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Posts Tagged ‘indian class action law’

I’m on vacation until the end of next week, so the posts here at CAB may be sparse and short over the next 10 days or so, but here is a short news item that caught my eye.  According to this article from the Hindu Times, the Indian Parliament is considering a bill that would allow U.S.-style class actions in securities fraud cases in India.

http://www.hindu.com/thehindu/holnus/006200907261411.htm

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According to this article by Anindita Dey of the Business Standard yesterday, an Indian securities regulator has announced plans to fund a program to reimburse litigation expenses actions brought on behalf of investors for alleged illegal securities practices.  The fund would be available to a group of registered investor associations who could apply for reimbursement for legal expenses from the fund, but only after those expenses have been incurred and only after a showing that at least 1,000 investors are affected by the alleged practices. 

The representative securities litigation described in the article is characterized as similar to class action litigation in the U.S., but it appears to differ in at least two important respects.  The first difference is the use of litigation fundingto support group litigation.  In the U.S., the funding of a lawsuit is usually accomplished by law firms who pursue the case and often advance costs in the hopes of recovering a portion of the judgment through a contingent fee or a fee award.  In other parts of the world, such as in Australia, private litigation funding firms provide funding for class actions in exchange for a portion of any recovery.  The funding scheme described in the article appears to differ slightly from that prevalent in Australia in that it is state-funded rather than private. 

The second difference is the method in which the representation is being achieved.  In the U.S., an individual investor or small group of investors typically seek appointment as class representatives to represent a larger class of investors.  By contrast, the type of litigation being described in the article contemplates that an association would bring the action on behalf of its members.  Associational representation is a procedural vehicle that has been used in the U.S., but is far less common in securities litigation than true class actions.

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