Whilst group proceedings are new in Scotland, other jurisdictions have had similar procedures for many years. In this insight, we take a look at some of the differences between the Scottish and English systems for group proceedings or their equivalent.
The ability to bring group proceedings in Scotland (known as class actions in England and Wales) came into force on 31 July 2020, when Part 4 of the Civil Litigation (Expenses and Group Proceedings) (Scotland) Act 2018 ("2018 Act") was implemented. As a result, a group of parties can now bring group proceedings if the claims are the same as, similar or related to one another. For more information on how group proceedings are raised, see our previous blog.
The 2018 Act introduced a framework which allows for both an opt-in and opt-out procedure. Currently in Scotland, the rules only provide for an opt-in procedure. For more information on the opt-in/opt-out procedure, see our previous blog.
English class actions can proceed either as 'opt-in' or 'opt-out', depending on the type of claim and procedure used. The two main procedures for English class actions are (1) Group Litigation Orders ("GLO") and (2) Representative Actions. There is a separate procedure available for competition law claims.
Group Litigation Orders (GLO)
GLOs are provided for by Part 19, Section III of The Civil Procedures Rules 1998 ("CPR") and require claimants to individually apply to a group register, meaning they must 'opt-in'. Each claim must "give rise to common or related issues of fact or law" to fall within the GLO. A GLO will only be permitted if the court believe there are several claims being presented upon a similar basis. Any judgment concerning common issues within the GLO are binding on all claims listed on the group register. Whilst GLOs are common, courts will often decide whether they should be determined alongside other claims, if widely similar and with claimants having the same interest.
By way of contrast to a GLO, representative actions proceed on an 'opt-out' basis and are provided for under Part 19.6 of the CPR. The 'opt-out' mechanism automatically includes persons of the class unless they expressly exclude themselves. This also means that, unless otherwise stated by the court, any order or judgement made is binding on all persons represented.
For a representative action to proceed, claimants must have a common interest or a common grievance. It is not necessary for parties' claims or causes to be identical, so long as the claims have the same practical objectives. This is likely to be a higher bar for parties to meet than for a GLO.
In the case of Lloyd v Google LLC, a representative action was brought on behalf of 4.4 million Apple iPhone users for alleged loss of control of personal data. Most recently, the UK Supreme Court unanimously overturned the decision of the Court of Appeal, confirming that the compensation for the alleged data protection breaches were of a kind that would need to be dealt with on an individual basis. This militated against progress of the class as a representative action. This decision is one of significance not only for data protection actions but for the future of 'opt out' class actions in England and Wales.
Section 47B of the Competition Act 1998 (as amended by schedule 8, paragraph 5 of the Consumer Rights Act 2015) came into force on 1 October 2015. The amended legislation allows for 'opt-out' collective proceedings to be heard before the Competition Appeal Tribunal (CAT). On an 'opt-out' basis, consumers and businesses can now bring an action for damage for losses suffered by an infringement of UK competition law, removing the need to individually identify each claimant. Prior to the amendment, collective proceedings were only permitted by way of opting in. 'Opt out' class actions in competition cases have increased significantly since the Supreme Court judgement in Merricksin 2020, which granted the UK's first Collective Procedure Order (CPO) on an 'opt out' basis.
As noted, there is a potential for 'opt-out' proceedings to be introduced in Scotland, which would bring it more into line with that in England and, further afield, in the US.
If Scotland were to introduce the 'opt-out' mechanism, the financial benefits available for a successful action may attract the interest of litigation funders, seeing an increase in group proceedings in Scotland. The increase in cases may put significant pressure on the Scottish Court system.
Overall, only time will tell how the rules in Scotland will evolve and whether Scotland should expect an opt-out procedure.