Class actions in England and Wales

  1.  Do you have a specific procedure or procedures for bringing “opt-in” class actions?  If so, please outline such procedure(s) and their key features.
  2. Do you have a specific procedure or procedures for bringing “opt-out” class actions?  If so, please outline such procedure(s) and their key features.
  3. Are there specific rules on standing for bringing claims under these procedures (e.g., that claims can only be brought by consumer associations)?  If so, please summarise those rules.
  4. How frequently are class actions brought in your jurisdiction? Are there any pending changes to your class action rules that are likely to increase the number of claims filed?
  5. Are the procedures for class actions restricted only to certain causes of action/types of claim, e.g., competition claims?  If so, please describe these restrictions.
  6. What types of relief are available, i.e., damages and/or injunctive relief? 
  7. On what basis are damages calculated i.e., compensatory and/or some other basis?
  8. Are punitive or exemplary damages recoverable?
  9. Will domestic law need to be changed to comply with the Representative Action Directive?
  10. Are there special rules for settlement of class actions, e.g., requirement for court approval?
  11. Beyond the existing rules for taking jurisdiction in unitary claims, are there any additional rules on jurisdiction for your class action procedures?  Are there any territorial limitations to who may be members of the class?
  12.  Please describe the “certification” requirements for each of your jurisdiction’s class action procedures, e.g., how similar must the claims be?  Are there any other criteria to be met for the court to approve use of the procedure?
  13. Do you have specialist courts for these procedures?
  14. Are there any special rules for discovery/disclosure for class action procedures that are different to the rules for unitary actions?
  15. Are there any special rules for appeals in class action procedures that are different to the rules for unitary actions?
  16. Can arbitration clauses lawfully contain class action waivers?
  17. Are contingency fee agreements permissible?
  18. What are the rules on cost shifting, i.e., does the losing party ordinarily have to pay the winning party’s costs?  Are adverse costs awards capped?  If so, at what level(s)?
  19. Is litigation funding of class actions permissible?  If so, how prevalent is litigation funding?

1. Do you have a specific procedure or procedures for bringing “opt-in” class actions?  If so, please outline such procedure(s) and their key features.

The English courts have two types of informal mechanisms to bring group claims on an opt-in basis.  The first of these mechanisms is where multiple claimants are named on the same claim form. 1 As permitted by Civil Procedure Rules (CPR), Rule 19.1. This technique can be used where the claims “can be conveniently disposed of in the same proceedings.” 2 CPR, Rule 7.3. The second mechanism is where claims are issued separately, but where the court then orders that they be consolidated 3 CPR, Rule 3.1(g). or tried together. 4 CPR, Rule 3.1(h). An order to consolidate or try claims together can be made either following an application from a clamant or claimants, from a defendant or at the court’s volition. The court had broad discretion on this issue and will be influenced by arguments on efficiency and cost savings in case management.

A more formalised approach for bringing opt-in group proceedings is the Group Litigation Order (“GLO”) mechanism, which was introduced in 1999.  On this approach, group members each issue their own claim and the court may grant a GLO if the claims “give rise to common or related issues of fact or law”. 5 CPR, Rule 19.10 and 19.11. The court will then set up a Group Register that lists the claims that are subject to the GLO.  Judgments and rulings concerning common issues (GLO issues) are binding on all claims that are subject to the GLO.

2. Do you have a specific procedure or procedures for bringing “opt-out” class actions?  If so, please outline such procedure(s) and their key features.

There are two opt-out mechanisms.

In 2015 the Government introduced 6 Via the Consumer Rights Act 2015, which amended the Competition Act 1998 (the “CA 1998”).  a UK-wide class action mechanism specifically for competition disputes, known as the Collective Proceedings Order regime (“CPO”). These proceedings can only be brought in the specialist competition court, the Competition Appeals Tribunal (the “CAT”). The new regime permits a representative to bring claims on behalf of a group on an opt-in or an opt-out basis in appropriate circumstances. This is the first time the UK introduced a statutory mechanism for opt-out claims, which was a radical step.

