Procedurei Types of action available
As noted at Section II, the regimes available for English class or group actions broadly fall into two categories: the older opt-in procedures, and the more recent opt-out procedure.ii Commencing proceedingsRepresentative actions
As noted above, not only can representative actions be utilised for any type of claim, there are also no requirements pertaining to the number of representees, be they claimants or defendants. The principal requirements for a representative action are:
- the representative is a party to the proceedings; and
- the representative and the represented parties all have 'the same interest' in a claim.
If a court orders that a representative action may be continued, the court's judgment will bind everyone the representative party purports to represent. However, it may only be enforced by or against a non-party with the court's permission. Importantly though, the representee need not authorise being represented so long as the same interest requirement is met.
Whether the parties are deemed to have 'the same interest' in a claim might appear to be a narrow and restrictive concept. However, over time the boundaries of the interpretation of the requirement have been tested. Emerald Supplies Ltd v. British Airways plc  EWCA Civ 1284 provided a detailed analysis of the requirements for a representative action. It was noted that the class must have a common interest or grievance and seek relief that is beneficial to all. It did not matter whether the class fluctuated, so long as at all points it was possible to determine class membership qualification. However, the attempt in this case to use the representative action as a proxy for an opt-out class action failed because of the inevitable conflicts within the claimant 'class' sought to be represented, which was drawn so widely that it was described by the court as fatally flawed. In particular, the court found that the same interest could not be said to be present as the sheer breadth of the class meant it was impossible to identify which members had the same interest. Furthermore, the overriding objective is important too in shaping its application. Concepts similar to proportionality can be distilled from the case law. Although the CPR appears to require an identical interest, Megarry J stated that 'the rule is to be treated as being not a rigid matter of principle but a flexible tool of convenience in the administration of justice'. In light of the requirements for the court to consider the overriding objective, particularly that the dispute is dealt with 'expeditiously and fairly', the representative action regime continues to provide significant potential for effectively bringing a group action.GLOs
GLOs are an opt-in mechanism that require an individual to have brought his or her own claim first to be entered upon the group register. They are similarly premised on the notion that where there are similar facts and issues to be resolved, it is more efficient that these are dealt with collectively. Given the costs inherent in litigation, such efficiencies have enabled claimants to recover losses previously unobtainable. It is important to distinguish, however, between instances where the determination of a single issue is common to all the claims, and instances where a defendant is liable to numerous claimants but each is separate as to liability and quantum. Where there are no generic issues, 'nor generic issues of such materiality as to save costs in their determination', a GLO will not be granted and the individual must litigate separately.
Court consent is required for a GLO, which may be obtained if the claimant can show that there are 'common or related issues of fact or law'. Nonetheless, the court has discretion in granting the order. There is no guidance as to how this discretion is to be exercised, though the overriding objective would still be applicable. Similarly, consideration must also be given to whether a representative action would be more appropriate, namely when the interests and issues of the parties are the same. It must be noted, however, that broadly the requirements of a GLO have not proven difficult to meet. This is in part because the standard of commonality is lower.
There are no special requirements for a GLO application, though the applicant should both consider the preliminary steps and ensure that his or her application contains the prescribed general information. As part of this information, the applicant must provide details relating to the 'GLO issues' in the litigation. It is important that these GLO issues are defined carefully, given that the judgments made in relation to the GLO issues will bind the parties on the claim's group register. Nevertheless, the court may give directions as to the extent to which that judgment is binding on the parties that were subsequently added to the group register. Once a GLO is granted, a deadline is set by which time the other claimants must have been added to the group register. However, GLOs have not proved especially popular to date. Since the introduction of the GLO procedure in 2000, there have so far been fewer than 100 GLOs ordered. Whether the increased availability of funding for these types of claims will lead to an increase remains to be seen.CPOs
The most significant recent change to the English class action regime resulted from the CRA which came into effect in October 2015. Schedule 8 introduced changes to the competition law class actions regime under Section 47A of the CA. Collective proceedings are proceedings that are brought by multiple claimants or by a specified body on behalf of claimants, sharing certain characteristics (i.e., a class action as ordinarily understood). While collective proceedings are limited solely to competition actions before the CAT, it is notable for two reasons. First, it is currently the only opt-out class action regime in England, and second, it is a possible indicator of changes to come more broadly to English class actions. While claimants already have the right to bring collective actions, as detailed above, these were perceived as insufficient to address the harm caused to both direct and indirect purchasers.
