Collective Actions: UK Guide
20 October 2021
20 October 2021
This guide explains the mechanisms available in the English courts for bringing collective actions and goes on to look at the status of current initiatives that are focusing on collective actions.
Collective actions, or "class actions", are where multiple claimants with claims sharing common characteristics seek a remedy against the same defendant or multiple defendants. The English courts have various types of procedures for collective litigation, and recent reforms have added to these with new procedures available for collective consumer and competition claims.
These, together with other procedural and substantive features available to litigants in the English courts, may explain why England is conventionally regarded as fertile ground for collective claims.
This guide provides an overview of the various mechanisms currently available in the English courts for collective actions. It concludes with a look at current trends, in particular the hotspots for collective actions and the drivers behind the perceived increase in collective actions.
The potential for collective actions arises whenever an alleged wrong causes loss to a group of people in a similar way. The English court rules provide various procedural mechanisms for these collective actions, and these are listed below.
Until October 2015 these mechanisms all shared a common feature: they operated on an opt-in basis. As such, claimants must elect to join the action in order to be considered a member of the class and share in any damages recovered. This contrasts with an opt-out regime, whereby an action can be pursued on behalf of a class of unnamed, and even unidentified, claimants who are deemed included in the action unless they have specifically opted out. While any claims brought in the English courts can still only be brought on an opt-in basis, collective actions for damages for infringement of competition law can be brought on an opt-out basis in the Competition Appeal Tribunal (CAT). The significance of this is explored below.
GLOs were introduced as part of the new English civil procedural rules introduced in April 1999 (the CPR), although they had been in existence on a more informal basis for some time. A GLO is made under CPR 19 for claims which "give rise to common or related issues of fact or law" (otherwise known as GLO issues). The claims are brought as a group, usually with at least ten claimants and often using the same lawyers.
All claimants wishing to join the group litigation must apply to be entered on the group register (i.e. they must "opt in") by a date specified by the court. A GLO will not be permitted if the court considers it more appropriate that the claims are consolidated or for there to be a "representative action" (see below). Judgment on one or more of the GLO issues then binds all of the claimants on the group register – any non-GLO issues (such as individual levels of compensation) will be determined in each individual case.
GLOs have been issued in a range of areas, including product liability, personal injury, tax and insurance. A list of GLOs is published on the English courts website. Take-up of GLOs has been modest, which many commentators attribute to the lack of an opt-out system.
Representative actions may be made by (or against) one or more persons who have the "same interest" in a claim (CPR 19.6). One or more of them can then be representatives of any other persons who have that same interest, i.e. the named claimant or defendant prosecutes or defends an action both on behalf of itself and on behalf of a class of individuals. Members of the represented class are not joined to the action and are therefore not automatically subject to disclosure or costs obligations. Any judgment or order given is binding on all persons represented but can only be enforced by or against a person who is not a party to the claim with the permission of the court. The "same interest" requirement has traditionally been interpreted restrictively, as reflected in the Court of Appeal judgment in Emerald Supplies Ltd v British Airways Plc.1 However, in a subsequent Court of Appeal decision (Lloyd v Google2), the Court allowed a representative claim on behalf of 4.4 million iPhone users to proceed on the basis that the claimants had disavowed any reliance on facts specific to individuals (and were claiming a uniform per capita sum). It could therefore be said that all claimants sustained the same loss - the loss of control over their browser generated information.3 The Court concluded that the represented class had the same interest and that it was "impossible to imagine that Google could raise any defence to one represented claimant that did not apply to all others" (class members would not have the same interest if defences were available in answer to claims by some but not others).
The Court of Appeal's decision was appealed to the Supreme Court, who heard the case in April 2021. At the time of publication, the Supreme Court's decision is still pending.
The Secretary of State has the right to submit "super-complaints" to the Competition and Markets Authority (CMA).4 The aim is to give consumers greater strength to bring complaints. The consumer organisations collate individuals' complaints, ascertain whether there is a competition law issue that significantly harms consumer interest to be addressed and, if there is, present the claim on the consumers' behalf. The CMA may take enforcement action, launch a market study, or refer the complaint to a sector regulator.
