Division

CILSA Comparative and International Law Journal of South Africa

GJ Gauteng Local Division, Johannesburg

GNP North Gauteng High Court, Pretoria

ILR Institute for Legal Reform

JOL Judgments Online

L Q Rev Law Quarterly Review

N or NPD Natal Provincial Division

NLR Natal Law Reports

SA South African Law Reports (Juta)

SAMercLJ SA Mercantile Law Journal

SALJ South African Law Journal

SCA Supreme Court of Appeal

TPD Transvaal Provincial Division

TS Transvaal Supreme Court Reports

W Witwatersrand Local Division

WCC Western Cape High Court, Cape Town

ZAECGHC South Africa: Eastern Cape High Court, Grahamstown

ZAGPJHC South Africa: South Gauteng High

Court, Johannesburg

Published
2018-08-29
How to Cite
Khoza, M. J. (2018). Formal Regulation of Third Party Litigation Funding Agreements? A South African Perspective. Potchefstroom Electronic Law Journal, 21, 1-22. https://doi.org/10.17159/1727-3781/2018/v21i0a3426
Section
Articles