There are three sources that set out the procedure for obtaining CPOs: these are the CRA Schedule 8, the Competition Appeal Tribunal Rules 2015 (the CAT Rules) and the CAT Guide to Proceedings 2015. Notwithstanding the fact that CPOs were introduced under the CRA, both individuals and businesses can apply for a CPO. The reforms also widened the types of claims that the CAT could hear. The CAT had previously been restricted to hearing follow-on claims, while collective proceedings can be either follow-on or stand-alone. A follow-on claim is one where a breach of competition law has already been determined by a court or authority such as the OFT or the Commission. With breach already having been established, the claimants are only required to show that the breach caused them loss. In contrast, a stand-alone claim is one where there is no prior decision by either body upon which the claimant can rely and the claimant must therefore prove breach before the CAT as well.
Similar to proceedings for a GLO, collective proceedings require certification to proceed, in this instance from the CAT. This mechanism works to remove frivolous or unmeritorious claims and enables the CAT to determine the class representative, class definitions and whether the proceedings should be opt-in or opt-out. Section 47B CA and Rule 79 of the CAT Rules detail the requirements that must be met for the CAT to make a CPO. Principally, the CAT must determine that 'the claims raise the same, similar or related issues of fact or law', and that a collective proceeding would be appropriate based upon a preliminary assessment of the merits and available alternative regimes. How the CAT determines the representatives, the classes (and sub-classes), and whether it is to be an opt-out action, will be fundamental to the collective proceedings' operation, reach and success. The limited case law under the new regime fails to give definitive guidance on how the CAT will exercise its discretion. Nonetheless (as noted above) the judgments in the Pride Mobility and MasterCard hearings indicate, at least in principle, that the CAT may be willing to adopt a relatively flexible approach to the eligibility and representative criterion, particularly regarding the delineation of classes (and sub-classes). However, this must be set against the fact that both of these cases failed to satisfy the hurdles identified by the CAT.
Upon certifying the class in an opt-out action, all members falling within the definition will automatically become part of the action unless they opt out before the end of the designated time period. However, this will only apply automatically to members domiciled within the UK. Non-UK domiciled claimants can still be a member of the class, though they will have to actively opt in before the end of the specified time period.iii Procedural rulesManagement
Given the differing group and class action procedures that can be used under English law, the process of determining the class differs between them too. With representative actions, the court can order that an individual is, or is not, a representative of a particular person. While the representee need not authorise the representative to bring an action (or even be aware that it is being brought), a representative claimant cannot assume an unfettered right to control the litigation because any party to the proceeding can apply for such an order. For a GLO, the court may give directions stipulating the date by which further claims cannot be added to the group register without the court's permission. However, failure to meet the deadline does not automatically mean that the claim cannot be added to the group.
