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England and Wales

Author: Vincent Smith and Mahdis Moeiri-Farsi

III. General Collective Redress Mechanisms

1. Scope

Injunctive or Compensatory

In common with other common law countries, the more developed general collective redress mechanisms are used almost exclusively to claim compensation on behalf of a dispersed group of victims. The general mechanisms described under paras. (a) to (c) of this section are used to claim compensation (damages).

However, some non-compensatory mechanisms have been used to obtain redress -in particular for consumers:

- a declaratory judgment may be applied for in order to obtaina definitive ruling that a trading practice is unlawful. For example in Office of Fair Trading v Abbey National plc ([2009] UKSC 6) the main UK

- designated public authorities may also apply for injunctions to protect the interests of consumers - (see section III B)

- a competition collective proceedings order for an injunction may be applied for under s 47A Competition Act 1998 (see III A below).

The generally available collective compensatory procedures are:

a. Group litigation orders

Group litigation orders (GLO) are made under CPR 19.11. A GLO may be made where there are a 'number' of claims 'giving rise to common or related' issues of law or fact. It follows that:

• No claimant or body has the right to commence a GLO proceeding: whether the order should be granted will be in the court's discretion;

• The minimum number of parties to a GLO appears to be two, although in practice a greater number is likely to be needed to justify the use of the procedure; and

• The degree of similarity of the issues to be tried under the GLO is fairly flexible - 'related' issues may be sufficient.

b. Representative actions

A representative action is a claim brought by one or more claimants, on their own behalf and on behalf of others under CPR 19.6. A representative claim may be begun in cases where more than one person has the same interest in the claim as the claimant. This means that a representative has the right to bring a collective claim but the court may order that the representative element be discontinued or that another representative be appointed; and the representative must have the same interest in the claim as the claimant, so;

- a representative has the right to bring a collective claim but the court may order that the representative element be discontinued or that another representative be appointed;

- the representative must have the same interest in the claim as each person represented: this has been restrictively interpreted-it is not enough that the claims be similar or related.

c. Test cases

Apart from the use of the test case mechanism in GLOs (see below), the English CPR does not make express provisions for the bringing of test cases on a general basis. However, test cases have been brought by agreement between claimants and defendants (as in the Office of Fair Trading's case on overdraft charges against major clearing banks) and/or by way of an application for a declaration by a typical claimant or a representative or government body.

2. Procedural Framework

a. Competent Court

A GLO application may be made in any court able to hear the underlying civil claims. However, a group litigation order may not be made unless the senior judge in that court (the Head of Civil Justice, Chancellor or President) consents.

b. Standing

There are no special rules on standing to bring a compensatory collective redress action under generalcollective redress mechanisms in England —normal legal capacity is sufficient. A declaration will be given only where it is likely to have a practical effect for the future conduct of the (applicant) parties or of other concerned persons (Roll Royce plc v Unite [2009] EWCA Civ 387 —admitting an application by a trade union on behalf of its members on the scope of their employment terms).

c. Availability of Cross Border collective redress

There are no rules preventing claimants residing outside the UK from joining a GLO. However, for the most common types of GLO claims (mass injury, for example) foreign law may apply to non-UK residents' claims, which could make then unsuitable for inclusion in the GLO action. For example, in Allen v Dupuy International, ([2014] EWHC 753 and [2015] EWHC 926 (QB))claims (pre-dating the Rome II Regulation) advanced in a GLO by New Zealand claimants were found to be time barred under applicable New Zealand limitation rules.

d. Opt In/ Opt Out

Principal availability of both options

The general compensatory collective redress mechanisms in the UK are opt-in only, with the exception of representative actions. Declarations and representative judgments bind all concerned persons, with no possibility of opt-out.

Conditions for either type (prescribed by law or discretion of the judge)

A GLO may only be ordered by a judge or senior master. Provided the claims included in the GLO give rise to common or related issues of fact or law, the discretion to make the order -on case management grounds -is a wide one (see below)

e. Main procedural rules

Admissibility and certification criteria

- Group litigation orders (GLOs)

The procedure for group litigation orders is contained in CPR 19.10-19.15 and Practice Direction 19B. Two or more claims will already have been commenced using the normal rules for commencing actions contained in the CPR(rule 7). A GLO may be applied for at any time, either before or after the relevant claims have been issued and the application may be made by any claimant or defendant. The court may also make a GLO of its own motion in certain circumstances.

