There is a growing trend in class action settlements, particularly in price-fixing actions, for defendants to seek certification of a worldwide settlement class. However, there is a significant risk that judgments approving a worldwide settlement class will not be enforced in most, if not all, European countries. As a result, defendants may pay for a worldwide release of their liability that they will not actually receive.
Canada and the United States have class action legislation. European countries do not. Some European countries are beginning to investigate and/or to introduce various forms of ‘collective redress’ actions which have some similarities to class actions. The European Commission announced this past March, in an initiative supported by the European Parliament, that it was studying the viability of continent-wide collective redress legislation. However, whether and on what basis a class action judgment from Canada will be enforced in Europe or a European collective redress judgment will be enforced in Canada are open questions.
Existing laws and treaties for enforcing conventional foreign judgments are not well suited to deal with the unique due process, jurisdictional and other issues created by cross-border class action judgments. The assumption is that, at a minimum, the requirements set out in these existing laws in each country will have to be met before a class action judgment from one jurisdiction will be enforced in another jurisdiction. The issue is whether these general rules can be applied to determine whether a foreign class action judgment should be enforced or whether additional rules are necessary.
In considering this question, one has to look at the types of plaintiffs or ‘claimants’ against whom a class action judgment might be enforced. Such claimants can include:
- the representative claimant named in the action;
- claimants who are permitted to opt into a class action that is commenced by others; and
- "absent" claimants, that is, claimants who are included in an action as a result of the governing class action legislation unless they take active steps to opt out of the action.
Generally speaking, named claimants and claimants who opt into an action cannot complain later if a judgment in the action is enforced against them elsewhere. The effect of the judgment on their rights is usually contemplated by the existing rules for recognizing and enforcing judgments in named-party litigation.
Absent claimants give rise to the most difficult issues, both substantive and procedural. With respect to substantive issues, a fundamental question will be whether a class action judgment should be recognized regardless of the original jurisdiction’s criteria for permitting such an action. That is, should enforcement be available only where the statute or rules authorizing the class action impose certain minimum requirements?
On the procedural side, the issue is one of fairness and due process — what notice and opportunity to be heard should be provided to claimants, particularly absent claimants, before a court enforces a class action judgment from another country so as to bind all claimants?
There are significant differences between legal regimes around the world which highlight the challenges in attempting to assess whether a class action judgment will be enforced globally. For a defendant, the enforceability of a class action judgment will arise most commonly in situations where the defendant will be seeking to prevent an absent claimant from re-litigating a claim that has been resolved by the defendant’s foreign class action judgment.
At the simplest end of the ‘enforcement’ spectrum are jurisdictions such as Canada, the United States and Australia because each of these countries has true class action legislation. Presumably, these jurisdictions will be more open to enforcing class action judgments from other class action jurisdictions because each country is familiar with and permits similar types of class actions in its own jurisdiction.
At the other end of the ‘enforcement’ spectrum are European countries that do not have class action legislation, do not have the same legal regimes (e.g., civil law vs. common law) and do not recognize legally some aspects of class actions such as punitive damages and contingency fees. In such jurisdictions, there is no certainty that a Canadian class action judgment will be enforced and given the required preclusive effect. New and additional rules are required to eliminate this uncertainty.
McCarthy Tétrault Notes:
John P. Brown is the Chairman of the International Bar Association Task Force on International Procedures and Protocols for Collective Redress. The Task Force is comprised of lawyers, academics and jurists from around the world, including Eric Gertner, the head of the firm’s Research Department. Over the past year, the Task Force has studied the issues relating to the enforcement of foreign class action judgments. The Task Force released its report on this subject at the International Bar Association Conference in Singapore in October 2007. The report includes draft Guidelines for Recognizing and Enforcing Foreign Judgments for Collective Redress.
The Guidelines are intended to describe the minimum procedural and substantive rights which a foreign court should be satisfied were addressed by the court which issued the original judgment before a foreign court should consider enforcing the judgment. These Guidelines are necessary because the existing judicial tests for analyzing traditional ordinary judgments are inadequate for assessing judgments in collective redress actions. The Task Force is currently distributing the Guidelines to select legal, judicial and government officials in various countries around the world for comment.