Most commonly in the UK, large numbers of litigants whose claims give rise to common or related issues of fact or law will have their cases dealt with under a Group Litigation Order, which is a court-ordered procedure for efficient case management of claims rather than a true collective action.
However, a recent development introduced a more formal collective redress procedure for claimants bringing private actions for damages for breaches of competition law. Proposed collective actions in this sphere must be approved by the Competition Appeals Tribunal, as must the proposed class representative, and may be opt in or opt out. A small number of cases have been commenced under the new procedure but to date, none has been completed and its impact remains uncertain.
What forms of collective actions are permitted in this jurisdiction and under what authority?
Class actions as understood in the US do not exist in the UK. However, there are procedures by which claimants with similar claims may group together to bring collective actions against the same defendants. Under the majority of these procedures, the individual claimants have to be identified and have to opt into the proceedings.
Under the Civil Procedure Rules (“CPR”), there are two main methods by which claimants may bring a collective action:
- Group Litigation Order (“GLO”) under CPR Part 19 section III
This is an order made by the court to provide for the case management of claims which give rise to common or related issues of fact or law. A group register is established onto which claims issued by individual claimants can be entered. Applications for entry onto the register may be refused by the court if the court is not satisfied that the case cannot conveniently be managed as part of the GLO. Individual claimants under a GLO may decide to appoint one solicitor or firm to conduct their claims on their behalf but this is not obligatory.
- Representative actions under CPR Part 19 section II (“Representative actions”)
Under CPR rule 19.6, the court may direct that where more than one person has the same interest in a claim, that claim may be begun or continued by one or more of those persons as representatives of any other person who has that interest. Any order of the court is binding on all persons represented in the claim. Where a person is represented in the claim but not a party to it, the order may only be enforced against him with the permission of the court.
The CPR also provide for the representation of interested persons who cannot be ascertained, limited to claims concerning the estate of a deceased person, property subject to trust or the meaning of documents, including a statute. Representative actions are comparatively rare, with GLOs commonly the more appropriate means of case management. There are also general provisions by which parties may consolidate individual proceedings or add third parties to existing proceedings. Representative actions are not discussed further in this review.
- Representative action in competition actions
A third procedure for collective actions is available in the form of a representative action under the Competition Act 1998 (“Competition Act”).
The Enterprise Act 2002 (inserting sections 47A and 47B into the Competition Act) introduced the ability for “specified bodies” to bring representative actions on behalf of two or more individual consumers in the Competition Appeals Tribunal where those individuals had suffered loss or damage in relation to infringements affecting consumer goods or services.
The individuals concerned must all have claims arising from the same infringement of Articles 81 or 82 EC Treaty and/ or the Chapter(s) I and/or II prohibition of the Competition Act. Relevant infringements are those applying to goods and services which an individual received or sought to receive other than in the course of a business, and which were or would have been supplied to the individual in the course of a business. They must be identified and consent to proceedings being brought or continued on their behalf by the specified body.
The first (and so far only) action to be brought under this section was commenced in March 2007 by the Consumers’ Association on behalf of consumers who had purchased certain replica football shirts. The price of these shirts had been found by the Office of Fair Trading to be the subject of price-fixing agreements between certain retailers. The Consumers’ Association is a specified body under the relevant legislation (Specified Body (Consumer Claims) Order 2005 SI 2005/2365) and represented some 550 individual consumers. The case was eventually settled out of court, with individuals receiving up to £20 each by way of compensation from the relevant retailer.
- Collective actions and collective settlements in private actions for breaches of competition law (“Opt out private actions for breaches of competition law”)
Measures to implement collective actions in the context of private actions for breaches of competition law were included in the Consumer Rights Act 2015 and came into force on 1 October 2015. Collective proceedings may be brought in the Competition Appeals Tribunal (“CAT”) and can be either opt in or opt out proceedings, stand-alone or follow-on actions and can cover actions on behalf of both individuals and businesses. In each case the action may be commenced by a class representative but it may only be continued if the CAT makes a collective proceedings order (“CPO”) confirming: that the claims are eligible for inclusion in collective proceedings; authorising the proposed representative; determining the description of the class of persons whose claims are eligible for inclusion; and whether the proceedings will be opt in or opt out.
The procedure is governed by extensive rules including: provisions relating to the content of applications by proposed class representatives (or settlement representatives); the factors that the CAT will take into account in making a CPO or when settlement of the action, for which the court’s approval is needed, is being proposed; how would-be claimants can opt in or opt out; judgments and orders in such proceedings; and the allocation of costs and fees. The regime is principally aimed at consumers and small and medium sized enterprises, and claims brought by larger businesses may not generally be suitable.
Six actions have so far been commenced under this new procedure. The first one, relating to mobility scooters, was withdrawn when it failed to obtain a CPO to proceed. The second, Walter Merricks CBE v Mastercard Inc, also failed to obtain a CPO from the CAT. In that case, however, the claimants appealed to the Court of Appeal and were successful in having the CAT’s refusal order overturned in April 2019. The application for a CPO will now be reheard by the CAT in accordance with guidelines set out in the Court of Appeal’s judgment. Four other applications for CPOs are pending with the CAT and it will be interesting to see how these are treated in the light of the Merricks decision.
Who may bring them?
Usually in English law, only a party with an interest in the action itself may bring a claim for damages.
