Earlier this month the first environmental collective action was brought before the Competition Appeal Tribunal ("CAT"), directed against Severn Trent Water. Lawyers for the consumer claimants have set out that similar claims will be brought against Thames Water, United Utilities, Anglican Water, Yorkshire Water and Northumbrian Water. We have previously blogged on the subject of climate change class actions being a concern for businesses here.
What is the claim about?
The claim, brought by Professor Carolyn Roberts on behalf of the consumers affected, alleges that water companies in England have abused a dominant market position by under-reporting the number of pollution incidents they have caused by spilling or discharging sewage into waterways. It is claimed that, had the number of pollution incidents been accurately reported, then the water companies would have missed their pollution targets which would have led to the water regulator, Ofwat, penalising the companies by requiring money to be returned to customers in the form of lower bills.
Collective Actions and Group Proceedings
Collective actions, or group proceedings as they are known in Scotland, are a type of court action where multiple different parties can join together to bring an action as one. In many cases, the cost of bringing an action as an individual outweighs the potential recovery. Where parties join together to bring an action as one, then the costs/benefits analysis can be more favourable for individuals, particularly where they are funded by a third party litigation funder, as we spoke about here.
The action against Severn Trent Water has been brought in the CAT by way of "opt out" procedure. This means that all the relevant consumers affected are automatically included in the claim unless they have specifically "opt out" of the action. You can learn more about the differences between "opt in" and "opt out" procedures here and here.
In Scotland, group proceedings were introduced by the Civil Litigation (Expenses and Group Proceedings) (Scotland) Act 2018 ("2018 Act") and rules were established by the Act of Sederunt (Rules of the Court of Session 1994 Amendment) (Group Proceedings) ("2020 Rules"). Although the 2018 Act provided a framework for an "opt out" procedure to be introduced, the 2020 rules have only made provision for an "opt in" procedure for the time being. That means the CAT is the only place where "opt out" proceedings can be brought in the UK, which will have been a factor in the consumers' minds when deciding which court the action should be brought in.
What does this mean for businesses?
Given this is the first environmental collection action to be brought before the CAT, and potentially benefitting from the "opt out" procedure, businesses and organisations with environmental obligations will be well advised to keep a close eye on the case to see how it develops.
In one of our earlier articles we mentioned the steps business can take to protect themselves. Whilst we wait to see how these types of action will be treated by the courts, it is advisable for businesses to make sure that they are complying with their environment obligations. In particular, businesses should ensure that they take all steps necessary to keep abreast of and comply with any regulatory changes in their field, together with keeping records and evidence of their compliance with their obligations. This will leave businesses in a stronger position to deal with any future environmental group proceedings or collective actions.
For more information about group proceedings generally, and links to insights into the potential risks for Scottish businesses of different types of group proceedings, visit our class actions webpage or get in touch with your usual Brodies contact.