In brief - Financial services licence exemptions do not have
ASIC has become involved in the case of International Litigation
Partners Pty Ltd v Chameleon Mining NL, submitting to the court
that exemptions from the need to hold a financial services licence
do not have retrospective effect.
Litigation funding agreement is a financial product
As reported in our earlier article, Has the long-anticipated regulation of litigation funding
finally arrived? the NSW Court of Appeal recently
determined that because a litigation funding agreement is a
"financial product" and International Litigation Partners
(ILP) did not hold a financial services licence,
Chameleon Mining was entitled to rescind the funding agreement.
ILP exempted from financial services licence requirement
After the judgment was handed down in March 2011, the court
invited the parties to submit short minutes of order. When ILP
submitted its proposed orders, it took the curious step of
also submitting a document issued by ASIC exempting ILP from the
requirement to hold a financial services licence.
What was particularly unusual about this was that the funding
agreement was rescinded in mid-August 2010, but the exemption from
holding a financial services licence was granted by ASIC on 1
ILP claims exemption has retrospective effect
The argument put by ILP was that the exemption granted by the
ASIC instrument changed the law, had retrospective effect and was
specifically related to the funding agreement. According to ILP,
this meant that Chameleon had no entitlement to rescind the funding
ASIC view of retrospective exemption claim
ASIC became involved and lodged written submissions as
amicus curiae (literally "friend of the court",
one who volunteers or is invited by a court to give advice or make
submissions to the court), stating that the exemption was not
intended to be retrospective.
The court took a similar view. The judgment handed down on 3
June 2011 states that "it is doubtful whether ASIC has power
... to make exemptions with retrospective effect. In any event, on
its proper construction, the Instrument does not have retrospective
The 3 June 2011 judgment has the benefit of clarifying the law
with regard to instruments of the kind issued to ILP by ASIC. In
the view of the court (and as submitted by ASIC), such instruments
do not have retrospective effect and certainly cannot be used
retrospectively to change the outcome of court proceedings.
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