Legal framework and trends

Available actions

What types of class/collective action are available in your jurisdiction, and what are their respective benefits and drawbacks? Are there any restrictions on when a class/collective action can be used?

The main procedure for bringing class and collective actions in the English courts is the group litigation order (GLO). This is essentially a procedural framework for the management of claims which give rise to common or related issues of fact or law (GLO issues). There are no particular restrictions on when the courts may grant a GLO, save that they must be satisfied that there are or are likely to be a number of claims giving rise to GLO issues. The GLO is an opt-in procedure, which means that the claims are brought only on behalf of those who specifically opt in to the proceedings.

Claims can also be brought using the representative action procedure, which allows a claim to be brought by or against one or more persons as representatives of any others who have the same interest in the claim, without the need for those represented to take any steps to join the proceedings. The representative action procedure has not been widely used, largely because the courts have interpreted the same interest requirement very narrowly. The High Court recently rejected an attempt to use the procedure to launch a claim against Google on behalf of approximately 5.4 million UK residents in respect of data privacy issues.  

It is also possible to use more informal procedures to bring class or collective actions, including:

  • naming multiple claimants in a single claim form;
  • consolidating proceedings or trying multiple actions together; and
  • resolving test cases.

There is also a UK-wide regime allowing competition law claims to be brought on behalf of a class of businesses or consumers in the specialist Competition Appeal Tribunal. The scope of the regime is limited, in that it applies only to claims for damages or an injunction in respect of infringements or alleged infringements of UK or EU prohibitions against anti-competitive agreements or abuse of dominance. The Competition Appeal Tribunal may make a collective proceedings order on an opt-in or opt-out basis.

Trends

How common are class/collective actions in your jurisdiction? What types of claim/dispute are they typically used for?

There have been approximately 100 GLOs made since the GLO procedure was introduced in May 2000. These have included a wide variety of types of dispute, including:

  • environmental claims;
  • industrial disease claims;
  • product liability claims;
  • tax disputes;
  • child abuse cases;
  • claims relating to financial investments; and
  • shareholder claims.

Areas that seem particularly important in terms of future growth include:

  • shareholder actions;
  • actions in respect of environmental and human rights issues; and
  • data and privacy actions.

Claims have been issued under the competition-specific class action regime for claims before the Competition Appeal Tribunal in four instances to date. The first claim brought under the regime, which related to Pride Mobility scooters, was withdrawn by the applicant before certification. The certification hearing had been adjourned to allow the applicant to address a flaw that the Competition Appeal Tribunal had identified in relation to the proposed damages assessment, but she withdrew the application instead of reformulating it. Certification was denied in the second case, which related to fees charged by MasterCard for the use of its debit and credit cards, and Mastercard was refused permission to appeal (though a further application for permission was made directly to the Court of Appeal and is pending, as is a judicial review application). The two most recent claims are at the pre-certification stage.

Legal base

What is the legal base for class/collective actions in your jurisdiction?

Group litigation orders are governed by Civil Procedure Rules (CPR) 19.10 to 19.15. Representative actions are governed by CPR 19.6.

The competition-specific class actions regime for claims in the Competition Appeal Tribunal is governed by Section 47B of the Competition Act 1998 and the Competition Appeal Tribunal Rules 2015. 

Court system

Briefly describe your jurisdiction’s court system and procedure rules.

Civil claims are litigated mainly in the High Court and the County Court. Claims for £100,000 or less (or £50,000 or less for personal injury) must generally be commenced in the County Court, while claims above that amount may be transferred to the County Court if they are commenced in the High Court. The High Court has three divisions:

  • the Queen's Bench Division, which includes the specialist Commercial Court and the Technology and Construction Court (TCC);
  • the Chancery Division, which specialises in intellectual and other property-related disputes, banking and company work, as well as disputes over land and trusts. The specialist Companies Court and Patents Court are both part of this division; and
  • the Family Division.

Since 2 October 2017, the Chancery Division, the Commercial Court and the TCC have been operating under the umbrella of the Business and Property Courts of England and Wales.

The Competition Appeal Tribunal is a specialist tribunal with cross-disciplinary expertise in law, economics, business and accountancy. It hears and decides cases involving competition or economic regulatory issues.

