Class Actions

Class Actions

Class actions and group litigation continue to gain traction across the world. The US continues to lead the way, followed by Australia and Israel with waves of litigation aimed at the protection of shareholders and consumers.  The prevalence of class actions in these jurisdictions may be explained by their adoption of “opt-out” models, where claimants are automatically included in the action unless they choose to opt-out.

Although the UK has not adopted a wholescale “opt-out” model, there has been an exponential growth in collective actions in recent years. This has been fuelled by the rapid expansion of the litigation funding market, heightened awareness of access to justice and consumer protectionism, and successful media campaigns by claimant law firms which lure “wronged consumers” into litigation with the promise of lucrative pay-outs and creative fee arrangements.

Corporate scandals following data breaches or the exposure of poor working conditions, human rights abuses and environmental damage are fertile areas for collective actions. The ever-increasing dominance of “ESG” in the corporate world and the public conscience will ensure this trend continues.  Recent cases have highlighted a growing willingness to hold UK-domiciled parent companies liable for the activities of their overseas subsidiaries, particularly where the corporate structure supports the imposition of a duty of care and there are genuine concerns that those harmed will not obtain justice in their own courts.

The “opt-out” collective redress procedure introduced by the Consumer Rights Act 2015, has paved the way for claimants to bring “follow on” class actions for damages for infringements of competition law.  A recent landmark Supreme Court decision, which lowered the certification threshold to enable a class action to advance, is expected to encourage more antitrust class actions.

The EU is implementing its first collective redress procedure for consumers. The "Representative actions for the protection of the collective interests of consumers" Directive has wide application in EU consumer law covering all infringements of EU law by traders that harm, or may harm, the collective interests of a group of consumers.  It will cover a broad spectrum including data protection, product liability, financial services, travel and tourism, energy, telecommunication, environment, health and travel; with the aim of creating a minimum level of comprehensive protection for EU consumers.

Our Interactive Guide to Class Actions Issues for the Insurance Industry

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