Class actions in Scotland

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There are currently two types of “opt-in” class action procedure operating in the Scottish courts: the old informal procedure and a new “Group Procedure” that was introduced in 2020. 

Until 31 July 2020 the only mechanism for dealing with large group claims was an informal one that generally involved a designated judge case-managing the claims of multiple claimants that had the same or similar causes of action and may or may not have been against the same defendant. The standard rules of procedure would generally apply to such groups of cases, except in so far as specific directions were made by the court to provide a bespoke procedure for the group. This informal case-management approach was, for example, adopted in 2015 in relation to the Scottish vaginal mesh litigations, and continues in use for extant cases. 

The new Group Procedure that was introduced in 2020 is a formal opt-in class action procedure with its own detailed body of rules. Note: The terms “Group Procedure” and “Group Proceedings” are used in Scotland but we generally use the more widely-recognised term “class actions” in this guide. 

The enabling legislation that made provision for the introduction of the Group Procedure is the Civil Litigation (Expenses and Group Proceedings) (Scotland) Act 2018 (“the 2018 Act”). The detailed court rules required to give effect to this were drafted in 2020 and the new procedure was launched on 31 July 2020. 1  

In common with class action procedures in other jurisdictions, claimants must first obtain the court's leave to bring a class action: this will involve two applications: (1) an application to authorise a proposed representative as suitable (by reference to prescribed criteria); and (2) an application for permission to raise the proceedings, having regard to matters such as the extent to which the issues raised by the claimant group are the same or sufficiently similar, and that all reasonable efforts have been made to notify all potential members of the claimant group about the proceedings. The representative party is responsible for maintaining a “Group Register”, and for promptly providing the court and defendant(s) with an updated Group Register should there be changes to the claimant group. The court’s decisions on common issues are binding on the whole group.

So far as there continue to be some group claims proceeding by the old informal mechanism, it remains relevant. However, it is expected that in future class actions are likely to utilise the new Group Procedure.

The Scottish Courts 

Although the 2018 Act makes provision for both opt-in and opt-out class actions to be introduced, at this stage, a framework of rules has only been formulated for opt-in proceedings. The Scottish Civil Justice Council (“SCJC”), the body responsible for drafting new court rules, has, however, stated that it will consider introducing an opt-out regime at a later date. 

The Competition Appeal Tribunal

While Scotland is part of the United Kingdom, it has its own separate legal system and its own criminal and civil courts. However, certain specialist tribunals in the UK enjoy a UK-wide jurisdiction. These include the Competition Appeal Tribunal (“CAT”) which has an opt-out class action mechanism.

In 2015 the Government introduced 2  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 CAT. The CPO 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 viewed by many (including the CAT itself 3 ) as 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.

Group Procedure

Formal opt-in proceedings are brought in the name of the representative party, on behalf of all claimants in the group. The 2018 Act specifically states that “a person may be a representative party in group proceedings whether or not the person is a member of the group on whose behalf the proceedings are brought”, 4  suggesting the Scottish Parliament deliberately sought to create a broad pool of potential representative parties. Ultimately, it is for the court to appoint a person as the group’s representative party having considered their suitability as against the prescribed criteria. 5  

Group Procedure

Given how recently Scotland’s opt-in class action mechanism was introduced, there are currently no pending changes. However, the SCJC has expressed an intention to actively monitor progress with a view to ensuring these are fit for purpose. Since the rules were brought into force, the Court of Session (which enjoys exclusive jurisdiction over class actions) has issued a Practice Note 6  with additional procedural guidelines and it may be that further informal guidance will be issued as practical lessons are learned.  

As noted above, the SCJC will be giving further consideration to the introduction of opt-out proceedings and we anticipate that if those further changes are brought in, that would have a substantial impact on the likely number of claims.  

CAT proceedings

The CPO regime is still in its infancy and at the time of publication there have been less than 20 applications for CPOs to date. Four of these applications have been granted, and 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.

Group Procedure

There are no restrictions on the type of civil claim which may proceed as a class action under the opt-in procedure arising from the 2018 Act. 

CAT proceedings

The CPO procedure available in the CAT is only available in relation to competition claims (breach of Articles 101 or 102 of the Treaty on the Functioning of the European Union or UK domestic law equivalents under Chapter I and Chapter II of the Competition Act 1998). ). 

Group Procedure

There are no restrictions on the types of relief available to the claimants in opt-in class actions as distinct from claimants in unitary claims, and so both damages and injunctive remedies may be sought.