The CAT will hold a certification hearing at an early stage of proceedings to decide whether or not the claim is suitable for the procedure and whether to grant a CPO, and whether the claim should be permitted to proceed on an opt-in or on an opt-out basis.  If the latter, judgments and settlements will be binding on all class members save those who choose to opt-out.

The other opt-out mechanism is the Representative Action procedure. This mechanism dates back to the 1870s.  It requires that the representative and class members have the “same interest” in the claim. The “same interest” threshold has historically been tightly policed by the English courts with many efforts to use the device rejected.  In the high-profile case of Lloyd v Google the Court of Appeal approved the use of the representative action device in a claim brought on behalf of an estimated 4.4 million iPhone users.  That ruling is on appeal to the UK Supreme Court and will be heard in late April 2021.  

3. Are there specific rules on standing for bringing claims under these procedures (e.g., that claims can only be brought by consumer associations)?  If so, please summarise those rules.

Under the opt-in mechanisms (both the informal mechanisms and GLOs) the claimants issue their own claims and so there is no representative, albeit the court may select test cases to try and encourage efficiencies amongst the group.

Neither the GLO nor the Representative Action mechanism specifically restrict the standing of the proposed representative to a particular category (e.g., consumer associations), although the court will examine the proposed representative at the certification stage (see answer to question 12 below for more detail).  

4. How frequently are class actions brought in your jurisdiction? Are there any pending changes to your class action rules that are likely to increase the number of claims filed?

There are no published data on the number of group claims filed using informal opt-in mechanisms.  A list of GLOs made is maintained by the HM Courts & Tribunal Service at https://www.gov.uk/guidance/group-litigation-orders. This records that around 110 GLOs have been granted since 1999, although it is understood that the real number of GLOs is higher as some GLOs have not been included on this list. 

The CPO regime is still in its infancy and there have only been nine applications for CPOs to date.  None of these applications have been granted, although there have been a number of preliminary rulings that have brought clarity to the criteria for approving the representative and also the adequacy of the funding agreements that underpin these claims. In December 2020, the UK Supreme Court handed down judgment in Merricks v Mastercard, and approved a relatively permissive approach to the certification stage. This is likely to encourage more claims.

Attempts to being opt-out class action using the representative action device have been rare, although a number of claims were filed in 2020 including against YouTube, Salesforce and Oracle in reliance on the Court of Appeal’s approach in Lloyd v Google. The ongoing viability of those claims is likely to turn on the outcome of the Lloyd v Google appeal to the Supreme Court.

5. Are the procedures for class actions restricted only to certain causes of action/types of claim, e.g., competition claims?  If so, please describe these restrictions.

The only class action procedure with any restrictions on the cause of action applicable is the CPO regime, which is only applicable for competition claims (breach of Articles 101 or 102 of the Treaty on the Functioning of the European Union or UK domestic law equivalents). 

6. What types of relief are available, i.e., damages and/or injunctive relief? 

Damages and injunctions are available for claims brought under the opt-in mechanisms and for representative actions. For CPOs, damages are available and, for claims brought in England and Wales as opposed to Scotland, injunctive relief is also available.  

7. On what basis are damages calculated i.e., compensatory and/or some other basis?

Damages are generally calculated on a compensatory basis in English proceedings. That said, alternate approaches for assessing damages will be used where appropriate, such as  restitutionary damages or an account of profits.  

8. Are punitive or exemplary damages recoverable?

In principle, exemplary damages are available in English law where  there: (1) has been oppressive, arbitrary of unconstitutional conduct by “servants of the government”; (2) conduct has been calculated to make a profit which might well exceed the compensation payable to the claimant; and (3) where provided by statute. 7 Rookes v Barnard [1964] 1 AC 1129.  In practise, awards of exemplary damages are rare.  

