Class Actions - an increasing threat to UK corporations

A recent report suggests that the number of class actions raised against UK companies continues to increase. Over the last year there has been a 10% increase in the number of class action lawsuits raised around the world against FTSE 100 companies.

The report, produced by Thomson Reuters, details that the UK's leading companies have faced 170 class actions over the last year, as compared with 155 class actions in the previous year.

Our leading corporates operate in a global market place. The FTSE 100 companies operating in the United States will no doubt be familiar with class action culture in many countries around the world. In the last year, 67% of all class action claims raised globally were brought before US Courts.

In the UK, corporates may not be aware that class action procedure is gaining traction as an increasingly popular method of achieving redress across the world. The analysis suggests that this is a threat to organisations, even those operating solely within the UK. Nine of the class actions raised against FTSE 100 companies in the last year were raised in the Courts of the United Kingdom. Indeed, recently, settlement of car emission cases has hit the headlines.

Whilst the Courts in England and Wales have had their own procedures for collective redress for over twenty years, Scotland had no equivalent mechanism. In the summer of 2020, group claims procedure came into force in Scotland, which enables groups of two or more people with the same, similar, or related claims, to unite to raise proceedings in a single action in the Court of Session.

There may be an increase in procedural forum shopping by litigation savvy claimants. For example, consumers who are the victims of the same anticompetitive behaviour in a global market may be persuaded to join a class action in either the US or the UK. They will choose the forum and procedure to resolve their claim depending upon the efficiency of the procedure, how quickly they will obtain financial redress, where and how they will obtain the greatest financial recovery, and exposure to costs.

Companies operating in a global marketplace will need to be alive to the potential for an increase in the number of class actions they face, in many different jurisdictions, and the risks that rise from this exposure.

We previously considered what organisations and business should do to prepare for this new litigation landscape. We will continue to monitor developments.