A consultation being undertaken by the Scottish Civil Justice Council to extend the rules governing mass legal claims has closed amidst uproar from Scotland’s business and legal community, with concerns that a new system will disadvantage Scottish consumers and the economy.
The Scottish Civil Justice Council is considering extending the rules surrounding mass legal claims in Scotland to bring forward a US-style ‘opt-out’ approach to class actions, a type of legal process in which two or more individuals can bring a claim on behalf of a larger group of people who have suffered a similar harm.
If extended, the changes could see huge numbers of people being involved in a claim, unless they specifically opt out of doing so. Such a system has many disadvantages – including not delivering for the consumers it is intended to support.
Seema Kennedy, Fair Civil Justice Executive Director, commented:
“Large mass legal cases claim to provide access to justice for consumers, and on the face of it, sound consumer friendly. But they only work if they deliver the intended results and increasingly the evidence suggests that they are not working.
“Scotland’s consumers deserve swifter access to justice and consumer redress. But this is not going to be found in our already overburdened courtrooms. We need to have an open conversation about how we can create a better system, one that is based on more efficient complaints and compensation systems, improved regulation of those working in the legal arena and more ombudsman services.”
The dangers of any changes extend beyond consumers to Scotland’s economic competitiveness. Business voices have long cautioned that introducing US-style mass litigation would act as a real disincentive to inward investment and re-allocate job-creating capital elsewhere in the UK or abroad. That seems to echo the UK Government’s position. If Scotland moves forward alone, it is in danger of turning into a litigation outlier.
Colin Hutton, Head of Litigation at CMS Scotland, commented:
“If implemented, the adoption of an opt-out regime in Scotland would represent the most significant development in Scottish civil litigation in decades. However, the implications reach far beyond the courtroom – the consultation engages a proposal that would have significant economic implications for businesses and the public sector in Scotland, but has largely gone under the radar so far.
“Comparative evidence from Portugal and the Netherlands indicates that Scotland could experience a material spike in mass litigation targeting, in particular, the public sector. It is notable that, at the point at which Scotland is considering the introduction of an opt-out system, both the Competition Appeal Tribunal and the Netherlands are reviewing the effectiveness of similar regimes.
“We welcome the Scottish Civil Justice Council consultation but would encourage that, as a minimum, there is proper consideration given to the experience of other jurisdictions, the potential economic impact and the views of the business community and the public sector in Scotland.”
David Thomson, CEO, Food and Drink Federation Scotland, commented:
“In Scotland food and drink manufacturers operate in a highly competitive global market. We need a stable business environment to invest and in turn, create jobs. Changes to this legislation risks undermining investor confidence at a time when economic growth and inward investment are critical.”
Upon completion of the Scottish Civil Justice Council consultation process, it is expected that new rules would be introduced via a Scottish Statutory Instrument and could become law automatically unless Parliament voted to annul within a limited number of days.
Seema continued: “Bringing forward opt-out for group proceedings would do little to help Scottish consumers, businesses or the public sector. On the evidence so far, the answer is neither consumer nor country.”
Anthony Maton, Global Co-Chair of Law firm Hausfeld, has challenged the claims of Fair Civil Justice. He commented:
“Fair Civil Justice is a campaign ostensibly presenting themselves as consumer advocates but who are in reality backed by big business and were set up by an arm of the US Chamber of Commerce. It is these same big business interests that would stand to gain from a dilution of the regime.”
According to Hausfeld, Fair Civil Justice is a lobbying organisation set up by the Institute for Legal Reform, an arm of the US Chamber of Commerce. David Meyerson, a Senior Director at the Institute, and based in the US, is listed as a Director of Fair Civil Justice on Companies House.
Opt-out actions provide a meaningful route of redress for consumers and businesses and hold rule-breaking companies to account. The judgment in the recent Kent v Apple claim found that Apple abused its dominance in relation to the App Store with an award of damages for consumer and business user of the App Store of £1.5bn.
Nicola Boyle, Managing Partner, Hausfeld, also commented on the means by which opt-out actions provide a meaningful route of redress for consumers and businesses and hold rule-breaking companies to account. She cited the judgment in the recent Kent v Apple claim, which found that Apple abused its dominance in relation to the App Store with an award of damages for consumer and business user of the App Store of £1.5bn.
She explained: “The CAT’s recent judgment in Kent v Apple shows the regime working exactly as intended. It provides a route for compensation that would be impossible on an individual basis, reinforces deterrence across a vital sector of the economy, and signals to businesses that compliance is the foundation of competitiveness, and not its obstacle.”
Recent polling commissioned by Hausfeld shows that public support for collective actions outweighs opposition, with nearly two-thirds (64%) supporting making collective claims easier to bring.
Anthony Maton, Global Co-Chair, Hausfeld, concluded: “The message from the public could not be clearer: people want fair markets, meaningful accountability and a system that ensures rule-breaking companies cannot simply retain unlawful gains.”
