Rowan: Welcome opportunity
The Law Commission has launched a new project [1] to consider whether a consumer class action regime should be introduced.
Among the initial questions it is seeking to answer are what features would be needed to ensure “the efficient conduct of litigation at proportionate cost”, without promoting “speculative claims”.
The Department for Business and Trade (DBT), which is sponsoring the project, launched a call for evidence last summer [2] on the existing opt-out collective actions regime, which only applies to competition law breaches.
The Law Commission said the government had asked it to assess “whether the way consumer laws are enforced could be strengthened through the introduction of a consumer class actions regime”.
The project would “identify the benefits and risks associated with the introduction of a consumer class actions regime, having regard to other available mechanisms such as public enforcement action and alternative dispute resolution”. It would also make recommendations on the design of a regime.
The aims would be to improve consumers’ access to redress, “both by securing redress in court and by ensuring that damages are distributed to the affected class” and “promoting the efficient conduct of litigation at proportionate cost”.
The terms of reference say the Law Commission will consider whether the regime should allow for opt-in as well as opt-out claims, the criteria and process for commencing a class action, the management of class action proceedings, and damages, costs and settlement, including the funding of claims, taking into account any reforms to litigation funding as a consequence of the Civil Justice Council’s review.
Further engagement with “a broad range of individuals and organisations” would take place once work on the project had started, ahead of the publication of a consultation paper setting out the reform proposals.
Professor Solène Rowan, commissioner for commercial and common law, commented: “The Law Commission welcomes the opportunity to bring its expertise in evidence-based law reform to consumer class actions.
“The project will examine the benefits and risks of introducing a consumer class actions regime and make recommendations as to how such a regime might operate.”
Following the call for evidence, work on the project should start during the autumn.
Martyn Day, co-president of the Collective Redress Lawyers Association, said the mnove was “a timely and important step towards closing the UK’s justice gap”.
He explained: “At present, the avenues open for large groups of individuals with the same claim to take legal action against companies are limited, so a mechanism that makes it much easier for those groups of individuals to club together makes great sense.
“It is also a step in the right direction in terms of us not being left behind by our continental neighbours who are implementing the EU Representative Actions Directive that allows opt-out cases to be brought on behalf of consumers.
“There is no doubt that a well-designed consumer class actions regime will strengthen access to justice and ensure better corporate accountability in this country. We strongly encourage claimant law firms to engage with the consultation process and contribute evidence that will help shape a fair and workable regime.”
Neil Purslow, chairman of the International Legal Finance Association’s executive committee, said the review was encouraging.
“Consumers and small businesses too often lack a realistic route to hold corporate wrongdoers accountable. The opt-out collective actions regime, backed by litigation funding, is already beginning to demonstrate its value in the competition space through the Competition Appeal Tribunal.
“Expanding access to collective redress beyond competition law would be a significant step towards closing the justice gap for consumers and small businesses across the UK.”
The outcome of the call for evidence on collective actions has not yet been made public but launch of this project indicates that the government views them positively.