United Kingdom

Types of class action mechanisms. General characteristics

The so-called Group Litigation Order (hereinafter: “GLO”) model has been in force for many years.

Moreover, on 1st October 2015 a new class action mechanism (collective proceedings) entered into force. Available in competition law cases, it was introduced by the virtue of the Consumer Rights Act of 2015 (hereinafter CRA). The court competent in group proceedings is the Competition Appeal Tribunal (hereinafter Tribunal).

The examination of the case as to its merits is preceded by the so-called certification stage in which the Tribunal investigates whether claims can be examined in class action proceedings. Issuing a collective proceedings order (hereinafter CPO), the Tribunal:

  1. authorises the representative of the group,
  2. defines the group and
  3. specifies the group composition model (opt-in or opt-out).

A class action conducted on the basis of CRA may be prosecuted as both opt-in or opt-out.

In the event of the opt-out model, each prospective group member becomes a group member automatically, even though it’s completely impossible to define their identity and even though they are not aware of the ongoing proceedings. Whereas parties to have filed a declaration on leaving the group and those whose permanent residence is located outside of the United Kingdom do not become group members in the opt-out model (unless they join the group on the opt-in basis ).

The institution of GLO was first developed in practice (as a matter of fact developed by judges themselves) and then introduced into the new Civil Procedure Rules (hereinafter CPR). The GLO procedure is currently provided for in part 19 section III CPR.

Essentially, the GLO constitutes a mechanism of managing proceedings in many similar cases (case management of claims) rather than a typical class action in the American take. Cases covered by a GLO remain individual cases, but they are jointly managed/prosecuted.

Within the GLO procedure, each claimant initiates their own action against the defendant, pursuing their individual claims. Next, the court examines (“manages”) all the claims brought forth (against the same defendant) (“manages” them) jointly within the same proceedings. Thus, no group representative exists in this model since all the parties pursuing similar claims against the defendant are claimants themselves.

As an instrument of the “case management of claims” the GLO is characterised by substantial judicial discretion in terms of the course of the proceedings, including evidentiary proceedings.

Conditions of admissibility and the procedure Class Action in Competition Law

Within class action proceedings both consumers and entrepreneurs’ who sustained damages as a result of the infringement of competition (both national and EU) law may seek to assert their claims.

The basic premise of admissibility is the requirement for all claims subject to the proceedings to raise the same, similar or related issues of fact or law.

Class action proceedings may be instigated by a group member or its representative. The representative is approved or appointed by the court in a CPO. A group representative may be both a person who is a member of the group as well as an entity who is not a member of the group, e.g. an organisation protecting consumers’ rights.

Prior to initiating a class action procedure, at the request of an interested party, the Tribunal investigates whether claims included in a statement of claims can be examined in group proceedings. To that end the Tribunal is required to determine, among others, individual group member claims (and their factual and legal basis), costs and benefits of examining the case in collective proceedings, the size and nature of the group, as well as whether it is possible to identify all members of the group based on objectivised criteria (e.g., determining composition of the group as “all persons who suffered (damages)” is not considered sufficiently accurate). Having analysed the above, the Tribunal renders a decision on examining the case in group proceedings by issuing a CPO. What is of significance, the Tribunal is not bound by its own decision on examining the case in collective proceedings and may, at any time, change the mode of proceedings in the case.

Since the CRA’s entry into force, the Tribunal has the title to examine both those cases where prior to bringing forth an action, a competent domestic or EU body in the frames of an applicable procedure stated a violation of competition law as well as cases where this did not happen. Therefore, it is nowadays admissible to lodge a statement of claims in group proceedings with the Tribunal in the two following cases:

  • follow-on cases – when an infringement of either national or EU competition law was already stated in a legal decision issued by a competent national or EU body; hence, the Tribunal remains bound by the final legal decision issued by a competent body in such cases and the only aim of the collective proceedings is to prove the damage suffered as a result of the infringement;
  • stand-alone cases – when an infringement of either national or EU competition law was not previously stated in a legal decision issued by a competent national or EU body, but it is autonomously examined by the Tribunal for the needs of a collective action; in this case the parties bringing forth an action have to prove not only that damages have been sustained, but, first and foremost, the very infringement (of the competition law).

Group Litigation

In the case of the issuance of a GLO, the court may issue a decision on the joint examination of several cases (GLO) where claims pursued by individual claimants pertain to common or related issues of fact or law. Therefore, individual claims do not have to be equal, the same, or homogeneous – it suffices if they are similar and they arose in an approximate factual and legal basis.