Appeals from the High Court, and from the Competition Appeal Tribunal in proceedings in England and Wales, are generally made to the Court of Appeal (Civil Division) and ultimately the Supreme Court. Permission to appeal may be granted by either the lower courts or the Court of Appeal. The lower courts and the Court of Appeal must follow previous decisions of both the Supreme Court and the Court of Appeal under the doctrine of precedent.

Proceedings in the Court of Appeal, the High Court (apart from the Family Division) and the County Court are governed by the CPRs. Competition Appeal Tribunal proceedings are governed by the Competition Appeal Tribunal Rules 2015. The individual courts and the Competition Appeal Tribunal also issue guides which are specific to claims made in those jurisdictions. Appeals to the Supreme Court are governed by the Rules of the Supreme Court. 

Appeals

How are appeals of class/collective actions handled?

As regards claims brought under a GLO, all parties to claims listed on the group register at the time of the judgment will be bound by the decision insofar as it relates to the GLO issues (ie, the common or related issues of fact or law which are the subject matter of the GLO) unless the court makes a different order. Any party that is adversely affected by a judgment or order which is binding thereon may seek permission to appeal.

Claimants who join the group register after a judgment or order has been given will not be bound by the decision automatically; rather, it is open to the court to direct that they are bound and to what extent. Where the court has made such a direction, an affected claimant cannot appeal the judgment or order but may challenge the direction that it is bound by the decision.

As regards collective proceedings before the Competition Appeal Tribunal, the class representative or a defendant may appeal to the Court of Appeal in regard to a decision on a point of law arising from a decision to award damages or another sum (other than costs) or grant an injunction, or as to the amount of the award. Permission from the Competition Appeal Tribunal or the appellate court is required. The Competition Appeal Tribunal Guide states that there is no right to appeal Competition Appeal Tribunal decisions on certification and any challenge to such decisions can be brought only by way of judicial review. In MasterCard, the Competition Appeal Tribunal rejected the applicant's argument that (contrary to the guide's interpretation of the legislation) there is a right to appeal a Competition Appeal Tribunal decision refusing certification. However, this decision is being challenged directly before the Court of Appeal.

Statute of limitations

What is the statute of limitations for bringing class/collective actions?

As there are no special limitation rules for claims brought under a group litigation order, the usual limitation periods apply. For claims in contract and tort, the usual period is six years from the date on which the cause of action arose; however, this can be extended in certain circumstances such as where the claimants lack knowledge relevant to the cause of action or in cases of fraud or deliberate concealment.

Special rules apply to limitation where a claim is originally made in collective proceedings before the Competition Appeal Tribunal but is later made in individual proceedings. These rules effectively suspend the limitation period while collective proceedings are being pursued, so that individual claims will not be time-barred if:

  • the collective proceedings do not proceed; or
  • the claims in question do not form part of the collective proceedings.

However, they apply only to causes of action arising on or after 1 October 2015.

Reform

Are any reforms envisaged or underway in relation to class/collective actions?

Not currently.

Class formation and procedures

Standing

Who has standing to bring a class/collective action? Are there any explicit restrictions?

A group litigation order is essentially a case management framework for managing individual claims. Each claimant must be named on a claim form in respect of its own individual claim. There is no separate class representative.

In relation to collective proceedings before the Competition Appeal Tribunal, the tribunal may authorise a person to act as class representative whether they are a member of the proposed class or not, but only if the tribunal considers that it is "just and reasonable" for that person to act as a representative in the proceedings. The Competition Appeal Tribunal must consider a list of factors, including whether the applicant will:

  • fairly and adequately act in the interests of the class members;
  • have a material conflict of interest; and
  • be able to pay the defendant's recoverable costs if ordered to do so.

Certification

What criteria and procedural requirements apply for class certification?

The only threshold requirement for the court to make a group litigation order (GLO) is that there are or are likely to be a number of claims giving rise to the GLO issues (ie, the common or related issues of fact or law which are the subject matter of the GLO). If that requirement is satisfied, the court may exercise its discretion to grant a GLO. In considering whether to do so, the court must seek to give effect to the overriding objective of the Civil Procedure Rules, which is to enable the court to deal with cases justly and at a proportionate cost. Essentially, the court will consider whether managing the proceedings by way of a GLO will:

  • help to promote fairness;
  • save costs; and
  • allow the claims to be dealt with in a timely and efficient manner.