- GLOs: each individual claimant must commence an action in its own right. The GLO register is simply a tool for case management.
- Representative actions under the Competition Act: these may only be brought by specified bodies. Currently, there is only one such body in the UK, the Consumers’ Association. This procedure is unique in English law as it gives locus standi to bring a claim for damages to a body with no interest in the action itself, other than that of acting in a representative capacity. Such a procedure is not available in any other situation.
- Opt out private actions for breaches of competition law: these may only be brought by persons with a genuine interest, such as representative bodies (i.e. trade or consumer associations) or potential claimants. The class representative must be certified by the CAT before it can commence proceedings, which will need to be satisfied that it is just and reasonable for the proposed person, who need not be a class member, to act as a representative in those proceedings.
Opt in or opt out?
Most collective actions currently available in the UK procedure are opt in.
- GLO: each individual claimant has to start his own proceedings. A party joining the group register will be bound by any judgment or order made in it unless the court rules otherwise. Claimants may also apply to be removed from the register, in which case they will not be bound by the judgment.
- Representative action under the Competition Act: although it is the specified body that brings the claim, it may only do so on behalf of named individual claimants and with their consent. The claimants must be listed in the initial claim.
- Opt out private actions for breaches of competition law
Collective proceedings may be opt in or opt out; the CAT will rule on that aspect when certifying the proceedings as suitable to be conducted as collective proceedings.
However, any class member who is not domiciled in the UK at the specified time must specifically opt in to the claim.
There are no limitations other than those applying to all civil proceedings.
Judge or jury?
What relief may be obtained?
Any remedy usually available in civil proceedings may be sought by the claimants. It is for the court to decide whether the various remedies sought in the individual claims may be appropriately litigated under a GLO.
Representative actions under the Competition Act
Only damages may be awarded. Any award is made to the individual claimants and not the representative body, although the body may be authorised by the court to receive the sums on the individuals’ behalf.
Opt out private actions for breaches of competition law
The regime is compensatory only; exemplary damages are unavailable.
How are such actions funded?
Parties to UK litigation will usually fund their own actions initially. However, it is usual for the successful party to recover all or part of its costs from the unsuccessful party at the end of proceedings under the process of assessment of costs. Conditional fee agreements between a party and its lawyers, (also known as a “no win no fee” agreements) and damages-based agreements (akin to a contingency fee basis) are permissible subject to certain regulations and restrictions. These types of funding arrangements may be backed by litigation insurance, most often arranged “after the event”.
Third party funding is becoming more important as a method of funding UK cases. Such funding may be particularly appropriate in collective actions.
GLO and Representative actions
The costs incurred by parties to a GLO are assessed by the court and may be apportioned between the group litigants or allocated to particular parties. In representative actions brought under the Act, the court has discretion to award costs as it sees fit.
Opt out private actions for breaches of competition law
The UK government has been concerned to prevent the development of a “litigation culture” and considers there could be a risk of abuse if claimant law firms and litigation funders are permitted to bring collective actions themselves. However, third party funding of such actions is increasingly common. The normal “loser pays” costs rules above have been retained for opt out private actions for breaches of competition law, so that unsuccessful claimants face the risk of liability for a successful defendant’s legal costs. Third parties who fund collective actions which are unsuccessful may be liable for costs up to the extent of the funding they provide and, in some cases, beyond that amount.
Damages-based agreements are prohibited in this type of case due to concerns that they could incentivise inappropriate use of the new regime by claimant law firms. Claimants remain able to use conditional fee agreements and litigation insurance to fund collective actions.
Is pre-trial disclosure available?
Orders for pre-action disclosure or preservation of evidence are available to claimants bringing actions managed as part of a GLO under the usual procedural rules.
Under the CAT rules, the tribunal may give orders for the disclosure of documents and preservation of evidence.
Likely future scope and development?
In 2010 the Civil Justice Council, which has been the most active body in pushing the collective redress debate in the UK, published a set of draft generic court rules that could be used for any different model of collective proceedings that might be permitted by primary legislation. The draft rules set out criteria for an action to be certified as suitable for collective proceedings and for the approval of a class representative. They also contained details of the procedural rules that could apply to the conduct of collective proceedings. However, the government of the day said it believed that such an action would be better considered on a sector by sector basis and introduced only where there is evidence of need, following an assessment of economic and other impacts, and once alternative approaches had been considered including, in particular, regulatory options. The result was the introduction of Representative actions, discussed above.
Since then, collective redress procedures have been introduced for Opt out private actions for breaches of competition law but no proposals have been made to extend specific collective redress processes for any other type of claim.
Conversely, to date, some 105 GLOs have been ordered, in cases as diverse as tax litigation, medical negligence and child abuse. Although the procedure has received some criticism, it continues to provide the main procedure for determining a large number of disputes together. In May 2018 the High Court in London approved a GLO in the largest consumer group action to date. Claims being brought by over 60,000 British drivers against the car manufacturer Volkswagen in relation to allegations that software fitted to their vehicles cheated EU emissions tests will now be conducted pursuant to a GLO. While it is likely that GLOs will continue to provide the main process by which large numbers of affected claimants conduct court proceedings in the UK for the foreseeable future, the judgment of the Court of Appeal in Merricks is likely to give encouragement to potential class representatives and may lead to an increase in applications for collective redress.