The landscape in 2020 and beyond
Class actions and collective claims mechanisms around the globe are on the rise. Europe in particular has become far more amenable to mass claims in the last 10 years or so, driven by an emerging political agenda in favour of facilitating ‘access to justice’, while activity in more established markets such as the US have continued at pace.
In addition, litigation funding has gained traction around the world, and is driving much of the increase in group, class and collective claims.
Over the years we have worked closely with clients to manage mass claims risk and in 2020 we are seeing the following macro-trends driving activity:
- The increasing public and regulatory scrutiny of the environmental and societal impact of corporate behaviour and broadening stakeholder base is creating an atmosphere ripe for class and collective actions
- The rise of digital-dependent business models, is increasing risks of mass claims relating to the processing and protection of sensitive data and the strength of IT infrastructure
- Although in its early stages, the coronavirus pandemic is likely to prompt a range of unprecedented claims from groups of consumers, workers and shareholders
The accordions below set out a unified view of global regimes, markets and the forces that are impacting them including changing attitudes to funding options. To get the full picture, request access to the guide.
Legal developments by jurisdiction
The previously proposed changes to the Austrian Code of Civil Procedure to introduce a formal collective action procedure have not progressed since 2008. Informal collective actions remain the route for achieving a mass claim.
Belgian law allows for group actions to be brought both by consumer associations on behalf of groups of consumers and by representative organisations of the self-employed and SMEs on behalf of the latter. No imminent change is expected to that regime.
As at April 2020, no claim has passed the certification stage for a group claim under the UK’s Consumer Rights Act 2015. The Supreme Court appeal in Merricks v Mastercard, which is due to be heard in May 2020, is eagerly awaited. Regardless of the outcome, however, the door remains clearly open though for future UK class action claims under that regime.
The sectors covered by collective action mechanisms are growing – following the introduction of the Loi Hamon in October 2014, the Loi de Santé, which came into force on 1 July 2016, extended the scope of available class actions to include healthcare disputes. The subsequent so-called J21 Act of 18 November 2016 further extended the French class action regime to include: (i) discrimination; (ii) environmental law; and (iii) personal data protection.
The Declaratory Model Action, introducing a new formal mechanism for consumer association-led actions for collective redress, entered into force on 1 November 2018. It is designed to enable qualified entities to bring a declaratory action on behalf of consumers. The aim is to isolate identical legal issues of a larger number of different individual claims and to have them decided swiftly and coherently by a single court. Since 1 November 2018, only eight of these lawsuits have been made public, including one major case with more than 400,000 registered consumers.
Collective actions in Italy are currently under reform. Article 140-bis of the Consumer Code will be in force until 19 November 2020. At that date the new class action regime, provided for by Law No. 31 dated 12 April 2019, will come into force, expanding the scope of application of the class action proceedings and fostering the diffusion of such legal action.
A significant development is the entry into force of the Dutch Act on Redress of Mass Damages in a collective action on 1 January 2020. This legislation has made significant changes to the collective action regime, including the possibility of claiming monetary damages, which was not possible under the former regime for collective actions.
The Spanish Procedural Code already allows for group actions to be brought by consumer associations on behalf of groups of consumers. No imminent change is expected to that regime.
At EU level, major developments are underway aimed at facilitating collective actions. In particular, trilogue negotiations have commenced between the European Parliament and the Council, under the supervision of the Commission, in order to agree the final text of the Commission’s draft Directive on Representative Actions. The other limb of the Commission’s ‘New Deal for Consumers’, the Directive on better enforcement and modernisation of EU consumer protection rules, has been published in the Official Journal and will apply from 28 May 2022.
US courts have issued a number of business-friendly decisions in recent years, including enforcement of arbitration clauses and class action waivers – but not all decisions are pro-defendant, and securities, M&A and other class action lawsuits remain on the rise. At the same time, US courts continue to adjudicate the parameters of standing and class certification, and US class action law may continue to evolve as recent changes to the Federal Rule governing class actions take effect.
Representative and non-representative group litigation remain available under the Chinese Civil Procedure Law. Specifically, new rules promulgated in late 2019 allow securities investors to bring open group representative actions for securities fraud claims.
A two-phase class action for monetary damages (Monetary Damages Action) came into force in 2016.
Our full 2020 multijurisdictional Class actions and collective claims guide. Now in its 6th edition, provides concise insight and perspective on the landscape of these claims across the world. Our guide gives clients a unified view of global regimes, markets and the forces that are impacting them – including changing attitudes to funding options.