In relation to collective proceedings before the Competition Appeal Tribunal, the tribunal may grant a collective proceedings order only if it is satisfied that:

  • it is just and reasonable for the applicant to act as class representative in the proceedings; and
  • the claims are eligible for inclusion in collective proceedings (ie, they raise the same, similar or related issues of fact or law and are suitable to be brought in collective proceedings).

The Competition Appeal Tribunal has a list of factors which it must consider with regard to suitability, including:

  • whether collective proceedings are an appropriate means for the fair and efficient resolution of the common issues;
  • the costs and benefits of continuing the collective proceedings;
  • the size and nature of the class; and
  • the possibility of determining whether any person is a member of the class.

Joining claimants

How are claimants joined to the class/collective action? Are actions formed on an opt-in or opt-out basis?

The GLO procedure operates on an opt-in basis. Claimants must issue a claim form before their claims can be entered on the group register. In practice, the lead solicitors for the GLO will simply add new claims to the group register when requested to do so, so long as any cut-off date specified in the GLO has not passed. After the cut-off date specified in the GLO, claims may not be added to the group register without the court's permission.

The court will not order a claim to be entered on the group register unless it gives rise to at least one of the GLO issues (ie, the common or related issues of fact or law which define the GLO). The court has the discretion to refuse registration:

  • if it is not satisfied that the claim can be managed conveniently alongside the others on the group register; or
  • if including the claim would adversely affect the case management of other claims. 

Collective proceedings in the Competition Appeal Tribunal may proceed on an opt-in or opt-out basis, subject to the tribunal’s discretion. The collective proceedings order will set out the process and deadlines for opting in or opting out of a claim (as applicable). In opt-in proceedings, a class member who opts in by the specified time becomes a represented person and will be bound by a subsequent judgment in the proceedings. In opt-out proceedings, a class member domiciled in the United Kingdom who does not opt out by the specified time will become a represented person; a class member who is domiciled elsewhere must opt in by the specified date to become a represented person.

Class members who fail to opt in or out by the specified date may apply to the Competition Appeal Tribunal for permission to do so. In determining whether to grant permission, the tribunal will consider all of the circumstances, including whether:

  • the delay was the fault of the class member; and
  • the defendant would suffer substantial prejudice if permission were granted.

Timeframe

What is the typical timeframe for class/collective action proceedings?

There is no typical timeframe for class and collective action proceedings. Timescales vary considerably depending on the size and complexity of the case. However, it would be unusual for class or collective action proceedings to be resolved in less than one year – such proceedings often take several years to resolve.   

Evidence

Disclosure

What disclosure/discovery mechanisms are available, if any? In what circumstances will a court order disclosure of documentary evidence?

There are no special rules for disclosure in cases proceeding under a group litigation order (GLO) or collective proceedings before the Competition Appeal Tribunal.

In GLO proceedings, as in other types of civil litigation, the Civil Procedure Rules provide that the court must decide, having regard to the overriding objective and the need to limit disclosure to that which is necessary to deal with the case justly, which of the so-called ‘menu of orders’ set out in the rules to make. These range from an order to dispense with disclosure through to an order to disclose any documents which may lead to a train of enquiry to discover relevant documents. In practice, the court will often order standard disclosure (ie, disclosure of documents which either support or adversely affect any party's case).

From January 2019, there will be a two-year pilot of new disclosure rules in the business and property courts. The changes are aimed at encouraging the parties, and the courts, to adopt a more restrained approach to disclosure and prevent standard disclosure being treated as a default option. However, it seems likely that in most major class and collective actions the court will still order disclosure to take place on a relatively broad basis.

In competition collective proceedings, the Competition Appeal Tribunal may order disclosure to be given, on terms that it thinks fit, by or to any party to the collective proceedings (ie, the class representative and the defendant) and any or all represented persons.     

Privilege

What rules and standards govern non-disclosure of documents on the grounds of professional privilege, litigation privilege or other confidentiality considerations?

