Insurance
Class actions: Insurers' friend or foe?
21 September 2001Mention 'class actions' and most Australians immediately think of United States-style litigation that should be avoided at all costs.
However, the reality is quite different, indeed it is arguably so different that defendants and their insurers should not always instinctively fear class actions, but perhaps in some cases, should actually embrace them.
This article by Michael Mills addresses the issues and concerns that arise in class actions and the extent to which they affect defendants and their insurers, in particular in relation to the following issues:
- mass torts, or the stereotypical class action, that have been both the genesis and the driver of the development of class action/representative proceedings procedure
- the threshold tests that a plaintiff must satisfy in order to get its class action off the ground
- the numerous jurisdictional issues that may threaten the validity and reach of the class action and the potential effect this may have on liability of the defendant and its insurer
- the advantages and disadvantages of a class action in relation to both plaintiffs and defendants and their insurers
- whether the emergence of class actions within Australia threatens to give rise to United States-type liability and exposure for insurers and insureds.
The article discusses the way that Australian courts have allowed certain class actions to go ahead, while denying others. It also analyses the criteria the courts have used in making their decisions, which should be understood by all who operate and sell products in the public sphere.
By understanding the criteria that must be met in order to pursue a class action, business is in a better position to manage their risks in order to prevent a situation arising that may give rise to these types of claims.
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