In contrast, with the collective proceedings regime the CAT has a broad discretion in the certification process to outline how a CPO is to be conducted given that it may take into account 'all matters it thinks fit'. Furthermore, in considering the suitability of bringing the claim in collective proceedings, the CAT may limit the CPO to just some of the issues to which the claim relates. In certifying a claim as eligible for inclusion in collective proceedings, the CPO must describe the class and any sub-classes along with the provisions for opting in and out of the proceedings. The CAT also has the full remit to vary the order, including altering the description or identification of class members, at any time on its own initiative or following an application by the class representative, defendant or any represented person.Process
Given the breadth of the class or group action mechanisms in England, generalities regarding the process of such actions are difficult to discern. For example, liability and quantum may be split depending on the type of claim that is brought, though in other instances, such as in follow-on claims, breach need not even be assessed. The same can be said for assessing the speed at which class actions progress. As regards collective proceedings, it is impossible at present to determine the rate at which these are to progress given how recently they have become available and the preliminary stages that cases under the new CRA regime have reached. Proceedings for GLOs and representative actions will also by their nature be context specific. Since GLOs have recently been used for notable, complex securities claims, some of which have already seen significant settlements, they may not provide a good benchmark from which to assess the speed and potential efficiencies of such a group action mechanism.Disclosure
The disclosure provisions do, however, vary between the different class or group action regimes. Taking for instance representative claims, because the representees are not parties to the claim, they are not subject to the ordinary disclosure standards. Instead, they must only meet the requirements that a non-party is held to. In contrast with collective proceedings, the CAT holds comprehensive disclosure powers based on those more generally applicable in litigation in the English courts. The CAT can, therefore, order the disclosure of documents that are likely to support the case of the applicant, or adversely affect one of the other parties' case, from any person irrespective of whether they are a party to the proceeding, as long as it is necessary to save costs or dispose of the claim fairly.iv Damages and costsCosts
The general rules on costs are detailed at CPR 44. This provides discretion as to the award, amount and timing of payment for costs. Given that the unsuccessful party will ordinarily be ordered to pay the other side's costs, unmeritorious class actions have traditionally been restrained. This is particularly in light of the significant costs inherent in class actions, given their size and complexity.
However, as demonstrated by BritNed Developments Ltd v. ABB AB, parties and their advisers should be mindful of the fact that the judiciary has recently shown its willingness to depart from the typical 'loser pays' costs order. In this case (in October 2018), the High Court ordered both parties to pay their own multimillion-pound costs, in light of the fact that the claimant was awarded damages significantly lower than that claimed. Although the case was not brought as a group claim or class action, it is notable as it demonstrates the willingness of the English Court to exercise its discretion to limit the extent of recoverable of costs. In the context of group claims – which are often subject to third-party funding – the likelihood of recoverability of costs can be a key factor in deciding to pursue a claim. The potential for a winning party to be barred from recovering their costs could act as a deterrent to litigation funders and law firms normally interested in pursuing large-scale class actions.
There is also the added complication of how costs are to be split between the constituent members of the class. For representative actions, as the represented individuals are not parties to the action, they are not individually liable for costs. The court may nevertheless accept an application for costs to be paid by the representees. There are also specific costs rules in the CPR for proceedings governed by GLOs. The default position is that group litigants are severally, and not jointly, liable for an equal proportion of the common costs. In RBS, however, the court decided at a case management conference in December 2013 that adverse costs should be shared on a several basis in proportion to the size of the individual's subscription cost in the rights issue relative to the total subscription cost for all the claimants on the group register.
With the growth in after-the-event (ATE) insurance and third-party litigation funding, the costs risk may, however, become less pronounced. Nevertheless, as addressed above, the risk is still a considerable factor in determining whether and how a class action is brought. Indeed, the arrangement of ATE insurance is often considered alongside, and of equal importance to, the litigation funding arrangements. Unlike proceedings governed by GLOs or representative actions, damages-based agreements are prohibited in respect of opt-out collective proceedings. Therefore, for opt-out collective proceedings to be successful, it is increasingly likely that they will be dependent upon third-party funding being obtained.Damages
One of the notable differences between civil actions in England and certain other jurisdictions, particularly the US, is that there are no jury trials in English civil actions. This difference becomes apparent with quantum as English class action damages are typically much lower than in the US.
With regard to damages for representative actions, the historic position was that the 'same interest' requirement excluded damages from being recoverable for the class. However, there has been an incremental liberalisation such that it is established that damages can be claimed in a representative action. The damages awarded, however, in proceedings governed by a GLO or representative action will be dependent on the type of claim that is brought, though under English law, damages are generally compensatory (e.g., breach of contract, tort).