- Representative actions

There are no special rules for bringing a representative action and any claimant may commence an action on his own behalf and on behalf of all others having the same interest in the claim. It is, however, open to the court, either on its own motion or on the application of any person with an interest, to direct either that the claim should not be continued as a representative claim at all, or that the representative should be replaced with an alternative.

In practice, the court has interpreted the requirement that the interest be 'the same' strictly. One of the reasons for this is that an order or judgment in a representative action is binding on all persons represented, even if they were not parties to the proceedings and even if they were unaware that the proceedings were underway.

- Test cases

A managing court in a group litigation case may order that one or more of the claims to proceed as test cases. There is no definition of test case and nor are there any criteria given in the rule for how a test case should be selected.

Single or Multi-stage

GLO cases proceed on a multi-stage basis, with the GLO being made and then the common issues being decided (if not first settled). Any individual issues will also need to be decided in a potential third phase of the relevant claims. Representative actions and declarations are single stage procedures.

Case-Management and deadlines

- Group litigation orders

The GLO must include:

• a specification of the GLO issues which will be managed together as a group under the order;

• directions on establishing a group register of the parties to be bound by the findings made under the GLO;

• nomination of a management court.

The GLO may also include an order that all existing claims, which give rise to GLO common issues, should be transferred to the management court be managed under the GLO (and therefore be entered on the GLO register).

Before a claim can be entered on the group register it must be issued(commenced) as an individual claim.

The effect of entry on the group register is that judgment given in respect of any of the group issues will be binding (res iudicata) for that issue for all claims on the register at the time the judgment is given. It is however possible for a claim which raises both group issues (e.g. as to liability) and individual issues (e.g. as to quantification) to be entered on the group register for the group issues only and for the individual issues to be tried separately (usually after the finding on the group issues).

The court may provide for one or more of the claims entered on the group register to be used as test claims which are treated as typical of the claims relating to each GLO issue.

The GLO issues will all be tried in the management court designated in the order (although individual issues may be tried elsewhere) and the court may designate the solicitor to one of the claimants to manage the group in relation to the common issues.

- Representative actions and declarations

No specific case management rules are provided for either of these types of action: the courts' general case management powers are used.

Expediency (particularly in injunctive cases)

The general CPR (rule 25) allows the court to make an interim injunctive or declaratory order at any time -even before a claim has been commenced -in cases of urgency or where it would be in the interests of justice to do so. This rule applies to collective proceedings as well as to bi-lateral proceedings. The application for interim relief may be made without giving notice to the other party if this can be justified.

Evidence/discovery rules

Disclosure of documents in England and Wales is provided for in CPR 31. The rule requires 'automatic' disclosure by list of all relevant documents which may either support or undermine the disclosing party's case. The disclosing party is required to carry out a reasonable search for all documents which are or have been under his control, list them (if appropriate by category) and —if they are not available for inspection —state why. Evidence from individuals is given by way of a sworn witness statement setting out what the individual would say if he were called to give evidence in person. Disputed issues in witness statements are resolved by examination at trial.

The position is different in Scotland where disclosure of documents is not 'automatic' but must be requested by the party seeking disclosure.

Court directed settlement option during procedure

There is no rule giving the courts in England the power to require parties to engage in ADR during the collective (or other) proceedings -unlessthe dispute falls within a valid arbitration clause. However, the court is entitled to 'encourage' parties to use ADR (CPR rule 1.4(2)(e)) and may impose sanctions on them in costs if they unreasonably fail to do so.

3.Available Remedies

a. Damages

Damages are the most frequently claimed remedy under GLO proceedings and are a common remedy for many other collective redress claims (e.g. representative actions). The claimant must show both that the defendant caused the group loss and the amount of that loss. Exemplary (punitive) damages in addition to compensatory damages are a possibility, but an award of exemplary damages is very rare.

Under the GLO procedure, it is open to individual claimants in the group to assert additional claims outside the group issues on the basis of facts which are specific to them: additional claims need not be heard by the GLO management court. Claimants therefore have the ability to establish the liability of the defendant using the GLO procedure and to claim additional damages in a related but separate action if so desired.

