This sounds like a significant development in the UK litigation landscape. While this development has generated seemingly endless debate about the benefits, or otherwise, of a class action regime, in reality, for a number of reasons, including the following, its effect remains to be seen:

  • Opt-out class actions are only available in the Competition Appeal Tribunal (the CAT) in the context of private actions for breaches of competition law, not in the wider court system. Although, notably, the CAT can now hear stand-alone competition claims: historically, the CAT only had jurisdiction to hear private damages claims in respect of which a regulatory body had already made a finding of infringement (a so-called ‘follow on’ damages action).
  • Whether they are opt-in or opt-out, before they can be heard in the CAT, all collective actions must first be certified. Among other things, the certification regime requires the CAT to consider that the applicable proceedings “…raise the same, similar or related issues of fact or law and are suitable to be brought in collective proceedings.” All eyes are likely to be on the first class which applies for certification to see how the CAT interprets this requirement in practice.
  • All collective actions must be brought by a representative: either a directly affected class member or ad hoc representative entity. The CAT will have to authorise the representative to bring the claim and will only do so “…if the Tribunal consider that it is just and reasonable for that person to act as a representative in those proceedings.” How precisely the ‘just and reasonable’ requirement will be interpreted by the CAT remains to be seen and, again, is likely to be watched closely be commentators and practitioners alike.
  • Opt-out class actions in the CAT apply to UK domiciled claimants only. Any foreign domiciled claimants must specifically opt-in to the class.
  • Damages based agreements (DBAs) are expressly prohibited for opt-out collective proceedings.

Perhaps most interestingly for litigation funders like Vannin, is the prospect that it seems from the language of Schedule 8 that unclaimed damages from an opt-out class action may be paid to the class representative for “costs or expenses incurred…in connection with the proceedings.” This is being interpreted by many as meaning that the costs of litigation funding, including any funding premium, may be recoverable from any unclaimed damages, leaving available to those claimants making a recovery the full complement of their damages entitlement.
However, it is impossible to know at the outset of a case whether there will be unclaimed damages from which the funder can recover its investment and, if so, what the size of the unclaimed damages pot will be. If there are no unclaimed damages available, in reality, it may be difficult to see how the funder’s investment will be repaid, especially in circumstances where the expected damages return for each individual claimant may be relatively small.
The statutory regime for private enforcement of competition law is evolving. The introduction of Schedule 8 of the Consumer Rights Act has changed the landscape. The European Commission’s directive on Antitrust Damages Actions, which was signed into law on 26 November 2014 will, in due course, develop it further. Whether either will result in a sea-change in approach by the English courts remains to be seen.

Notes to Editors:

For more information on Vannin Capital, please contact: Meika Aysal, Marketing at Vannin Capital, T: +44 207 099 5180, E: