Group claims law changes litigation landscape in Scotland

Until now, there has been no provision in the court rules in Scotland for any form of group or representative action. Instead, litigants have had to proceed individually or by means of a test case. The introduction of the Civil Litigation (Expenses and Group Proceedings) (Scotland) Act 2018 changed this and allowed the court to make provision in its rules for group proceedings. The new rules, outlined in the Act of Sederunt (Rules of the Court of Session 1994 Amendment) (Group Proceedings) 2020, will bring Scotland into line with an increasing number of countries expanding their own 'class action' procedures at a time when a new EU group claims law moves closer.

This new approach is likely to be particularly attractive to individuals with lower value claims who might otherwise consider it too costly to litigate on their own. Potential litigants will now be able to join a group proceedings case in the Court of Session in Edinburgh in a cost effective way. However, corporates and their insurers, which may be targeted by group claims, will be watching keenly as groups seek to utilise the 2020 Rules to gauge how the court approaches and applies them in practice. There are lots of procedural questions to be addressed and ironed out as the court and parties gain operational experience of this new procedure and significant conceptual change to what has gone before.

As with class actions in other parts of the world, for example the US, the rules provide for participation in group claims by ‘opt-in’ only. Under this model, parties must consent to become part of the group. Court determinations on the proceedings will only affect the group to which they relate and not those who have left the group before the determination was issued. Litigants joining the group will be bound by all previous determinations affecting the group.

The court will appoint a representative party for the group proceedings. Certain criteria must be met by a person wishing to be the representative party, including that they are able to satisfy the court that they "would act fairly and adequately in the interests of the group members as a whole, and that the applicant’s own interests do not conflict with those of the group whom the applicant seeks to represent". The representative must also have sufficient financial resources to meet any awards of expenses. Those defending group claims must be advised of an application to be a representative party and be given an opportunity to indicate opposition to the appointment.

The court must give permission for matters to be raised as group proceedings. In terms of the 2018 Act, permission may be granted where the court is satisfied that all of the claims made in the proceedings raise issues, whether of fact or law, which are the same as, or similar or related to, each other and that the representative party has made all reasonable efforts to identify and notify all potential members of the group about the proceedings.

Further guidance on what amounts to "the same as, or similar, or related" is not given in either the 2018 Act or the 2020 Rules, but the definition is potentially wide ranging and could raise more questions than it answers as it currently stands. For example, it is not currently clear how matters will proceed if the similarity is in law but not fact, nor how individual issues will be resolved once the group issues have been determined. In England, a case by case approach is usually adopted.

Whilst the 2018 Act sets out criteria on where permission for group proceedings may be granted, the 2020 Rules provide for when permission may be refused. These include where a 'prima facie' case has not been demonstrated and where it has not been demonstrated that it is a more efficient administration of justice for the claims to be brought as group proceedings rather than by separate individual proceedings.

Again, the defender must be told of the application for permission to raise group proceedings and given an opportunity to make representations in relation to it. Either party may appeal against a grant or refusal of permission.

Whilst the 2020 Rules answer some of the issues left open by the provisions of the 2018 Act, questions remain and organisations will be watching carefully to see how matters are interpreted by the courts in practice. The retention of the ability of the court to make such orders as it considers appropriate to ensure the efficient running of the case is particularly welcomed.

Co-written by Hannah Beaumont of Pinsent Masons, the law firm behind Out-Law.