In practice a similar outcome applies to test cases for damages -a claimant may or may not choose to bring his own separate claim.

In a representative action by contrast, those represented, who have the 'same' interest in the claim as the representative claimant, are bound fully by the judgment. However as they are not parties the action the judgment may only be enforced against them with the permission of the court. Enforcement of an award of damages against the defendant will be carried out by the representative claimant, not the represented non-parties.

b. Injunctions

Injunctive relief on behalf of a group or a general interest are well established in certain areas of collective redress in England -especially consumer law (see below) where designated bodies have standing to make/apply for 'stop now' orders under specific legislation.

Since injunctions prohibit specific actions by the respondent they will normally also provide a remedy for other potential applicants in a similar situation to the main applicant -akin to a 'test' case approach. An order of a mandatory (positive) injunction -requiring the respondent to do something -is rare.

c. Declarations

The High Court may make a declaration of the law as it applies in a particular novel factual and legal situation -for example, whether 'administrative' overdraft charges by clearing banks operate as an unlawful penalty. A declaration will be binding in relation to those issues not only on the High Court itself but also on all other first instance courts and tribunals.

As with injunctions, a declaration can affect the legal position of non-parties, although that effect will be confined to those in a sufficiently similar factual position to the original defendant. Declarations are not available in relation to purely hypothetical issues —there must be a real dispute to be resolved —and nor are they available if an award of damages would be the appropriate remedy.

d. Allocation of damages between claimants for compensatory claims

There are no specific rules on the allocation of damages under a GLO to claims registered on the group register. Where test claim(s) are nominated, then group cases falling within the scope of the test cases are likely to receive an equivalent amount of damages, although even these claimants may have additional heads of claim which are outside the scope of the GLO common issues altogether and where damages will have to be assessed separately.

Similarly there are no specific provisions in the rules on representative actions regarding the allocation of damages awarded, but the requirement that each represented party has an identical interest in the claim strongly suggests that any damages awarded must be divided equally between the represented parties.

There are no express powers in the CPR permitting the court to estimate or to aggregate damages in GLOs or in a representative claim.

e. Availability of punitive or extra-compensatory damages and their conditions

Punitive (exemplary) damages are only available in England and Wales in very rare circumstances. In essence, the defendant must have known he was acting unlawfully and continued with the conduct in the expectation that his gain from the unlawful act would exceed any compensation which could be awarded to the claimants. Exemplary damages have not been awarded in collective redress actions.

4. Costs

a. Basic rules

The basic rules governing costs in England and Wales (CPR 44.2) are that:

- the starting point is that the loser pays all of the winning party's costs; but

- the court may make a different order if the loser was partly successful, the conduct of one or the other of the parties was unreasonable or where an offer to settle was made which was rejected but could have dealt with the claim earlier.

The general costs rules apply to collective redress actions (in particular representative actions and GLOs), although they have given rise to difficulties in the case of GLOs. To attempt to keep costs predictable and proportionate in GLO cases, courts have sometimes applied costs caps to the amount parties may recover in costs if they win.

There are special additional rules for costs in GLO cases (CPR 46.6):

- costs are separated into the costs relating to the common issues being tried under the GLO ('common costs') and the individual costs for group members with individual claims;

- the starting point for a costs order in a GLO where the group loses is that each group member is liable for an equal share of the common costs plus the costs relating to his individual issues.

There is however, no joint liability for these costs, so that a group claimant is not liable for another claimant's share of the common costs if the other fails to pay.

In a representative action, since the persons represented are not parties to the claim, costs are not payable by them under the 'costs shifting rule', although the court does retain the power to make costs orders against non-parties, which is available where the particular circumstances of a case appear to require it.

b. Loser Pays Principle

The starting point for costs awards in general collective redress claims is that the loser pays all of the wining party's costs: the court may, however, make a different order.

5. Lawyers' Fees

In England, contingency fees (damages based agreements: DBAs) have been legal since 2013 for most kinds of claims, but subject to some limitations. For most claims, a DBA may provide for a percentage of compensation recovered to be paid to the legal representative for lawyers' costs —subject to a cap of 50% of recoveries. However, the legal representative must also pay over to his client any costs recovered in the litigation from the losing defendant. This DBA agreement must be in writing and there are ethical rules for lawyers requiring them to explain carefully to their clients the effect of the DBA agreement before the client enters into it.

