From the implementation of the EU Representative Actions Directive to an explosion of claims in the UK Competition Appeal Tribunal, coupled with an ever-increasing role for litigation funders, class actions in both the UK and the EU are now taking off. We take a look at some of the key developments below.
Historically, the UK had no meaningful form of collective redress. That has changed significantly in recent years, largely driven by claimant firms and funders testing the boundaries of new (and old) mechanisms.
Claimants are currently focusing their efforts on seeking opt-out class actions — a class action regime similar to those permitted in the United States, where a class can be certified but individual class members have the right to opt-out of the class action — in the Competition Appeal Tribunal (“CAT”), since the first class was certified in 2021. To be certified in the CAT, the claim must be brought as a competition law claim. But some of the claims being pursued are stretching the boundaries of what is truly competition law. A permissive and claimant-friendly tribunal, the CAT has to date set a fairly low bar to certification. 26 claims have now been issued as proposed class actions in the CAT, with 11 having to date been certified. Targeted defendants include in particular tech companies and financial institutions.
An example of the type of claim being pursued in the CAT is Gormsen v Meta Platforms, Inc. This involves a proposed class action against Meta in the CAT for loss and damage caused by Meta’s alleged abuse of dominance. The proposed class representative alleges that Meta (via Facebook) has a dominant position in the personal social network and social media markets and that it has abused that position through the implementation of its Terms of Service, which he says make user access to Facebook contingent on the provision of personal data. This claim may more naturally be seen as a data privacy or consumer protection claim, but it has been framed as a competition law claim (for abuse of dominance), presumably to seek to benefit from the CAT’s opt-out mechanism, which would not otherwise be available.
Group litigation in the UK High Court has proven less popular with claimant firms since the Supreme Court’s decision in Lloyd v Google, which significantly reduced the scope for bringing so-called “representative actions” (an alternative, less structured form of class action than in the CAT).
Claimant firms do rely on the “Group Litigation Order” (GLO) mechanism for pursuing product liability, ESG and other claims which cannot be brought within the CAT regime. However, these are entirely opt-in mechanisms and unlike true class actions place substantial burdens on each claimant.
More commonly in ESG claims, multiple claimants are named on the same claim form, thereby creating their own “class”, but the claim by each claimant technically remains individual.
For now, the opt-out class actions being certified in the CAT are the main development to watch.
In the EU, the new Representative Actions Directive (“RAD”) aims to harmonize class action regimes across the EU and requires 27 new regimes (one per member state) to be implemented by June 2023. The Directive empowers “qualified representatives” to bring collective actions and seek injunctive relief and / or redress (including damages) on behalf of groups of claimants harmed by unlawful practices breaching specified EU laws, including consumer protection law and product liability law. The RAD only requires the introduction of an opt-in mechanism in each jurisdiction, although member states may go further and introduce opt‑out mechanisms if they choose to do so. The Directive will have a greater impact in some jurisdictions where class actions are relatively undeveloped (e.g. Germany) than others with more established regimes (e.g. the Netherlands).
To date, class actions in the UK and the EU have largely been focused on competition law, data protection and consumer protection, with occasional attempts to pursue shareholder claims. Looking to the future, we expect to see more ESG claims being pursued, as well as product liability, including in respect of AI technologies following the European Commission’s proposals to make it easier for claimants to pursue claims relating to AI systems.
Litigation funding plays an important role in class actions in the UK and the EU, with funders backing many high-profile claims. According to a recent report by Portland Communications, the assets owned by the top litigation funders in the UK alone in 2022 increased to £2.2 bn, representing an increase of more than 10% on the previous year.
The implementation of the RAD, together with the receptiveness of the CAT to opt-out class actions in the UK, suggests that class action lawyers in the UK and EU are in for a busy 2023. Litigation funders and claimant firms, already well-represented in the UK and the EU, are no doubt taking note. Companies most at risk should ensure that they do likewise.
 Through the Artificial Intelligence Liability Directive (AILD) (covering fault-based, non-contractual civil claims) and the Product Liability Directive (PLD) (covering no-fault, strict liability).
 Portland Communications, “Litigation & Disputes: Class Action Report 2022”.