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Michael Dean, Feb 25, 2015
Class actions are not part of the U.K. legal landscape, at least not yet. In fact, commentary around the current passage of the Consumer Rights Bill through the U.K. Parliament has highlighted that class actions are viewed as something of a legal bogeyman. Concern has been expressed that the United Kingdom should avoid the introduction of a system of punitive damages combined with damages-based fee agreements and the wealthy/rapacious bar that would inevitably develop! Perish the thought!
On the other hand, effective consumer redress is on the legislative agenda at both the U.K. and European levels. It has been recognized that many meritorious claims are currently not being pursued and the Civil Justice Council (which oversees the modernization of the civil justice system) has recommended that the U.K. Government should facilitate new avenues for multi-party litigation. Consumers and small- and medium-sized businesses (“SMEs”) are least likely to have the resources required to bring an individual action and therefore may find the possibility of participating a scheme for collective redress most appealing. Therefore, the United Kingdom is taking a sectional rather than across-the-board approach to introducing the class or collective action, as and where need is demonstrated.
Private damages for breach of competition law will be in the vanguard introducing a wider mass consumer and business redress in the United Kingdom, although mass redress for consumers in the area of financial services is likely to be available first. The Consumer Rights Bill will introduce new forms of collective action in the United Kingdom where, in certain judicially supervised cases, claimants will have to opt-out, failing which their claim is included with the collective or class.
If class actions are to become reality in the United Kingdom, then funding for the action will be needed, whether from claimants, insurers, litigation funders, risk sharing with lawyers, or a mixture of all of these. Without funding or insurance, the liability to costs and defendants’ costs may be prohibitive.
Attempts to bring actions collectively under existing procedures have hit stumbling blocks so far. This article will consider the reasons why success has been elusive, and discuss the obstacles that might lie in the way of the implementation of an effective system of collective redress in the United Kingdom—in particular in the competition field—and how these might be overcome.