Section 47B of the Competition Act 1998 (as amended by schedule 8, paragraph 5 of the Consumer Rights Act 2015) came into force on 1 October 2015 and enables consumers and businesses to bring a private action for damages for losses suffered as a result of an infringement of UK competition law on an opt-out basis, i.e. on behalf of an entire class of claimants (other than those who have expressly opted out of the action), without the need to identify every individual claimant.
The introduction of an opt-out regime was controversial and, during the consultation process, many expressed fears that it would result in a US-style class action culture. However, protective measures have been put in place, including the retention of the "loser pays" costs regime and a strict certification process requiring the CAT to grant a Collective Proceedings Order (CPO) before a collective action can proceed. Claims will only be permitted to proceed on an opt-out basis if the CAT is satisfied that certain requirements have been met, and that an opt-out process is the most suitable way of bringing the proceedings. The use of damages-based agreements (contingency fee retainers) is also prohibited in opt-out collective proceedings.
In December 2020, the Supreme Court clarified the approach the CAT should take towards certification. In its judgment in Merricks, which concerned a 'follow-on' claim for damages ensuing from a 2014 infringement decision issued by the European Commission, the Supreme Court confirmed that the CAT was applying the correct test but too strictly and remitted the case back to the CAT for reconsideration.5 In August 2021, the CAT subsequently certified the Merricks CPO, and shortly afterwards went on to certify the UK's first ever 'standalone' collective competition claim (i.e., where no infringement decision has been made by a competition regulator) against BT Group plc.6 The BT CPO decision has widened the potential scope for certification, and indicates the CAT's willingness to certify both 'follow-on' and 'standalone' damages claims. Various other collective actions claims lodged at the CAT were suspended pending judgment in Merricks, including against Google and Apple, and it remains to be seen whether these will progress in the same way.
The opt-out regime is complemented by an opt-out collective settlement regime, which requires parties who want to settle opt-out collective proceedings to submit their proposed settlement to the CAT for approval. If approved, the settlement will be binding on all members of the class, with the exception of those who expressly opt out within a specified time frame. Opt-out collective settlement is available at a very early stage, before the CAT has concluded its certification process. The details of the new regime are set out in the revised CAT rules.
Although not strictly speaking a formal collective action procedure, another way in which the courts can manage a multiplicity of claims efficiently is via the use of test cases. The CPR provides the English courts with sufficient powers to manage litigation so that where there are a large number of claims, each raising common factual or legal issues, one or a small number can be selected and determined in court. Examples include the bank charges litigation and the DePuy metal hip-implant case.7
The selection of those actions to go forward is decided by the parties rather than the court, but the court has the power to stay the rest of the claims either on its own initiative or with the parties' consent. The outcome of the test case takes precedence over the stayed or any future actions; it does not in itself finally determine those proceedings.
An alternative is the inclusion of a large number of claimants to the action. There have been several cases where thousands of claimants have together brought proceedings; recent examples include the high-profile environmental claims brought against resources companies in respect of their overseas operations.
The Supreme Court ruling in Merricks and the CAT's subsequent certification of the Mastercard and BT CPOs are likely to offer encouragement to those seeking to bring both 'follow-on' and 'standalone' opt-out proceedings in the CAT. In particular, the reminder that the courts must not expect too much at an early stage of proceedings and that the availability and/or complexity of data does not provide a basis to decline to make a CPO suggests that the threshold for certification will now be lower. A number of claims are currently listed for hearing, including the UK Trucks claim and the competing FX trading cases against a number of the banks, as well as significant claims against Google and Apple, which were recently filed.
While protections remain in place to prevent the emergence of a US-style class action culture, there has undoubtedly been an increase in the number and size of collective actions brought in the English courts and the CAT. It is no coincidence that the same period has seen a growth in the third party funding market in the UK, and in the niche (often US-based) law firms prepared to bring such cases.
Looking forward, we expect to see this increase continue. In particular, the following areas are likely to see growth: