Another step towards class actions in England and Wales?

United Kingdom

The Civil Justice Council (“CJC”) has recently published its formal recommendations as to how to improve access to justice through collective actions (i.e. an action brought by or on behalf of a represented class, whose members have a common interest in the action). The report proposes the introduction of a generic collective action, capable of being brought by a wide range of representative parties, from individual representative claimants to designated or ad-hoc bodies. Whilst the proposals do not call for the wholesale adoption of the much-feared American-style class action, the CJC does propose that in some instances an opt-out procedure would be appropriate.

The report is likely to have a significant impact on the way the options for collective redress are developed in this country and the proposals will come under close scrutiny, at a time when collective redress is very much in the spotlight not only within England and Wales, but across Europe.

In summary, the CJC’s advice to the Lord Chancellor, which runs to some 480 pages, makes the following 11 proposals:

1. A particular collective action mechanism should be introduced, to be supplemented by further collective actions to be used in the wider civil context, for example in cases before the Competition Appeals Tribunal.
2. A wide range of representative parties should be permitted to bring a collective action, from individual representatives to designated or ad-hoc bodies.
3. Such claims should be capable of being brought on either an opt-in or opt-out basis (subject to certain restrictions on limitation periods for class members where an action is brought on an opt-out basis).
4. In order to bring a collective action, the claim would need to be certified by the court.
5. Appeals regarding certification (or lack thereof) should be treated in the same way as permission to appeal from case management decisions and all other appeals within the claim should be subject to normal appeal rules.
6. Specialist judges should be responsible for case-management of collective actions.
7. Courts should have the power to aggregate damages in cases brought on an opt-out basis, where appropriate.
8. Settlements agreed on behalf of a represented class of claimants should be subject to a “fairness hearing” before binding all those within that class.
9. There should be full costs shifting (i.e. the loser should continue to pay the winner’s costs as a disincentive to bring unmeritorious claims).
10. Any unallocated damages from an aggregate award would be distributed by a trustee, in accordance with general principles of trust law.
11. The new collective action should be introduced through primary legislation.

In conducting its research the CJC found that there was “overwhelming evidence” that meritorious claims that could be brought are not being pursued and it said that a new collective action could not only “promote better enforcement of citizens’ rights” but could also protect defendants from unmeritorious litigation.

The CJC also announced in its recommendations that that it will publish a report on the operation of contingency fees and costs shifting in its next paper. This comes at the same time as a plan by Sir Anthony Clarke, Master of the Rolls, to appoint a senior judge to undertake a review of the costs system. It is understood that the review by the senior judge will look at all aspects of the costs system in England and Wales, including conditional fee arrangements and other types of funding, proportionality of costs and the length of time spent on costs assessment processes.

The issue of collective redress and the proposals to introduce class or collective actions in Europe is one of the key topics being addressed by a 5-year research programme examining European civil justice systems at the renowned Centre for Socio-Legal Studies at the University of Oxford and sponsored by CMS.

To mark the beginning of this research programme CMS is planning a number of events for the Autumn to provide an opportunity for industry, academics and practitioners to come together to debate the issues.