Class actions have been generating interest recently due to several high-profile actions, such as the ongoing emissions case brought against the Volkswagen Group. A decision is now eagerly awaited in Mastercard’s appeal in the class action brought by Walter Hugh Merricks CBE, which has been heard for the past two days in the Supreme Court.
To raise a class action at least two parties must come together. Generally, they can be particularly attractive for single parties, where small recoveries do not provide the incentive to bring a solo action. They do not yet exist in Scotland, but this looks like it is all about to change.
On 1 May 2018, the Scottish Parliament passed the Civil Litigation (Expenses and Group Proceedings) (Scotland) Bill. It aims to make civil litigation more accessible, costs more predictable and increase access to justice. Part 4 of the ensuing Act makes provisions for group proceedings, otherwise known as class actions or multi-party actions, to be developed and made available in the Court of Session.
Secondary legislation and rules of court will be required, and the body responsible for the latter, the Scottish Civil Justice Council, earlier this year established a working group to look at how rules could be implemented. The Group anticipated that these rules would be available in Summer 2020 - it is yet to be seen if the worldwide pandemic will slow this progress.
One area of huge interest is whether the Council will propose an ‘opt-in’, ‘opt-out’ or hybrid approach. Each of these styles have already been adopted in different jurisdictions around the world.
Opt-in proceedings mean that a potential class of claimants is identified and those who qualify, and wish to join the action, must take steps to do so. If they do not take any action their claim will not be considered by the court, and they will not be able to share in any award. Those who do not join the group proceedings are free to bring their own legal claim.
This approach - which has been more commonly adopted around the world - allows the defender to quantify their potential liability at the outset. If the defender is not able to estimate the extent of their liability, it can be much more difficult for them to make a reasonable settlement offer and resolve the action at an earlier stage.
Opt-out proceedings, which are more controversial, allow affected parties to come forward and claim a proportion of the compensation after a successful claim is made. This can reduce the administrative burden of bringing together, what may amount to thousands of claimants, before an action is raised. Any person who falls within the identified class will be bound by the judgment, unless they chose to opt out of the action.
There are concerns that an opt-out approach - which is available in countries such as Portugal, and in England for damages arising from breaches of competition law - can result in an unmanageably large group in which members are not identifiable. In addition, a party may not realise that they can opt out, until it is time barred and too late. For this approach to be implemented, careful consideration is required over whether it would breach the liberty of a party to participate in litigation only if they wish to do so.
The Act does not set out how group proceedings are to be funded, nor the extent to which defenders can recover costs where the litigation is unsuccessful.
Regardless of which approach is adopted, the introduction of group proceedings in Scotland is a very welcome step. Class actions introduced carefully, with appropriate safeguards against unmeritorious claims, will allow Scotland to continue to be a centre of excellence for the full spectrum of dispute resolution processes.
Litigation funders such as Restitution, are well placed to assist. We can provide a range of financial solutions for all types of class action or other group litigations. If you would like to know more please do not hesitate to contact me.
This article was published in Scottish Legal News -