Draft court rules to govern "collective proceedings" were published on 3 February by a working group set up by the Civil Justice Council. The aim is to provide a procedural framework for any new forms of collective action which might be introduced in particular sectors, including the new regime proposed for financial services claims under the Financial Services Bill.

The rules will now be considered by the Civil Procedure Rule Committee and, subject to any proposed changes, will be put out for consultation.

Key points from draft rules

  • The court will act as gatekeeper in determining which actions may be brought collectively and, if so, in what form. In doing so, it must be satisfied that collective proceedings are the most appropriate means for the fair and efficient resolution of the common issues.
  • Claims will not have to satisfy a preliminary merits test to be certified as appropriate for collective proceedings, but the respondent can apply for summary judgment or strike-out at the application stage. The court may also have regard to the merits as part of its overall assessment.
  • The court will have a wide discretion as to whether an action can be brought on an "opt-in" or "opt-out" basis.
  • The court will approve a class representative to bring the action on behalf of the class. The class representative may be either a class member or another "appropriate person" and need not otherwise have any interest in the proceedings. The court will have a wide discretion in determining who might be an appropriate person to bring the action.
  • In considering whether to approve the class representative, the court must be satisfied that the applicant will be able to pay the defendant's recoverable costs. The class representative may also be ordered to provide security for the defendant's costs.
  • A judgment on the common issues will bind all those represented (or the relevant sub-class).
  • Any settlement must be approved by the court and, if so approved, will bind all those represented unless they have been excluded with the court's permission.

Summary of implications

  • The draft rules do not in themselves introduce any new form of collective action. It is up to government departments responsible for individual sectors to decide whether a new collective action is appropriate and, if so, to introduce the necessary legislation (as the Treasury has done in respect of financial services claims by introducing the Financial Services Bill).
  • The rules will provide the procedural framework for any new collective action introduced in particular sectors, but are subject to modification in the relevant primary legislation or any regulations made under it. For instance, any particular sector may choose to apply more stringent criteria for a collective action to be brought or, conversely, to relax the requirements imposed under the draft rules.
  • With respect to financial services claims in particular, it is not yet clear to what extent the procedures set out in the draft court rules might be modified by Treasury regulations. The Financial Services Bill gives the Treasury wide powers to make regulations, including in relation to the criteria for a collective proceedings order, but no draft regulations have yet been published.
  • Whilst the draft rules currently provide for costs shifting (i.e. the loser pays rule) between the class representative and the defendant, this could change in light of Lord Justice Jackson's recommendations following his year-long review of civil litigation costs. Under his proposal, full costs shifting would be maintained as a default position but the court could order that a different costs regime should operate in appropriate cases.

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