The provisions for damages in collective proceedings claims are, however, more detailed. Damages are ordinarily compensatory; exemplary (i.e., punitive) damages for collective proceedings have been statutorily excluded. Punitive damages may still be sought in relation to a competition law breach; however, to seek them, the individual would need to opt out from the collective proceedings action and bring an individual claim. The CAT will calculate damages aggregately for the class or sub-class and will not undertake an assessment as to the amount of damages recoverable by each represented person. Rules 92–93 of the CAT Rules stipulate that the CAT may give directions for the assessment of damages, for instance a formula to quantify damages. Damages are ordinarily to be paid to the class representative for distribution. If all of the damages are not claimed within the CAT's specified period, the CAT may order that undistributed damages are paid to the representative 'in respect of all or part of the costs or expenses incurred by the representative in connection with the proceedings'. Any other remaining unpaid damages are to be paid to charity.
The CPO applications that have so far been brought, in particular MasterCard (the claim value of which is £14 billion), indicate that significant damages may be sought through the collective proceedings regime. The sums that are potentially at stake will also be likely to provide a useful bargaining tool for claimants seeking to settle their claims instead of pursuing protracted litigation.v Settlement
In common with other jurisdictions, there is often a significant and mutual impetus for claimants and defendants to settle class actions out of court. In some instances, such as in securities litigation under Section 90 FSMA, where the cause of action has not been frequently litigated, the absence of clear precedent may encourage the parties to settle to avoid uncertainty. With regard specifically to follow-on actions, since breach will have already been determined, the dispute will likely focus on the issues of causation and quantum. Given that the determination of causation and quantum can still be a complex and expensive process and defendants may therefore consider it more economical to settle out of court.
As noted, it is increasingly likely that third-party litigation funding will take a larger role in English class and group action litigation. The consequences could be significant, opening up new claimants, types and scales of litigation to class and group actions not previously seen before. Third-party litigation funding also introduces a new dynamic when considering and negotiating settlement: although professional funders are legally prohibited from exercising control over the litigation they fund, the manner in which many funding packages are structured (with the cost of funds effectively increasing the longer a case progresses) may incentivise claimants to give fuller consideration to settling actions pretrial. Unlike in some other jurisdictions (notably the US), settlements in GLO and representative actions do not require court approval, though admissible settlement attempts may still have an impact upon the court's allocation of costs as between the parties if a settlement is not reached. The CPR do not, however, contain any explicit guidance on how any settlement negotiations or agreements are to be managed.
In contrast, the CA contains provisions, implemented by the CRA, for a collective settlement scheme. Once a CPO has been made and proceedings are authorised to continue on an opt-out basis, claims may only be settled by way of a collective settlement approved by the CAT. The proposed settlement must be presented to the CAT by the representative and the defendant of the collective proceedings. The settlement need not apply to all of the defendants in the proceedings, merely those that intend to be bound by it. The CAT, however, may only make an order approving the settlement where it deems the terms to be 'just and reasonable'. If the time frame specified in the collective settlement approval order given by the CAT has expired, the collective settlement will be binding upon all those domiciled in the UK who fell within the CPO's defined class and did not opt-out, and those domiciled outside the UK who otherwise fell within the defined class and opted-in. Opt-in collective proceedings are not subject to such requirements, although they cannot be settled without the CAT's permission before the expiry of the time given in the collective proceedings for a class member to opt in to the proceedings.
The potential success of the collective settlement scheme will, however, be closely tied to a claimant's ability to use the collective action scheme. If the opt-out certification process proves to be unduly restrictive, the defendant will no longer be induced to settle. The residency provisions in the CRA may also present issues to the success of the collective settlement scheme. Defendants could be reluctant to pursue a collective settlement scheme since it does not automatically provide the 'global' settlement that they might be seeking, given non-UK domiciled individuals will need to opt in to any settlement. Nonetheless, certain other provisions may further promote settlement, for instance that any remaining unpaid damages are to be paid to charity. It, therefore, awaits to be seen how the collective settlement scheme is adopted.