A party that would otherwise have to disclose a document in litigation may be able to withhold the document from inspection on grounds of legal professional privilege. There are no special rules of privilege which apply either in proceedings under a group litigation order or in collective proceedings in the Competition Appeal Tribunal; the usual rules apply. In broad outline, legal professional privilege comprises:

  • legal advice privilege, which applies to confidential communications between a lawyer and client for the purposes of giving or receiving legal advice; and
  • litigation privilege, which applies to confidential communications or documents created for the dominant purpose of litigation in reasonable contemplation.

Common interest privilege will also apply where a document that is privileged under either of these headings is shared confidentially with a third party that has a common interest in its subject matter.

Parties may also be entitled to withhold inspection of communications made without prejudice (ie, in a genuine attempt to settle an existing dispute.

Although the usual rules apply, interesting issues regarding privilege have arisen in the context of collective shareholder actions and in respect of the disclosure of documents relating to the funding of class and collective proceedings.

Evidence filing

What is the procedure for filing evidence with the court?

The general rule in civil litigation is that any fact which must be proved by witness evidence must be proved:

  • at trial by oral evidence given in public; and
  • at any other hearing by evidence in writing.

The court will order the parties to exchange written statements containing the factual witness evidence on which they intend to rely at trial and may also direct these statements to be filed at court.

The court's permission is required to adduce expert evidence. Expert evidence will typically be set out in a written report, which will be exchanged in accordance with a timetable set by the court. In some cases, the court may direct that the evidence on a particular issue be given by a single joint expert, though this would be unusual in class and collective actions.

Evidence for pre-trial applications, including an application for a GLO, will typically be filed with the court when filing the application notice. A copy of the application notice and the evidence in support will be served on the opponent (save in relatively rare circumstances where an application is made without notice – this will not apply to an application for a GLO).

With regard to collective proceedings in the Competition Appeal Tribunal, the applicant should submit with the claim form any evidence relied on in support of the application for a collective proceedings order.

Witnesses

What rules and standards apply to the submission of factual and expert witness testimony? What is the general value of this testimony? In what circumstances will the court order witness examination?

Factual witness statements will normally stand as evidence-in-chief. Accordingly, witnesses need not address matters covered in the statements in their oral evidence at trial, though they may amplify their statements orally if the court gives permission. The opposing party can then cross-examine the witness, following which the party who has called the witness will have a chance to re-examine. The judge may also ask questions of the witness.

If a witness statement is not served within the time limit set by the court, the witness may not be called to give evidence at trial unless the court gives permission. Conversely, a party may choose to rely on a witness statement without calling the witness to give oral evidence at trial, but this may affect the weight that the court will attach to the evidence. In these circumstances, the opposing party can apply to the court for permission to call the witness for cross-examination.

With regard to expert evidence, following the exchange of written reports, the court will normally direct that the experts meet to identify and seek to narrow the expert issues, and prepare a written statement for the court setting out the issues on which they agree and disagree. The experts will normally be called to give oral evidence at trial, unless their evidence is fairly uncontroversial.

The role of an expert is to help the court on matters within their expertise. This duty overrides any obligation on the party who has instructed the expert.

With regard to both factual and witness evidence, lawyers are prohibited from ‘coaching’ a witness, including suggesting what the witness should say or coaching a witness in respect of their evidence.

Factual and expert witnesses will not ordinarily give oral evidence for pre-trial applications. However, in the two cases that have to date proceeded to a hearing of an application for a collective proceedings order in the Competition Appeal Tribunal, the applicants' experts gave oral evidence at the hearing, at the request of the tribunal, and the tribunal put questions to the experts. In one of these cases the experts were also cross-examined, to a limited extent, by the defendants' counsel. In addition to the applicant and the defendants, class members may apply to the Competition Appeal Tribunal to make submissions either in writing or orally at the hearing.  

Relief

Declaratory relief

How and in what circumstances can declaratory relief be sought?

The courts have broad discretion to grant declaratory relief either as a sole remedy or in conjunction with another remedy. An action for declaratory relief is brought in the same way as a claim for damages, by issuing and serving a claim form on the defendant. A claim for a declaration can form part of an action brought under a group litigation order, but not collective proceedings in the Competition Appeal Tribunal as that procedure is limited to actions for damages or an injunction.

