Banking and finance dispute resolution
For the latest news and comment on banking and finance disputes.
For the latest news and comment on banking and finance disputes.
For all the latest news and comment in clinical negligence healthcare law
This collection looks at the latest news and comment on commercial contracting healthcare law. With the health and social care sector under…
For all the latest news and comment in employment and pensions healthcare law
For all the latest legal and regulatory news and comment in health technology
This collection contains DAC B eachcroft's latest report, The Route to Integrated Healthcare , which provides the first practical examples of how…
This collection looks at the latest strategic, commercial, regulatory and negligence legal and advisory news and comment in health and social care. …
For all the latest news and comment on employment and pensions law.
DAC Beachcroft Dublin specialises in insurance, professional indemnity, defendant personal injury, health, commercial litigation and employment work.…
For all the latest new and comment in tax law.
The GC Collective collection offers insight and comment for General Counsels (GCs) and in-house legal teams.
For the latest news and comment on Corporate, M&A and Equity Capital Markets.
Analysis, commentary and checklists on the legal and governance implications of Brexit on businesses operating in, and trading with, the UK
The Accountant's Liability Collection brings you topical news and insight of interest to accountants, actuaries, trustees and other financial…
Events and online training for the health and social care sector.
DAC Beachcroft's LatAm Quarterly Newsletter discusses topical news and issues in Latin America
In response to client suggestions and requests, DAC Beachcroft's insurance sector flagship publication.
For all the latest legal and regulatory news and comment in health and social care integration
For all the latest news and comment in corporate regulatory healthcare law
Find advice, commentary and thought leadership on all aspects of Director's & Officer's Insurance; from contract formation through to complex…
This collection looks at the latest news, comment and development on the law affecting mental health services. The law affecting mental health…
Our market-leading Information Law team regularly publish articles and updates addressing the ever-evolving Information Law landscape.
This collection looks at our Safety, Health and Environment Team and the products and services they can provide. In the climate of increased…
The Insurance Act 2015 comes into force in August 2016 and will represent a significant change to insurance contract law in this country. This…
Legislative changes are bringing major changes to the Insurance landscape. This collection houses DAC Beachcroft's alerts on the pertinent issues.
For all the latest news and comment in clinical regulatory healthcare law
Organisations face ever-increasing expectations from Government, regulators, customers or service users, and other stakeholders, so scrutiny and…
For all the latest legal and regulatory news and comment in healthcare estates and facilities management
This collection addresses the full spectrum of cyber security and data risk management – the zeitgeist of our age.
We have acted for clients in the majority of significant product liability cases that have been decided in the UK over the last 35 years. Our product…
Considering the future landscapes of our cities
The European General Data Protection Regulation (GDPR) came into force on 25 May 2016. A rewrite of European data protection law, the GDPR imposes…
Considering the future of housing
For the latest news and comment on public procurement law.
Welcome to the Construction Risks collection. This space is used to report upon issues of interest to those who seek to allocate, manage and reduce…
Technology, brands and intellectual capital are key assets for any successful business. Our intellectual property (IP) team are experts at helping…
Considering the future of retail
The Insurance Market Conditions and Trends report is DAC Beachcroft's insurance sector flagship publication. Now in its tenth year, the report…
The Solicitors' Risk Collection addresses issues and developments affecting legal practitioners, and the professional indemnity insurers of legal…
Published On: 14 January 2016
On 1 October 2015, the Consumer Rights Act 2015 came into force and introduced “opt-out class actions” for the first time in the UK.
News of the new Act has invariably been accompanied by headlines warning of the imminent threat of waves of US style mass litigation actions, and vastly increased exposures for companies and potentially their insurers. But is this really the case? To answer this question, it is necessary to analyse in further depth the implications of the changes.
The first thing to recognise is that the changes are limited to competition claims. The new Act amends the Competition Act 1998 to introduce a new class action regime for breaches of competition law (specifically cartel conduct or abuse of dominant position) allowing collective proceedings for damages claims, which will be heard by the Competition Appeals Tribunal (“CAT”). This will now make it significantly easier to bring class action proceedings for competition cases.
All potential collective proceedings will first have to be approved by the CAT. The CAT is then able for the first time to specify that the collective claim can be brought on an “opt-out” basis, rather than just an “opt-in” basis. Whilst “opt-out” actions are common place in the US, they were until now prohibited in the UK. This is a significant change.
If a collective claim is brought on an “opt out” basis:
The other key change introduced by the new Act is that competition collective claims can now be brought by any suitable class representative - previously any collective claim had to be brought by the Which? Consumer Association.
The changes introduced by the new Act will certainly make it easier and more affordable to bring a collective action for competition claims and as such it is anticipated this will lead to an increase in the number of claims. At the same time, however, it seems unlikely that the new Act will herald the dawn of US style mass litigation (at least for now). The reasons for this are that there are still significant differences between the litigation regimes in the UK and the US.
In the US the damages regime is very different: Juries hear the case and set damages, which can then be trebled by the judge, if he or she considers the Defendant should be punished. In the UK, damages are assessed by the judge and are compensatory not punitive. This means that awards in the UK are much lower and therefore quite simply there is less to play for and less financial incentive for claimants, and more importantly their lawyers and costs funders.
In the US, “opt-out” class action claims are not confined to competition claims, as they are in the UK. In the US, class actions can be filed on numerous grounds for example against retailers and manufacturers relating to faulty goods and services, against companies and directors for securities claims, data protection violations and fraud. There is therefore (at least for now) less scope for "opt-out" class action claims in the UK.
The third key difference is the costs regime. In the UK (unlike the US) the standard principle is that the loser of a case pays the winner's costs. This is a natural filter to deter frivolous or speculative claims, which does not exist in the US. This is likely to mean there will be far fewer class actions in the UK.
Against this background, it seems the more sensational headlines warning about the perils of US class actions, and the impact they will have on UK companies and their insurers are somewhat overstated. That said litigation costs funders are circling. If reports are to be believed, they have identified the recent FOREX fixing scandal as a possible test case for the new regime. Everyone will be monitoring carefully the first “opt out” class actions to be approved by the CAT under the new rules. The first few decisions are likely to shape the developments of UK class action practices.
At present whilst “opt out” class actions are limited to competition claims, it seems the impact of this new regime on D&O insurers is likely to be limited. The focus of any class action will be the company, and any attempts by the company to try to pass on liabilities to its directors are likely to fail following the decisions in Safeway v Twigger and Jetivia SA v Bilta (UK) Limited. It is possible the company may have entity cover under its D&O policy, however, whether this would respond to such competition claims will depend on whether the entity cover is limited to securities law claims, and/or if the policy contains antitrust exclusions. In any event, D&O insurers, like everyone else, will be keen to observe the first class actions. Only then are we likely to get a feeling whether competition claims are truly the thin end of the wedge, and if US style opt-out class actions are likely to be extended to other types of consumer claims in the UK in the not so distant future.