6. Funding

a. Availability of funding

Private litigation funding (money advanced on a non-recourse basis in return for a share of any recoveries) is widely available for many types of claims —including most forms of collective redress —in England. It is often combined with a DBA from the legal representatives to create a 'package' for the claimant group, covering all of the costs of a claim in return for a percentage of proceeds.

b. Origins of funding (public, private, third party)

Funding for collective redress claims comes from private sources —either litigation funders or the law firms which are representing the claimants. Civil legal aid from government sources has all but disappeared in the UK in recent years.

c. Conditions and frequency of resort to third party funding

Funding agreements are not normally disclosed so it is difficult to estimate the frequency and conditions of litigation funding of claims —although for the larger collective claims, anecdotally most are funded by a third party and/or law firm in some way. The conditions available to victims depend on the strength of their claims and the size of the expected recovery as well as the complexity (and thus cost) of the claim in question.

d. Control of funders (Courts/Legislators/Self-regulation)

There is no legislative or public administrative control of funders in the UK. However, through the common law torts of maintenance and champerty, anyone who improperly funds the litigation of another may be found liable for all of the (adverse) costs of that litigation if the case is lost. This possibility has been relaxed for bona fide commercial litigation funders though the practice of the English courts: funders now are normally able to limit their liability to a specific amount. However, the courts retain a reserve power to waive this protection if the funders act improperly.

In addition, a self-regulatory group, the Association of Litigation Funders (ALF) has produced a Code of Practice which is used as a guide by the courts (and others) as to acceptable funding practices. This combination of self-regulation with court oversight has to date proven sufficient to control the litigation funding sector.

e. Claimant-Funder relationship

Both the case-law based practice on maintenance and champerty and the ALF code of practice emphasise that the funder should not influence the course of the litigation —which should be left to the client (group) as advised by their legal representative. It is, however, common for funding agreements to require the funder to be kept informed —for example of offers to settle -during the course of the litigation.

7.Enforcement of collective actions/settlements

a. Framework for enforcement

The general enforcement provisions of the CPR (rule 70) apply to orders and judgments made following the general collective redress procedures described there. There are no special rules for executing judgments against participants in a GLO action. In a representative action, however, no order or judgment may be enforced by or against a person being represented (who is not a party) without the consent of the court (CPR 19.6(4)(b)).

b. Efficient enforcement of compensatory/ injunctive order

See above. Refusal to comply with an injunction or similar order —which is endorsed with a 'penal notice' (a warning that non-compliance is a criminal offence) —may be enforced through contempt of court proceedings. A court may make an order committing the defaulter to prison or may impose a lesser sanction -a fine or sequestration of goods, for example.

c. Cross border enforcement

CPR 74 provides detailed rules for the enforcement of orders under the Brussels Regulation (1215/12) and of European Enforcement Orders (EC 805/2004). These apply to the enforcement of judgments in collective redress claims as they do to other claims.

8. Number and types of cases brought/pending

In the period 2000 -January 2017, 98 GLOs were made in all kinds of claims. There are no reliable statistics for representative or test claims for collective redress since these mechanisms are not restricted to collective redress cases.

9. Impact of the Recommendation/Problems and Critiques, including

a. No collective redress mechanism

The general collective redress mechanisms identified above were introduced before the Recommendation was made in June 2013 and so the general impact of the Recommendation is difficult to establish. The competition collective proceedings order —introduced from October 2015 —follows closely the provisions of the Recommendation. In particular, the requirements under the collective proceedings rules (see below), for the Competition Appeal Tribunal to decide whether to make an 'opt-in' or 'opt-out' CPO, appear to implement the requirements of paragraph 21 of the Recommendation —opt-in should be the starting point with opt-out being made available if necessary in the interests of justice.

b. Impact of the collective mechanism (or lack of) on behaviour/ policy of stakeholders (direct/ indirect, economic/social impact)

As noted, the general collective redress mechanisms in the UK were not made as a consequence of the Recommendation and therefore any assessment of the Recommendation's impact at a general policy level is necessarily anecdotal. However, the public debate on the merits (or otherwise) of various forms of collective dress through the courts continues to be a lively one.