Interim relief

How and in what circumstances can interim relief be sought?

The court can grant various forms of interim relief, including:

  • interim injunctions;
  • freezing injunctions;
  • search orders;
  • security for costs;
  • interim payments; and
  • specific disclosure.

Interim remedies are discretionary and, in considering whether to grant an application for interim relief, the court must seek to give effect to the overriding objective of dealing with cases justly and at proportionate cost.

The requirements vary for the different types of interim relief. For some types of interim relief (eg, security for costs and interim payments), the court rules set out threshold conditions that must be satisfied to obtain relief. For others (eg, freezing injunctions and search orders), the test is largely a matter of case law.

Damages

How are damages calculated, recovered and distributed in class/collective actions? Are there any caps on damages?

In cases proceeding under a group litigation order (GLO), damages must in principle be calculated on an individual basis for each claimant, as the GLO is merely a case management framework for managing the claimants' individual claims. Those claims are not combined or aggregated in any way. There may be GLO issues (ie, the common or related issues of fact or law which are the subject of the GLO) relating to the losses which were suffered as a result of the defendant's conduct or how damages should be calculated. However, the quantum of damages for each claimant will typically be an individual issue rather than a GLO issue.

In collective proceedings before the Competition Appeal Tribunal, the tribunal can make an aggregate award of damages. Such an award determines the amount of damages to which the class as a whole is entitled, without undertaking an assessment of the amount recoverable in respect of the claim of each represented person. This type of award is most relevant in opt-out cases, where the represented persons are not identified.

Aggregate damages may be awarded by way of a lump sum or by using a formula to determine each represented person's claim without requiring individual proof. Whether the claims are suitable for an aggregate award of damages is one of the factors to be considered by the Competition Appeal Tribunal at the certification stage.

If the Competition Appeal Tribunal awards aggregate damages, it must give directions for apportioning the aggregate award between individual represented persons. Represented persons may apply to the tribunal to make submissions (orally or in writing) at the hearing to determine these directions.

In opt-out cases, the Competition Appeal Tribunal will order the damages to be paid on behalf of the class to the class representative or such other person as it thinks fit. This order will include:

  • a deadline by which the individual represented persons must claim their entitlements; and
  • a deadline by which the representative must notify the Competition Appeal Tribunal of any damages which have not been claimed.

Where (as is likely in practice) some represented persons do not claim their entitlement, the default position is that the undistributed damages are paid to a specified charity, currently the Access to Justice Foundation. However, a class representative may apply to the Competition Appeal Tribunal seeking an order that undistributed damages instead be used to cover all or part of the costs or expenses it has incurred in connection with the proceedings, insofar as these have not been recovered from the defendant. The Access to Justice Foundation has the right to be heard where such an application is made.

Where there is a collective settlement, the representative and defendant may agree that unclaimed funds revert back to the defendant.

There is no cap on the damages that can be awarded either in proceedings under a GLO or in collective proceedings before the Competition Appeal Tribunal.

Are punitive damages available?

Punitive damages are available only in limited circumstances, such as where a defendant's conduct has been calculated to make a profit for itself which might well exceed the compensation payable to the claimant.

Punitive damages may not be awarded in collective proceedings in the Competition Appeal Tribunal.

Other relief

What other forms of relief are available?

In addition to damages and declaratory relief, the most common forms of relief are injunctions (prohibitory or mandatory) and specific performance (a form of mandatory injunction requiring the performance of contractual obligations).

Defence

Strategy

What mechanisms and strategies are available to and commonly used by defendants in class/collective action suits?

Many of the mechanisms and strategies available to defendants in litigation generally apply equally in class and collective actions, including:

  • challenging the court's jurisdiction where there are grounds for doing so;
  • applying for strike-out or summary judgment in relation to either the whole claim or particular issues; and
  • seeking an order for security for costs.