There is no prohibition on awarding exemplary damages for class actions brought under any of the opt-in mechanisms or for Representative Actions. Exemplary damages are not awarded for claims brought under the CPO regime.

9. Will domestic law need to be changed to comply with the Representative Action Directive?

This question does not apply to the UK, which will not be required to implement the directive.

10. Are there special rules for settlement of class actions, e.g., requirement for court approval?

There are no special rules for the settlement of claims brought under the opt-in mechanisms or for Representative Actions.

For opt-out claims brought under the CPO regime, settlements must be approved by the CAT which shall only grant its approval “if [it] is satisfied that [the settlement terms] are just and reasonable”. If approved, the terms will be binding on the defendants and also on members of the class other than those that chose to opt-out by the deadline set by the CAT.  

11. Beyond the existing rules for taking jurisdiction in unitary claims, are there any additional rules on jurisdiction for your class action procedures?  Are there any territorial limitations to who may be members of the class?

There are no specific rules on jurisdiction that apply to the English class action mechanisms.

Provided that the English court will take jurisdiction, there are no territorial restrictions to who may be group members of claims brought under the opt-in mechanisms.

The territorial scope for opt-out claims brought under the CPO regime is restricted to persons domiciled in the United Kingdom, but persons domiciled elsewhere may opt-in to such a claim.

12. Please describe the “certification” requirements for each of your jurisdiction’s class action procedures, e.g., how similar must the claims be?  Are there any other criteria to be met for the court to approve use of the procedure?

Opt-in mechanisms

The opt-in mechanisms do not have a formal certification stage, but the court will consider whether those procedures are suitable for the issued claims as follows.

Multiple claims may be initiated on the same claim form provided that the claims “can be conveniently disposed of in the same proceedings.” 8 CPR, Rule 7.3. If the court considers that this threshold is not met then it may order that some of those claims be tried or case managed separately.

The court may order that claims be consolidated or case managed together. There is no formal test for deciding where claims should be case managed in this way, and the court will be significantly influenced by potential costs savings and efficiencies which, in turn, will be influenced the degree of common legal or factual issues between claims.

The court will only grant a GLO if claims “give rise to common or related issues of fact or law”. 9 CPR, Rule 19.10 and 19.11. Again, in deciding whether or not to grant a GLO, the court will consider whether this would be beneficial to efficient management of the claims.  It will consider whether a GLO would assist in determining “an issue or issues which is or are common to all the claims or at least groups of claims within the overall group.” 10 Civil Procedure, Volume 1, 2020, para 19.10.1.   

Opt-out mechanisms

The CAT will hold a hearing to consider whether or not to grant a CPO (i.e., to certify the class).  At the certification hearing the CAT will decide whether: (i) “it is just and reasonable 11 CA 1998, Section 47B(8)(b). for the proposed representative to act on behalf of the class (the “Eligibility Criterion”); and (ii) the claims “raise the same, similar or related issues of fact or law and are suitable [(the “Suitability Criterion”)] to be brought in collective proceedings. 12 CA 1998, Section 47B(6). The CAT will also consider whether the CPO should be granted on an opt-in or on an opt-out basis. In assessing the Eligibility Criterion, the CAT will consider factors including whether the proposed representative: (a) would fairly and adequately act in the interests of class members; (b) has any material conflicts with the class members in relation to the common issues; (c) which would be the most suitable representative, if more than one representative is applying; (d) would be able to pay the defendant’s adverse costs if ordered; and (e) if interim relief is sought, whether the representative would be able to satisfy an undertaking for damages as required by the CAT. 13 Competition Appeals Tribunal Rules 2015 (the “CAT Rules”), Rule 78(2). In assessing the Suitability Criterion, the CAT will consider “all matters it thinks fit” including: (a) whether collective proceedings are an appropriate means for the fair and efficient resolution of the common issues; (b) the costs and benefits of continuing the collective proceedings; (c) whether any separate proceedings making claims of the same or a similar nature have already been commenced by members of the class; (d) the size and nature of the class; (e) whether it is possible to determine in respect of any person whether that person is or is not a member of the class; whether the claims are suitable for an aggregate award of damages; and (g) availability of means of alternative dispute resolution. 14 CAT Rules, Rule 79(2). The Supreme Court in Merricks v Mastercard confirmed that the “Suitability Criterion” requires a relative assessment, to consider whether the claims were more suitable for bringing collectively or for bringing the claims individually.