The competition collective proceedings mechanism introduced in late 2015 is at present too new to have had a substantial impact on behaviour. This situation is likely to change as the practice of the CAT in making CPOs (in particular on an opt-out basis) becomes clearer through its decisional practice.

c. Incompatibilities with the Recommendation's principles

The UK civil procedure rules are broadly in conformity with the Recommendation. The UK has an opt-in collective redress mechanism (the GLO) generally available for victims of a mass harm to claim compensation. The use of declaratory relief has an equivalent effect as a general 'collective injunction'. There are also more developed forms of collective redress in the competition and consumer law fields.

d. Short summary of all identified incompatibilities

(1) The UK courts do not have

(1.1) a generally available opt-out compensatory collective redress mechanism for use where it is in the interests of the sound administration of justice for collective redress actions to proceed in that way; nor

(1.2) a generally available representative compensatory collective redress procedure for groups of victims of a mass harm event where the victims' claims are similar or related, but not the "same" (identical), to each other.

The mechanisms available for these types of situation only apply to competition law claims.

(2) There is no requirement that the representative in the current English representative proceedings (CPR 19.6) should have a non-profit motive. Indeed, the requirement that he has the same interest in the claim as the persons represented implies that he too must have a pecuniary interest.

(3) There is no legislative nor public administrative supervision of private litigation funding in the UK. Lawyers' remuneration (which may in practice fulfil the same function) are however regulated by legislation as well as by the courts.

(4) There is no express provision for the court to approve settlements of claims raising common issues under the GLO procedure. However, since the GLO proceedings are 'opt-in' only, any claimant who does not wish to be bound by the settlement may continue his action individually. If sufficient claimants reject the settlement and continue their claims, it is probable that the GLO proceedings will also continue without the settling claimants. Settlements of competition collective proceedings must be approved by the CAT.

(5) There is no express legislative provision for a representative entity recognised by the authorities of another Member State automatically to have standing in collective redress actions in the courts in the UK. However, the English courts have wide case management powers such that they would (where necessary) be able to admit a collective claim as a GLO organised by a foreign authorised body if it is in the interests of justice to do so.

Problems relating to access of justice/fairness of proceedingsThe extent of any problems relating to access to civil justice in the UK varies according both to the type of claimant and the type of claim. For business -including most SMEs -it is likelythat existing mechanisms (the GLO for example) are sufficient to enable them to bring or participate in a collective redress action if they have suffered loss as a result of a mass harm event caused by a breach of directly effective EU law.

For individuals and micro businesses, it appears that the situation is more complex and depends on the type of claim: for example

- consumers who have claims against financial services providers may make claims to the Financial Services Ombudsman who has statutory powers to require financial institutions to compensate for breaches of (among others) EU financial services law -an effective form of non-contentious collective redress;

- individuals harmed by mass product defects (e.g. in breast implants) have used the GLO procedure ([ref the PIP case])

- certain sectors offer consumer ombudsmen schemes to resolve disputes. Traders in these sectors may either belong to an ombudsman scheme voluntarily (e.g. the Property Ombudsman Scheme for estate agents) or be required to participate by legislation (e.g. the Legal Ombudsman for solicitors and other legal services providers);

- most straightforward claims for money compensation may now be made on-line and, for small claims (maximum £10,000) the 'loser pays' rule does not apply. As legal advice is not mandatory, consumers are able to make individual claims relatively quickly and economically.

Clear examples of 'abusive litigation' on a collective basis, based on directly effective EU law, are rare and depend on the definition of 'abusive' used. As a recent example, in the competition law claims against various air cargo carriers following on from the Commission decision of December 2010 finding a cartel in air freight surcharges, a law firm was censured by the court for having brought a claim on behalf of 60,000 Chinese claimants who, it later emerged, had not properly consented to being claimants (ref [Baoziang]). However, as most collective claims are brought for personal injury caused by mass harm events (so outside the scope of EU law), cases of abuse in litigation linked to the Recommendation are currently unlikely.

1. For example in Emerald Supplies [2009] EWHC 741 (Ch)

2. OFT v Abbey National [2009] UKSC 6

3. CPR rule 19.6

4. They are listed at https://www.gov.uk/guidance/group-litigation-orders

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