Lawyers answer commonly asked questions on class actions

A class action is an action brought jointly by a group of claimants who have all suffered the same, similar or related harm as a result of the actions of one defender or defenders.

The class actions have been open to claimants in many countries and jurisdictions across the world, including the USA, and England and Wales for many years.

In Scotland, groups have been able to join together to bring class actions or group proceedings, as they are known here, since the summer of 2020.

The introduction of group proceedings in Scotland has already had a massive impact, with several large groups of claims coming together to bring actions against defenders, where they believe that all suffered similar harm.

This has enabled claims that would not otherwise have been viable to be brought, for example, where they’re individually for relatively low sums, they now have the benefit of sharing cost and potential risk in bringing the claims together.

The introduction of group proceedings does come with financial and reputational risks to businesses, particularly as they're going to be exposed to claims that they wouldn't otherwise have been exposed to, for example, where the individual claims might have been for relatively low sums.

Those claims are now likely to be brought jointly and cumulatively, the financial exposure will be potentially relatively high, but will also expose the businesses to unwanted media attention.

Unlike in Scotland, English class actions can proceed either as opt-in or opt-out, depending on the type of claim or procedure used.

The two main procedures for English class actions are firstly, group litigation orders where claimants apply to join a group register where they've got claims which give rise to common issues of fact or law, and secondly, representative actions where they've got a common interest or grievance.

There's a separate procedure for competition law claims.

Opt-out actions automatically include any potential member of the class unless they expressly choose to be excluded.

Now opt-out class actions are used internationally.

For example, we'll be familiar with news stories and movies from the US, touching upon opt-out class actions.

In theory, an individual could be a party to these actions without ever knowing about the proceedings.

By contrast, opt-in actions require the members to actively join the group register, and this is the approach currently adopted by the courts in Scotland.

The Civil Litigation Expenses and Group Proceedings Scotland Act 2018 provided for both the opt-in and opt-out procedure.

However, the 2020 rules which gave effect to the legislation only provide for the use of the opt-in procedure.

However, the Court of Session is theoretically ready to roll out the opt-out procedure if rules are introduced to give effect to it.

The Scottish Civil Justice Committee is already considering introducing a working group to consider the rules necessary to give effect to the opt-out procedure, so watch this space.

Group proceedings are heard by the Court of Session, which is the highest civil court in Scotland.

The rules governing them are set out in Chapter 26A of the Rules of the Court of Session.

The first step is for a representative party to be appointed. They will be the face of the claim as the action progresses, and must be authorised by the court before the action commences.

At the same time or after approval of the representative party, permission must be obtained from the court to allow the action to move forward as a group proceeding.

Before the court will grant permission for a group proceeding in Scotland, the court will have to be satisfied that the claim meets the relevant requirements.

The first of these is that there is a prima facie or stateable case. The second requirement is that proceeding as a group will be more efficient than individual claims. Finally, there must be a real prospect of success.

Unless all of the requirements are met, the court will not grant permission.

After permission has been granted, a group proceeding will continue in a similar way to a standard Court of Session commercial action, beginning with procedural hearings to determine how the case should progress.

If the parties don't settle the claim, the action will proceed to a debate, which is a hearing on legal issues, or a proof, which is a hearing on evidence in order to determine the claim.

Both parties have the right to an appeal.

The principal requirement to join a claimant group in a group proceeding in Scotland is that the prospective members have claims which raise issues of fact or law, which are the same as, or similar or related to each other.

As long as a person's claim falls within that description and has not become time barred, they can join the claimant group in a group proceeding.

In Scotland, claimants must opt-in to a group proceeding, meaning they must choose to join.

This contrasts with a US-style opt-out procedure where claimants are automatically part of the claimant group if they fall within the definition, unless they choose to opt-out.

Once a claimant opts-in to the group proceeding, they will be added to the group register, which is a list of all the members in the claim and is kept up to date by the representative party as the action progresses.

Group proceedings can be funded by the claimants individually, but in practice this is rare because of the expense of launching a court action.

In Scotland, group proceedings can be funded in multiple different ways, for example, by way of a success fee arrangement between the claimants and their solicitors.

Third-party litigation funding is also popular. This is where a third party agrees to fund the claim, in return for a share of the proceeds awarded to the group if they are successful.