CAT proceedings

The CAT can award damages for claims brought under Scots law.

Damages in Scotland are generally calculated on a compensatory basis. 

Punitive or exemplary damages are not available in Scotland.

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

Group Procedure

The representative party must consult with the group members on the terms of any proposed settlement before any damages in connection with the proceedings may be distributed. 7   

CAT proceedings

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.  

Group Procedure

There are no special rules on jurisdiction applying to the Scottish class action mechanism, and accordingly, provided the claim would be subject to the jurisdiction of the Scottish courts if raised as a unitary action, it may form part of a class action.

CAT proceedings

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.

Group Procedure

The Scottish class actions procedure has a two-stage certification process. The first stage is an application to have the proposed representative authorised as suitable and the second is an application for permission to raise the class action. 

With regard to the first application, the court requires to be satisfied that the proposed representative is “suitable” and in doing so will give consideration to 8 :   

1. the special abilities and relevant expertise of the proposed representative;
2. the proposed representative’s own interest in the proceedings;
3. whether there would be any potential benefit to the proposed representative, financial or otherwise;
4. whether it has been shown that the proposed representative is independent from the defendant(s);
5. whether it has been demonstrated that the proposed representative would act fairly and adequately in the interests of the group members as a whole, and that their own interests do not conflict with those of the group; and
6. whether the proposed representative has sufficient competence to litigate the claims properly. This will include having financial resources to meet any expenses awards, albeit the full details of funding arrangements do not require to be disclosed.

With regard to the second application, the court may refuse permission where the representative has failed to demonstrate that 9 :  

1. all of the claims made in the proceedings raise issues (whether of fact or law) which are the same as, or similar or related to, each other;
2. the representative party has made all reasonable efforts to identify and notify all potential members of the group about the proceedings;
3. there is a prima facie case;
4. it is a more efficient administration of justice for the claims to be brought as group proceedings rather than by separate individual proceedings; and/or
5. the proposed proceedings have real prospects of success. 

CAT proceedings

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” 10  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.” 11 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. 12 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 (f) availability of means of alternative dispute resolution. 13 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.

Group Procedure

The opt-in procedure is only available in the Court of Session in Edinburgh. It is not available in the local sheriff courts. 

CAT proceedings

A CPO application can only be filed in the CAT.

There is no general obligation of disclosure in Scotland such as there is in other jurisdictions (for example England and Wales), and this position is no different for Scotland’s opt-in class action procedure.

Group Procedure

There are no special rules for appeals in relation to the opt-in class action procedure. 

CAT proceedings

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.” 14 Other decisions of the CAT can only be challenged by judicial review.  On the 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. 15    

Given how recently the formal Scottish class action mechanism was introduced, this has not yet been tested by the courts. However, it is highly unlikely that an arbitration clause with a class action waiver would be upheld by the Scottish courts.

Contingency fees (including hybrid damages-based agreements) are permitted in Scotland, 16  and this applies equally to opt-in class actions. 

Generally, Scotland operates a ‘loser pays’ system in relation to costs, whether at proof (trial) or any other procedural hearing. In practical terms, this usually results in the winning party being entitled to recover around 50-60% of their legal costs from the losing party. However, the court has significant discretion in relation to awarding legal costs, and there is no cap on the amount of an adverse costs award. New rules were introduced on 30 June 2021 permitting qualified one-way cost shifting (“QOCS”) for personal injury and death claims and appeals. 17 The effect of these rules is that the court will not (subject to a number of exceptions) make an award of expenses (costs) against an unsuccessful pursuer (claimant) in such claims, so long as the case has been conducted in “an appropriate manner”. 18

Group Procedure

The new rules are somewhat unclear. For the opt-in class action procedure, technically the claimants are all parties to the claim and so are, in principle, on risk for adverse costs. However, as many class actions will be funded by third party funders, the reality is that many claimants will be insured against direct adverse costs risk.

CAT proceedings

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 who made the application.

Whereas other jurisdictions have historically prohibited or restricted the use of third-party litigation funding, no such prohibitions or restrictions apply in Scotland. The use of third-party litigation funding has steadily evolved in Scotland over the last decade or so, and it is expected that class actions will often be funded by third party funders. New rules arising from the 2018 Act are expected to come into force shortly, giving further clarity on when third party funding arrangements may be kept confidential and when they must be disclosed. 19  

See the Overview of the Representative Actions Directive >>

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