A GLO procedure may be applied to all categories of cases (if they meet the indicated criteria) and there are no any subjective limits in this extent. When issuing a GLO, the court:

  1. orders to enter the case in the group case register,
  2. determines the circumstances embraced by the GLO,
  3. indicates the court to lead (manage) the cases within the procedure.

The provisions in force do not determine the minimum number of similar cases substantiating the issuance of a GLO, however, the practice assumes that this number should be a minimum of five cases.

Each party to the proceedings may file a motion for the application of the GLO procedure. The court may also issue a decision in this subject at its own discretion (ex officio).

What is significant, the court may interrupt the GLO application mode in the course of the proceedings, as well as exclude some of the individual claims from the group.

A type of relief (legal protection) that can be obtained (court decision)

A judgement rendered by the court within collective proceedings is, in terms of principle, binding for all group members.

Under the British legal system, compensation does not contain a criminal sanction, as in the case of the American exemplary damages. Its function is exclusively compensatory.

Following group proceedings, where such proceedings yield results favourable for the claimant, the Tribunal awards an amount of money for the group as a whole (individual claims of respective group members are not mentioned in the judgement). The awarded amount is then received by the group representative or another appropriate person indicated by the court. In case of the opt-out model the awarded amounts which the interested parties (group members) do not claim within the prescribed time limit are donated to charities.

Next to judgements awarding pecuniary amounts, in the frames of class action proceedings the Tribunal may also issue injunctions.

In the case of bringing an individual action, the claimant may seek every type of legal protection available within civil procedure. where such an individual case is included within a GLO, the court decides on the most adequate (appropriate) form of legal protection from among those sought by the claimant to be adjudicated within the GLO.

Costs and manner of financing the proceedings

In the case of all class action mechanisms the court has to make all efforts to assure fairness and the proportionality of costs in examining each case (the overriding objective, https://www.catribunal.org.uk/sites/default/files/2017-11/The_Competition_Appeal_Tribunal_Rules
, page 7, point 4).

In reference to collective proceedings, the general rule in force in the United Kingdom that “the loser is to pay” is maintained in the CRA. The risk related to costs of group proceedings is borne by the group representative as a party to the proceedings and in the case of failure it is their duty to reimburse the defendant with the costs of the proceedings.

It is similar in the case of a GLO, where, as a rule, the party which initiates the proceedings bears the costs related therewith, whereby the loser reimburses the winner, in full or in part, for the costs incurred in the proceedings. The costs incurred by the parties whose claims were examined jointly within the GLO are determined by the court. Thus, the court may either divide the costs between groups of claimants or encumber respective parties to the litigation with these costs.

In some cases, financing of proceedings by third parties is allowed in the United Kingdom.

Practice and significance of the institution. Development trends

The institution of collective proceedings modelled after the American class action and providing for a possibility of conducting group proceedings also according to the opt-out model was introduced to the British legal system relatively recently, hence no established practice of its application exists as yet.

On 21st June 2016 the Tribunal informed about the first case of a claim including a motion for the issuance of a collective proceedings order. The action was brought against Pride Mobility Products Limited, a manufacturer and distributor of scooters. The action was brought forth in a follow-on mode in connection with the British Office of Fair Trading’s confirmation of infringements perpetrated by the defendant from February 2010 to February 2012. The secretary general of the National Pensioners Convention acted as the representative of the complainant group. He suggested composing the group under the opt-out model, i.e. so that it would include all those who within the indicated period purchased goods from the defendant. However, the statement of claims was eventually withdrawn in this case on 25th May 2017. The withdrawal of the statement of claims was a response to the Tribunal’s adjournment on 31st March 2017 of the issuance of an adjudication on collective proceedings order – the Tribunal then invoked (at the present stage of the proceedings) the non-fulfillment of the commonality premise, i.e. similarity of the factual and legal basis of the claims, because the fact of infringement of competition law by the individual dealers the group members purchased their goods from did not pertain to all such dealers (for details, see: http://www.catribunal.org.uk/files/1257_Dorothy_Gibson_Judgment_CPO_CAT_9_310317.pdf).

The second action covering the motion for the issuance of a collective proceedings order was brought forth against MasterCard, also under the opt-out model as well. In this case on 21st July 2017 the Tribunal refused to issue the collective proceedings order because of the inadequacy (in relation to the aims of the proceedings) of the methodology for calculating damage amounts sustained by individual group members and their total applied by the complainant party (http://www.catribunal.org.uk/files/2.1266_Walter_Hugh_Judgment_CAT_16_210717.pdf, pp. 23-24 & 51).