Class actions on the increase: A case for regulation of litigation funding

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Properly used, class actions play an important role in enabling collective redress where individual claimants would otherwise lack the means to pursue justice. The growing concern, however, lies not in class actions themselves, but whether they are increasingly being driven by opaque and largely unregulated third-party litigation funding.

Litigation funding

Litigation funders, including hedge funds and specialist investors, finance court cases in exchange for a share of any future settlement or damages award. This model lowers the financial barriers for ordinary claimants and can improve access to justice.

At the same time, it introduces commercial incentives that may encourage the pursuit of large-scale claims that are speculative, marginal, or disconnected from the underlying interests of claimants. In South Africa, the extent of litigation funding is difficult to quantify, but it is likely to influence both the volume and scale of class actions in the years ahead.

It is important to distinguish between legitimate class actions, which address genuine harm and systemic wrongdoing, and cases where funding structures risk distorting litigation priorities.

For businesses, the latter carry significant financial, operational and reputational risks, particularly where historic conduct is scrutinised decades after the fact and where the economic interests of funders may outweigh considerations of fairness, proportionality or legal certainty.

Corporate & Commercial Law

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Cases to watch

Repossessed homes

One of the most closely watched class action cases in 2026 will be the R60bn class action against Absa, Nedbank, Standard Bank and FirstRand (FNB). The claim alleges that, prior to reforms introduced in 2017, banks repossessed and sold homes at prices far below market value, often without reserve prices at auction, resulting in substantial financial losses for homeowners.

Hundreds of claimants are already involved, with the class potentially expanding to more than 100,000 former homeowners dating back to 1994. Examples cited include properties valued at up to R1.3 million allegedly sold for as little as R1,000.

The certification hearing is scheduled for February 2026, following disputes over evidence in late 2025. As with all class actions, the case can only proceed if certified, in other words permitted, by the High Court.

Kabwe lead-poisoning case

Another significant matter is the appeal in the Kabwe lead-poisoning case against Anglo American South Africa.

Heard by the Supreme Court of Appeal in November 2025, the proposed class action seeks compensation for up to 140,000 Zambian women and children allegedly affected by lead poisoning from mine pollution within Zambia between 1925 and 1974.

The appeal challenges a 2023 High Court decision that refused certification, effectively halting the claim. A ruling is expected by June 2026.

Mining

High Court rules 50-year Anglo lead poisoning case is 'untenable'

Felix Njini and Olivia Kumwenda-Mtambo  17 Dec 2023

If certification is granted, the case could expose the company, no longer headquartered in South Africa, to substantial liabilities, notwithstanding 50 years since the alleged poisoning.

Anglo American has argued that it was a minority shareholder of the mine owning about 30% at the relevant time, and as it did not operate the mine, it is not liable for damages.

Uniform Rules of Court amendments

These cases are unfolding against a changing procedural backdrop.

Amendments to the Uniform Rules of Court in September 2025 formally recognised class actions within South African civil procedure, defining their scope and setting out factors courts must consider when deciding whether to certify a class. These include the interests of justice, the suitability of the proposed class representative, and the availability and viability of funding to support the case.

Legislation & Regulation

Key changes to rules regulating class action lawsuits

Jonathan Barnes and Bianca Masterton  3 Sep 2025

Comparative experience with other countries however, suggests that procedural clarity alone is insufficient.

In some US states and Australia, jurisdictions with more mature class-action regimes, litigation funding is subject to significantly greater judicial oversight. Courts in some US states require disclosure of funding arrangements and limit funder influence over litigation strategy such as whether to accept a settlement.

These safeguards are designed not to discourage legitimate claims, but to prevent abuse, manage conflicts of interest and preserve confidence in the civil justice system.

Potential for protracted litigation

Class actions are inherently expensive and protracted. Most claimants lack the resources to sustain years of litigation, making third-party funding a practical necessity in many cases.

The difficulty is that South Africa does not yet require comprehensive disclosure of funding arrangements to the court, nor does it place clear limits on the extent to which funders may influence litigation strategy, settlement decisions or the duration of proceedings.

This lack of transparency makes it difficult for courts to assess potential conflicts of interest or to ensure that cases remain aligned with the interests of justice rather than purely commercial return.

Corporate & Commercial Law

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Simon Kuper and Neil Lazarus  6 Mar 2025

Argument for regulation and frameworks

The issue, then, is not whether class actions should exist, but how they should be governed.

There is a strong case for introducing a clear regulatory framework for litigation funding, including mandatory disclosure of funding agreements to the court, restrictions on funder control over key litigation decisions, and judicial oversight of third party fee structures. Such measures would protect claimants, defendants and the courts alike, while ensuring that class actions remain a tool for justice rather than financial speculation.

Without these safeguards, South Africa risks importing the most problematic aspects of class-action litigation seen elsewhere, while lacking the institutional checks that mitigate abuse.

For businesses, this translates into heightened uncertainty and long-tail liability risk. For the legal system, it raises broader concerns about proportionality, fairness and public confidence.

Class actions will continue to play an important role in holding powerful actors to account. But ensuring that they are properly regulated, particularly where third-party funding is involved, is essential if South Africa is to balance access to justice with legal certainty and institutional integrity.