For the Representative Action procedure, the court will permit claims to continue if the representative and the members of the class have the “same interest” in the claim. 15  CPR, Rule 19.6(1).

13. Do you have specialist courts for these procedures?

The opt-in mechanisms, including GLOs, can be filed in both the County Court and the High Court.  A CPO application may only be filed in the CAT. 

14. Are there any special rules for discovery/disclosure for class action procedures that are different to the rules for unitary actions?

There are no special rules that apply to class actions that broaden or narrow the scope of disclosure. Under the opt-out mechanisms, the court or tribunal would need to decide whether members of the class (who are not parties to the claim), should be required to give disclosure.  Both the High Court and the CAT have the power to make this order. 

15. Are there any special rules for appeals in class action procedures that are different to the rules for unitary actions?

There are no special rules on appeals for any of the opt-in mechanisms or for Representative Actions.

Under the CPO regime, appeals are only available “on a point of law arising from a decision of the Tribunal in collective proceedings – (a) as to the award of damages or other sum (other than a decision on costs or expenses), or (b) as to the grant of an injunction. 16 CA 1998, Section 49(1A). Other decisions of the CAT can only be challenged by judicial review. On this face of it, this significantly narrows the scope for appeals but the High Court confirmed that a ruling by the CAT to refuse a CPO in an application that sought aggregate damages was a decision relating to the “award of damages” over which the Court of Appeal had jurisdiction to hear an appeal. 17 Walter Hughes Merricks CBE v MasterCard Incorporated [2018] EWCA Civ 2527.    

16. Can arbitration clauses lawfully contain class action waivers?

Although not formally tested, it is highly unlikely that an arbitration clause with a class action waiver would be upheld by an English court.

17. Are contingency fee agreements permissible?

Contingency fee agreements are permissible for all group litigation mechanisms, save for opt-out CPOs where the law firm for the claimant representative is not permitted to operate on a contingency fee basis.

18. What are the rules on cost shifting, i.e., does the losing party ordinarily have to pay the winning party’s costs?  Are adverse costs awards capped?  If so, at what level(s)?

England operates a cost shifting mechanisms whereby the losing party (either at trial or for substantive interim hearings) is ordinarily ordered to pay the majority (60%-80%) of the winning party’s legal fees. The courts have a high degree of discretion on awarding costs and there is no cap on the amount of adverse costs that can be awarded.

For opt-in mechanisms, the claimants are all parties to the claim and so bear direct adverse costs risk.  For GLOs, the claimants are usually severally liable for “common costs”. Common costs are the costs of the GLO issues, the administration costs of the lead solicitors and costs of claims that progress as test cases. Claimants are also liable for the individual costs incurred though progression of their own claim.

For the CPO regime, the claimant adverse costs risk is primarily borne by the representative. However, where issues are resolved for a sub-class costs can be awarded for or against the representative for that sub-class.  Also, where individual issues are resolved costs can be awarded for or against the relevant individual(s). Finally, where class members make an application to court costs can be awarded against those persons.

19. Is litigation funding of class actions permissible?  If so, how prevalent is litigation funding?

Litigation funding is available for class action mechanisms in England. Most large group claims filed in England are supported by a litigation funder and the market is well developed.

See the Overview of the Representative Actions Directive >>
Kenny Henderson
Partner
London
Neal Gibson
Neal Gibson
Partner
London