Transatlantic litigation: class actions in the UK and the US

The US has a long history of class action litigation. Supported by rule 23 of the Federal Rules of Civil Procedure, contingency fee arrangements, and broad discovery obligations, class actions are a key feature of the US legal landscape. The regime is firmly embedded in both the legal system and culture of the US.

The UK has traditionally adopted a more cautious approach. However, recent years have seen a significant expansion of collective redress, driven by the growth of Competition Appeal Tribunal (CAT) proceedings, the litigation funding market, and a series of important judicial decisions.

As a result, class actions (also known as collective redress or group claims) now represent a significant litigation risk on both sides of the Atlantic. While important procedural and cultural differences remain, the gap between the two systems has narrowed considerably. This article highlights some of the key distinctions.

Commencing proceedings

UK

Claimants can pursue collective redress through a number of procedural routes. For a detailed guide to these options, see the Legal 500’s Class Actions Comparative Guide here. In summary:

• Group litigation orders (GLOs) allow claims giving rise to common or related issues of fact or law to be managed together. GLOs operate on an opt-in basis and are subject to strict court regulation and management.
• Representative claims under CPR 19.8 permit one claimant to represent others who share the same interest in the proceedings.While representative claims can be brought on an opt-out basis, in practice this is rare because of the difficulties inherent in establishing that all claimants have the ‘same interest’.
• The courts may also use their general case management powers to consolidate or coordinate multiple related claims. This was recently confirmed by the Court of Appeal in Morris v Williams (in which Penningtons Manches Cooper acted for the successful claimants). It means claimants can either bring all their claims in one claim form at the outset, or have multiple claims joined or heard together.
• For competition claims, collective proceedings may be brought before the CAT on either an opt-in or opt-out basis under the Competition Act 1998.

US

US class actions are typically brought by representative plaintiffs on behalf of a proposed class. Proceedings may be brought in federal or state courts, although federal courts hear many of the largest class actions.

In addition, multidistrict litigation procedures may be used to coordinate related proceedings involving common factual issues.

Disclosure and discovery

For a detailed guide to the procedural differences between the UK and the US, see here. The key points in a class action context include:

UK

Disclosure is governed by proportionality and necessity. The courts increasingly seek to limit disclosure to what is required for the fair resolution of the dispute, particularly following the introduction of disclosure reforms in the Business and Property Courts under Practice Direction 57AD.

A crucial issue in class actions is the scope and timing of disclosure. The courts generally seek to avoid duplicative disclosure exercises and will often identify lead claims or lead issues for disclosure purposes. In GLOs and other managed group actions, disclosure is commonly given first in relation to generic or common issues, with claimant-specific disclosure deferred until it is necessary. Individual claimants are not usually required to provide full disclosure at the outset, particularly where common issues are expected to determine liability across the group. The courts retain a wide discretion and will seek to ensure that disclosure remains proportionate to the size and complexity of the litigation.

US

Discovery remains substantially broader. The process often commences at an earlier stage, and may extend across the class following certification. Parties may generally obtain discovery of non-privileged information relevant to claims or defences, subject to proportionality considerations. The breadth of discovery frequently creates significant costs and strategic pressures for litigants.

Damages 

UK

Damages are primarily compensatory. In CAT proceedings, the tribunal may award aggregate damages without assessing every class member’s loss individually. Punitive damages are rare and generally unavailable in CAT collective proceedings.

US

US courts may award compensatory, statutory, and, in some cases, punitive damages. The availability of punitive damages remains one of the most significant distinctions between the two jurisdictions. Foreign judgments for punitive damages are generally not enforceable in the UK. See this article for more details.

Settlement 

UK

Collective proceedings may be settled at any stage, without any oversight by the courts. Opt-out CAT settlements require tribunal approval and must be considered just and reasonable.

US

Settlements of certified class actions require court approval. Courts must generally determine that proposed settlements are fair, reasonable, and adequate for class members.

Costs and funding 

UK

The loser-pays principle remains a defining characteristic of English litigation. Successful parties will generally recover a proportion of their costs from the unsuccessful party. This adverse costs risk can be addressed in various ways. After the event (ATE) insurance is available to provide coverage for legal costs and expenses after a dispute has arisen. Conditional fee agreements (CFAs) and damages-based agreements (DBAs) are permitted as contingency fee arrangements (although DBAs are not permitted in opt-out collective proceedings in the CAT).

Alongside ATE insurance, CFAs, and DBAs, the third party litigation funding market has grown rapidly in recent years and now plays a critical role in collective proceedings. Following the Supreme Court’s decision in PACCAR [2023] UKSC 28 , many funding agreements required amendment or restructuring to remain compliant with the court’s interpretation of the DBA Regulations. However, legislation is intended to be introduced to remove the necessity for restructuring.

US

Generally, parties bear their own legal costs. Contingency fees remain a cornerstone of the US class action regime and continue to facilitate large-scale claimant litigation.

Key takeaways for transatlantic litigants 

• The US remains the more mature and expansive collective redress system.
• However, the UK is fast becoming one of the leading collective redress jurisdictions outside North America.
• Class action risk for defendants is no longer confined to the country in which the damage occurred. The English courts have seen a significant expansion in group litigation against parent companies headquartered in the UK, arising from ESG claims originating overseas.
• The principal distinctions between the US and the UK regimes remain the availability of opt-out procedures, approaches to costs, disclosure/discovery obligations, funding structures, and damages.

Conclusion 

Although the US remains the benchmark class action jurisdiction, the UK has developed a sophisticated and increasingly active collective redress framework. Global businesses with transatlantic operations must consider exposure from both a US and UK perspective. From a claimant perspective, it is crucial to consider the economic viability of claims and the practical issues arising from the procedural options available.