Judges rule collective claim must proceed as opt-in after tribunal deemed case weak
The Supreme Court has ruled that collective proceedings worth £2.7 billion against major banks over a foreign exchange spot-trading cartel must proceed on an opt-in basis, overturning a decision of the Court of Appeal.
In a unanimous judgment delivered by Lord Sales, Lord Leggatt and Lady Rose, the court reinstated the original ruling of the Competition Appeal Tribunal, which had refused to certify the claim as an opt-out class action.
The justices held that the tribunal was entitled to consider its assessment that the claim was weak when deciding whether opt-out proceedings were appropriate. They said the tribunal had been right to take into account the “leveraging” effect of opt-out actions and the pressure they can place on defendants to settle claims even where the underlying case lacks strength.
“The sophistication of the collective proceedings regime shows that it was not intended simply to provide a stick with which anyone who claims, however implausibly, to have suffered loss can beat infringing undertakings into paying them substantial damages,” the court said. Allowing clearly unmeritorious claims to proceed on an opt-out basis would lead to over-enforcement, contrary to the public interest.
The claim follows findings by the European Commission that six major banking groups, Barclays, Citibank, Royal Bank of Scotland/NatWest, JPMorgan, UBS and MUFG Bank, participated in foreign exchange spot-trading cartels. The banks were fined more than €1.1 billion.
The proposed class representative is Phillip Evans, a former panel member and inquiry chair at the Competition and Markets Authority. A majority of the tribunal had concluded that the case should proceed on an opt-in basis, finding that opt-in proceedings would be practicable and that the proposed class consisted of well-resourced and sophisticated entities capable of bringing claims if they chose to do so.
Although the tribunal accepted that an opt-in claim might fail due to limited take-up, it ruled this was not an access to justice issue. It said the likely collapse of the claim could not be treated as decisive in favour of opt-out proceedings.
The Court of Appeal later overturned that decision, holding that the tribunal’s criticisms of the claim’s strength were premature and that opt-in proceedings were impracticable. The Supreme Court disagreed, finding it neither illogical nor unfair for the tribunal to assess the claim’s weakness at the certification stage.
The justices emphasised that access to justice applies to defendants as well as claimants and said appellate courts should not interfere with discretionary decisions simply because they might have reached a different conclusion.
Mr Evans, who is represented by Hausfeld, said he was disappointed by the ruling. He argued that opt-in proceedings were unlikely to deliver meaningful redress for the individuals and businesses affected by the cartel’s conduct in the United Kingdom.