Under the Representative Actions Directive, all EU member states are required to introduce a form of class action procedure known as representative actions. Under this procedure, representative entities bring actions before national courts on behalf of groups of consumers. The Directive is aimed at giving individual consumers access to redress.
However, the ability to raise a form of class action is not new for all EU member states. When it comes to class action procedure in Europe one country has been ahead of the game.
A right to pursue class action, or a ‘popular action’, has been enshrined in Portugal's constitution since its conception in 1976. The framework providing the backdrop for class actions in their current form has existed since 1995.
Yet, while the procedure has been available for some time, its use was historically limited, and it has only been in recent years that use of the procedure has begun to take off. The uptick in the use of these actions has seen Portugal named as a high-risk country for class action litigation.
Scotland as the New Kid on the Block
Unlike our Portuguese counterparts, class action procedure is a relatively new addition to the Scottish legal landscape. Scottish group proceedings procedure only came into force on 31 July 2020, with the implementation of Part 4 of the Civil Litigation (Expenses and Group Proceedings) (Scotland) Act 2018.
Scottish group proceeding procedure allows for parties with the same, similar, or related claims to collate and raise group proceedings.
However, Scottish class actions have yet to take off, with only three such actions certified thus far.
But, having taken almost three decades for the procedure to become popular in Portugal, is it only a matter of time before Scottish procedure sees a similar explosion of actions?
Could Portugal's Class Action Boom Spread to Scotland?
Perhaps. A general culture shift encouraging individuals to make use of class action procedure and the availability of third-party funding have been credited as contributory factors towards the recent uptake in class actions in Portugal. There exists no barrier to these factors engaging within the current Scottish legal framework.
In fact, we previously discussed the availability of third-party funding in Scottish group proceedings in our blog on potential funding mechanisms.
Opt-in v Opt-Out
However, there is one key difference between the Scottish and Portuguese class action procedure which could prove significant. Scottish group proceedings currently only operate on an opt-in basis. As a result, potential parties must actively give notice that they wish to be included in the action.
Portugal, however, operates an opt-out procedure, this means that potential group members are automatically included unless they make it expressly known that they do not wish to be.
The opt-in v opt-out distinction may go part of the way to explain why Scotland has not seen the rise in class actions seen in other jurisdictions. The opt-in procedure may be off-putting for potential claimants who may not go to the effort of joining a group if any potential financial recovery may be minimal.
However, the 2018 Act which introduced group proceedings in Scotland, does allow for an opt-out procedure to be developed and implemented, if rules are introduced providing for it. It is anticipated that such rules will not be introduced until at least some of the group proceedings certified on an opt-in basis have proceeded to conclusion.
Only time will tell if Scottish class actions will see a rise in uptake in less time than it has taken for Portuguese popular actions to become popular.
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