In cases that are sought to be pursued under a group litigation order (GLO), defendants may resist the application for a GLO (eg, on the basis that the issues are not sufficiently common to make a GLO an efficient way of proceeding). Where a GLO is made, a key point for the defendant will often be to ensure that an appropriate balance is struck between addressing issues which are common to all or most of the claims and issues which are distinct to the individual claimant. The claimants will often be keen to focus on common issues in order to put the maximum amount of pressure on the defendant at a minimum cost. The defendant will wish to ensure that individual issues are also investigated appropriately, as these may be just as important in determining whether and to what extent the defendant is liable.

In cases that are sought to be pursued as collective proceedings before the Competition Appeal Tribunal, defendants are likely to resist the application for a collective proceedings order – sometimes referred to as the ‘certification process’. Based on the cases seen to date, certification appears likely to be a key battleground in many cases.

Joint defence agreements

What rules and standards govern joint defence agreements? What are the benefits and drawbacks of these agreements?

If there are multiple defendants to a claim, they may enter into a joint defence agreement which may deal with the sharing of confidential and privileged information and issues such as the sharing of legal costs. There are no particular rules or standards governing such agreements.

The benefits and drawbacks of such agreements depend on their terms.

Costs

Cost burden

Who bears the costs of proceedings? Can this burden be shifted in any way?

The general rule in cases proceeding under a group litigation order (GLO), as in other types of civil litigation, is that the unsuccessful party will be ordered to pay the successful party's costs. This is known as the ‘costs shifting’ rule or sometimes the ‘loser pays’ rule. However, the court has broad discretion and may make some other order, or indeed no order, as to costs.

The general rule is subject to an exception for personal injury claims, where a regime of qualified one-way costs shifting applies. In essence, this means that defendants are generally required to pay the costs of successful claimants but, subject to certain exceptions, will not recover their own costs if they successfully defend the claim.

In deciding what order (if any) to make about costs, the court must have regard to all of the circumstances, including:

  • the conduct of all the parties;
  • whether a party has succeeded in part; and
  • any admissible offer to settle which is drawn to the court’s attention.

The court's discretion is also subject to specific rules that apply with regard to offers to settle made under Part 36 of the Civil Procedure Rules.

In GLO cases, the treatment of costs differs depending on whether the costs in question are individual costs or common costs.

‘Individual costs’ are costs incurred in relation to individual claims on the group register (other than test claims). The general rule is that each group member will be liable for the individual costs relating to their own claims. This includes both their own individual costs (to the extent not recovered from the defendant) and any costs awarded to the defendant in relation to the individual claims.

‘Common costs’ comprise costs incurred in relation to the GLO issues, costs incurred by the lead solicitors in administering the group litigation and individual costs incurred in test claims. The general rule is that each group member will be severally (not jointly) liable for common costs in equal proportion, together with all other group litigants. This includes both the claimants' own common costs (to the extent not recovered from the defendant) and any costs awarded to the defendants in respect of common costs. However, the court may depart from the general rule depending on the facts of the case. For example, in shareholder litigation, where the claims of some group members were significantly higher in value than others, the courts have ordered costs liability to be split pro rata to the acquisition cost of the claimants' shares. Further, where claimants have reached an agreement or understanding as to how they will share liability for their own common costs, the court will normally respect that.

In proceedings before the Competition Appeal Tribunal, there is no general rule that costs follow the event. The tribunal has a wide discretion as regards costs and will consider all relevant circumstances, including:

  • the conduct of all parties;
  • whether a party has succeeded in full or in part; and
  • any admissible offer to settle that is drawn to its attention.

In some circumstances, the court may also make costs orders against third parties, including professional litigation funders. 

Calculation

How are costs calculated? What level of costs is typically recovered? Would you consider the costs regime in your jurisdiction to be more claimant or defendant friendly?

In civil litigation, including proceedings under a group litigation order, if the parties cannot agree the amount that should be paid in respect of costs, the court will assess the amount payable. There are two bases of assessment: the standard basis and the indemnity basis.

Where the order for costs is silent as to which basis applies, it will be the standard basis. The court may make an order for costs on the indemnity basis where there has been some conduct or circumstance which takes the case out of the norm, such as unreasonable conduct by the paying party.

In both cases, the court will order the payment only of costs which:

  • have been reasonably incurred; and
  • are reasonable in amount.

