Linklaters – Collective actions – court proceedings brought by a number of claimants with similar or related interests against a defendant or group of defendants – are becoming increasingly important in civil litigation. It is therefore vital that businesses with cross-border operations are aware of the potential actions they may face in other jurisdictions, brought by way of procedures with which they may be unfamiliar.
Our newly updated review Collective redress – a comparative review, considers the availability and operation of collective redress in 20 jurisdictions across the Americas, Africa, Asia-Pacific and Europe.
Procedures differ widely between jurisdictions and range from the sophisticated and highly developed proceedings which are a regular occurrence in US (and indeed, Australian) litigation, to actions which are restricted to certain sectors or disputes, such as the KapMuG in Germany, which operates in the context of capital markets disputes only.
Whether a collective action procedure is “opt in“ or “opt out” is another area of divergence between jurisdictions. The majority of jurisdictions favour opt in procedures but there are signs that opt out proceedings may be becoming more common. The judgment in Portuguese ação popular proceedings, brought by a representative claimant to protect a public interest, will generally bind all potential claimants except those who have formally opted out. In Spain, would-be claimants have the opportunity to opt into collective proceedings and take an active part in them, although the result of the case will ultimately bind all those affected by the decision, whether they opted in or not.
The advent of third-party funding as a recognised source of financial backing for claims in many jurisdictions is likely to fuel the growth of collective actions. However, jurisdictions are keen to ensure that this method of funding does not result in the pursuit of unmeritorious claims. It is likely that the funding of and recovery of costs for collective actions will continue to be a controversial issue as the procedure becomes more widely available.
This comparative review is intended to highlight issues rather than to provide comprehensive advice. If you have any particular questions about collective proceedings, please contact the Linklaters LLP lawyers with whom you work.