SCOTLAND Trends and Developments Contributed by: Jacqueline Harris, Kirsty Gallacher, James Ferguson and Charlotte Kelly, Pinsent Masons
Pinsent Masons LLP 30 Crown Place Earl Street London EC2A 4ES United Kingdom Tel: +44 20 7418 7000 Web: www.pinsentmasons.com
Five Years of Group Procedure in Scotland – Where Are We Now? Introduction Five years after the introduction of Scotland’s formal class action mechanism – known as “group proce- dure” – a distinct procedural landscape is beginning to take shape. Established under Part 4 of the Civil Litigation (Expenses and Group Proceedings) (Scot- land) Act 2018 (the “2018 Act”), group procedure is designed to improve access to justice and enable the efficient resolution of mass claims. Although uptake has been gradual since the relevant provisions came into force on 31 July 2020, recent judicial guidance and growing practitioner experience are now actively defining the framework of group proceedings in Scot- land. The 2018 Act provides a broad framework for group procedure and is supplemented by court rules pro- viding further detail. Group proceedings are initiated by a representative party who brings the action on behalf of two or more persons, each having a separate claim in the group proceedings. Only one representa- tive party may act on behalf of the group; this can either be a member of the group (pursuers/claimants) or an external party such as a trade union or consumer organisation. The representative party must make a successful application for the court’s permission to proceed as a group proceedings action. As part of the permission stage, the court will consider the issue of commonal- ity – ie, the individual claims in the group must raise issues of either fact or law which are “the same as, or similar or related to, each other”. The court may refuse the application if the claim does not also satisfy the
merits test (that there is a prima facie case and the action has real prospects of success) or the efficiency test (that it is a more efficient administration of justice for the claims to be brought as group proceedings rather than by separate individual proceedings). Opt-in v opt-out During the legislative process leading to the 2018 Act, the policy options explored ranged from more limited opt-in procedures – requiring group members active- ly to consent to participation and typically involving individualised claims and damage assessments – to broader opt-out mechanisms, where representatives bring claims on behalf of all potential claimants unless they explicitly opt out. The Civil Litigation (Expenses and Group Proceedings) (Scotland) Bill only con- tained a mechanism for opt-in procedure when first introduced. However, during parliamentary debate, an opt-out mechanism was also introduced. Each approach involves trade-offs and reflects different policy priorities. Key concerns associated with opt- out mechanisms include: increased litigation and legal costs; challenges in calculating damages without indi- vidualisation or clear knowledge of the class size; the risk of encouraging a “compensation culture”’; and the potential for misuse, particularly where weak or unmeritorious claims are pursued. Ultimately, the legislation was drafted in such a way as to provide legislative authority for both opt-in and opt- out models. For either model, there is only a require- ment to introduce new court rules (rather than new primary legislation) to give effect to the procedure. Only an opt-in procedure has been implemented in court rules so far. For practical purposes, this leaves the future of opt-out procedure in the hands of the
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