Any doubt as to what is reasonable will be resolved in favour of the paying party if costs are assessed on the standard basis and in favour of the receiving party if on the indemnity basis.

Where assessment is on the standard basis, the costs are subject to an additional requirement of proportionality. Costs are ‘proportionate’ if they bear a reasonable relationship to:

  • the sums in issue in the proceedings;
  • the value of any non-monetary relief in issue in the proceedings;
  • the complexity of the litigation;
  • any additional work generated by the conduct of the paying party; and
  • any wider factors involved in the proceedings (eg, reputation or public importance).

Further, where the court has made a costs management order and is assessing costs on the standard basis, the court will not depart from the receiving party's costs budget without good reason. The budget may therefore lead to a higher or lower level of recovery than would otherwise be the case.

In general terms – ignoring the effect of costs budgeting – a receiving party might expect to recover approximately 60% to 80% of costs incurred (perhaps closer to the top of that range or even higher if costs are assessed on an indemnity basis). 

Similarly, in collective proceedings in the Competition Appeal Tribunal, if the parties do not agree the level of costs, the tribunal may assess the sum payable or refer the question for detailed assessment by a costs officer.

In general terms, the costs regime in England and Wales may be seen as more defendant friendly than claimant friendly in that costs shifting applies. Therefore, claimants which bring unmeritorious claims will typically be liable for the defendant's costs.

Attorneys’ fees

What rules and restrictions (if any) govern attorneys’ fees? Are contingency fee agreements allowed?

Historically, arrangements whereby a lawyer's fees were dependent on success in contentious proceedings were unlawful and unenforceable due to ancient common law rules against ‘trafficking’ in litigation known as the principles of maintenance and champerty. However, more recently, two types of fee agreement which are dependent on success have been introduced as statutory exceptions to these common law rules:

  • Under a conditional fee agreement (CFA), the lawyer will charge no fee (or perhaps a discounted fee) if the case is lost, but the lawyer's normal fee together with (typically) an uplift on that normal fee (referred to as a ‘success fee’) if the case is won. The success fee cannot be more than 100%.
  • Under a damages-based agreement (DBA), the lawyer will charge no fee if the case is lost, but a fee calculated as a percentage share of any damages recovered if the case is won. This may also be known as a ‘contingency fee agreement’. The percentage share cannot be more than 50%, inclusive of value added tax (lower percentages apply for personal injury and employment cases).

Such fee arrangements will be enforced so long as they comply with relevant statutory requirements. For DBAs in particular, there are detailed restrictions, including a ban on hybrid DBAs which combine a DBA with some other form of fee agreement (eg, reduced hourly rates together with a contingency fee payable on success).

Both CFAs and DBAs can be used for cases proceeding under a group litigation order, but DBAs are prohibited for opt-out collective proceedings before the Competition Appeal Tribunal.

Litigation funding

Third-party funding

Is third-party litigation funding allowed in your jurisdiction? If so, how common is its use?

Historically, arrangements whereby a third party would fund litigation in exchange for a share of the proceeds were unlawful and unenforceable due to ancient common law rules against ‘trafficking’ in litigation known as the principles of maintenance and champerty. However, more recently, third-party litigation funding has become accepted as long as the arrangement does not contain additional features which would contravene public policy and therefore render the agreement unenforceable on grounds of champerty.

It is not entirely clear where that boundary will be drawn, but two factors that may lead to a finding of champerty are:

  • where the third-party funder exercises improper control of the litigation; and
  • where the third-party funder is entitled to an excessive share of any recovery.

The use of third-party funding is relatively common in class or group litigation compared with other types of proceeding.

Public funding

Is legal aid or any other form of public funding allowed for class/collective actions?

Legal aid is not a realistic means of funding most class and collective actions due to restrictions on the types of claim that fall within its scope, as well as the restrictive financial and merits criteria that apply.

Insurance

Is after-the-event (ATE) or similar insurance available in your jurisdiction? If so, how common is its use?

ATE insurance is available and is quite common, including in class and collective actions.

Settlement

Rules

What rules, restrictions and procedures govern settlements of class/collective action suits?

There is no requirement for the court to approve a settlement of proceedings brought under a group litigation order, save insofar as it relates to claims brought by (or against) children or protected parties.

The procedures for settling collective proceedings before the Competition Appeal Tribunal depend on whether the proceedings are brought on an opt-in or opt-out basis. The tribunal’s approval is not required for a settlement of opt-in proceedings, save that the class representative may not settle the proceedings without the tribunal’s permission before the deadline for class members to opt in. In contrast, a settlement of opt-out proceedings will be binding only if the tribunal has approved it by issuing a collective settlement approval order, which it will do only if it is satisfied that the terms of settlement are just and reasonable. 

Class member objections

How are class member objections to settlements handled?

This question does not arise in proceedings brought under a group litigation order, as individual claimants must agree to any settlement.

With regard to competition proceedings before the Competition Appeal Tribunal, where an application is made for a collective settlement approval order, the tribunal will set a deadline for submissions by class members and may direct notice of the application to be given in order to publicise the fact of the hearing and the scope for submissions. In deciding whether to grant the application, the tribunal must consider all relevant circumstances, including the views of class members.  

Separate settlements

How are separate settlements handled?

In proceedings brought under a group litigation order (GLO), individual claimants must agree to any settlement and settlements may be concluded on an individual basis. The courts are empowered to minimise any disruption to the remaining claims. In particular, where a test claim is settled, the court may order that it be substituted with another claim on the group register which will then proceed as a test claim. In some cases, a GLO may contain provisions restricting the discontinuance of test claims and the making or acceptance of offers to settle in respect of test claims without the court's permission.

Individual settlements of competition proceedings before the Competition Appeal Tribunal are possible in opt-in cases, but not opt-out cases. In an opt-in case, if the class representative settles its own personal claim on an individual basis, it must notify all represented persons and the tribunal. 

Alternative dispute resolution

Availability and prevalence

Is alternative dispute resolution (ADR) available for class/collective action suits? If so, which ADR forms are commonly used?

ADR is available for class and collective actions, as for any other civil case. Mediation is the most commonly used form of ADR.

Court-ordered mediation

Does the court customarily order pre-trial mediation in relation to class/collective action suits?

The courts will not compel parties to engage in mediation, in class or collective actions or other types of civil case. However, it is strongly encouraged at all stages of proceedings.

The Practice Direction on Pre-action Conduct and Protocols states that:

  • litigation should be a last resort;
  • parties should consider whether negotiation or some other form of ADR might enable them to settle their dispute without commencing proceedings; and
  • parties should continue to consider the possibility of reaching a settlement at all times.

Once proceedings are issued, there are various points at which the rules allow the parties to take stock and consider the possibility of settlement (eg, by requesting a stay of the proceedings).  The various court guides also contain provisions aimed at promoting ADR. Further, a party may be penalised in costs for unreasonably refusing to engage in ADR. 

While the courts will not compel parties to engage in ADR, they may make an order providing (for example) that the parties will take such serious steps as they may be advised to resolve their disputes by ADR procedures. Such an order will typically provide that, if the case is not settled, the parties must inform the court what steps towards ADR have been taken and why they have failed (without prejudice to matters of privilege).

In collective proceedings before the Competition Appeal Tribunal, there is no requirement for the class representative or class members to have sought to engage in ADR before commencing the proceedings. However, the collective proceedings claim form must state whether the parties have used an ADR procedure and the tribunal must consider the availability of ADR as a factor in deciding whether to certify the claims as eligible for inclusion in collective proceedings. In addition, the tribunal may stay the proceedings while the parties seek to engage in ADR.

Class-action waivers

Are class-action waivers in arbitration agreements allowed?

Class-action waivers are not commonly used in England and Wales, as they are (for example) in the United States. However, in principle, it seems likely that an English court would uphold an arbitration agreement to prevent a claimant joining an action which is proceeding under a group litigation order (which is an opt-in rather than opt-out mechanism) where that claimant's claim is the subject of a valid arbitration agreement.

It remains untested whether a class-action waiver in an arbitration clause would be effective to prevent a class member claiming an entitlement to damages following a judgment or settlement in opt-out collective proceedings before the Competition Appeal Tribunal, where the claims pursued in the collective proceedings fell within the arbitration clause.