Article published on how in-house lawyers can tackle the increasing threat of class actions in the English courts

Class actions represent an increasing area of risk for UK corporates, with increasing numbers of high-profile and high-value group claims being brought, or threatened to be brought, in the English courts. The principal mechanism used to litigate these claims differs from the ‘opt-out’ class action familiar from the US, where claimants who fall within a defined class are automatically included unless they take steps to opt out. In contrast, claims in the English courts normally proceed on an ‘opt-in’ basis, with claimants issuing claims which are then managed together by the court under a Group Litigation Order (or GLO).

Damian Grave, Gregg Rowan and Maura McIntosh have published an article in the Summer Edition of the In-House Lawyer magazine which explores the reasons for the rise in group litigation in England and Wales and considers what strategies defendants can bring to bear to improve their position in such cases. Click here to view a PDF.

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Filed under Announcements, Collective actions

Brexit White Paper reiterates aims for civil judicial cooperation

The UK government has today published its White Paper detailing its proposal for the future relationship between the UK and the EU. The short section on civil judicial cooperation echoes the aims set out in the government’s Framework for the UK-EU Partnership published on 13 June (as outlined here).

The White Paper recognises the benefits of civil judicial cooperation for both the UK and the EU, including that it gives businesses legal certainty in the event of disputes and makes them more confident trading across borders. It says, uncontroversially, that the future relationship between the UK and the EU should protect these advantages.

The paper reiterates the government’s intention to seek to participate in the Lugano Convention post-Brexit, noting however that “while the UK values the Lugano Convention”, some of its provisions have been overtaken (a reference, no doubt, mainly to the stronger protections for exclusive jurisdiction clauses under the recast Brussels Regulation) and it is limited in scope. It adds that the UK is keen to explore a new bilateral agreement with the EU, which would cover a coherent package of rules in civil, commercial, insolvency and family matters.

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Filed under Choice of law, Enforcement, Jurisdiction

Holding company liability for acts of a subsidiary: Court of Appeal finds English court lacks jurisdiction on basis no duty of care owed

In the latest in a line of jurisdiction rulings in cases of so-called “class action tourism”, the Court of Appeal has held that the English court does not have jurisdiction to hear tortious claims against two companies in the Unilever group, domiciled in the UK and Kenya respectively, arising out of alleged injuries suffered by individuals on the subsidiary’s Kenyan tea plantation at the hands of third parties during post-election violence in 2007: AAA and others v Unilever PLC and Unilever Tea Kenya Limited [2018] EWCA Civ 1532. In doing so, the Court of Appeal has upheld the first instance decision, albeit on different grounds.

This is the second Court of Appeal decision this year in which a UK incorporated company and its overseas subsidiary have successfully challenged the jurisdiction of the English court to hear claims arising out of the operations of the subsidiary company abroad. Our discussion of the first decision, Okpabi and others v Royal Dutch Shell plc and another [2018] EWCA Civ 191, can be found here.  However, this remains a developing area of the law and it will be interesting to see whether the claimants will seek permission to appeal to the UK Supreme Court.

John Ogilvie, Damian Grave and Neil Blake, partners, Joanne Keillor, a senior associate, and Jake Savile-Tucker, an associate, in our disputes team consider the decision further below. Continue reading

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Article published – Damages-Based Agreements: A chance to make them work?

The government has recently launched its post-implementation review of the key legislation that implemented the Jackson reforms, including the introduction of damages-based agreements (or DBAs), back in April 2013: Part 2 of the Legal Aid, Sentencing and Punishment of Offenders Act 2013 (LASPO). The review includes a stakeholder conference held by the Civil Justice Council on 30 June and an online survey to give those affected by the reforms an opportunity to make their views known.

The MOJ’s initial assessment of the reforms, published in advance of the CJC conference, recognises that there has been some criticism of the current DBA regulatory regime, which is widely blamed for the perceived low take-up of this method of funding.

Maura McIntosh has published a post on Practical Law’s Dispute Resolution blog which considers the post-implementation review and the views expressed at the CJC conference, specifically focussing on the issues relating DBAs and how they can be addressed. Click here to read the post (or here for the Practical Law Dispute Resolution blog homepage).

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Awarding costs in group litigation: Court of Appeal says “who receives the cheque” does not determine success

A recent Court of Appeal decision illustrates the court’s approach to awarding costs in the context of complex group litigation, and how it differs from the approach taken in ordinary commercial litigation: Sirketi v Kupeli [2018] EWCA Civ 1264.

Under CPR 44.2, in exercising its discretion as to costs, the court’s starting point is that the successful party is entitled to recover its costs from the unsuccessful party, though the court can make a different order. In general, in a commercial claim, the most important factor in determining which party is successful or unsuccessful is to look at who writes the cheque.

In this case, which involved some 838 claimants, the High Court applied that approach in finding that the claimants were the successful party following a trial of preliminary issues and lead claims. As that trial had resulted in a damages award to 14 of the lead claimants (for a total of just under £9,000), the judge concluded that the claimants were prima facie entitled to their costs – though she reduced the costs to 33% in light of various other considerations.

The Court of Appeal overturned the judge’s decision, finding that “who pays whom” was not a reliable indication of success in a complex group claim. There are other material factors, including the respective success or failure in the individual claims within the group, and success or failure in the common issues that are intended to assist in determining individual claims. Continue reading

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Filed under Collective actions, Costs

Our new book launched today: Class Actions in England and Wales

Herbert Smith Freehills is today launching a new textbook, Class Actions in England and Wales. Written by lawyers from the firm and published by Sweet & Maxwell, it aims to become an essential resource for those bringing or defending class actions in the English courts. Class actions have become increasingly prevalent in this jurisdiction, with growth fuelled in part by the activity of claimant firms and litigation funders. It is an increasingly important area for the firm and its clients.

In the book’s foreword, the Chancellor of the High Court, The Right Honourable Sir Geoffrey Vos, describes the book as “an approachable and insightful text, offering useful summaries of the main authorities and a practical guide to the conduct of a collective action”, which he predicts will “rapidly become invaluable” to lawyers engaged in class action litigation.

Continue reading

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High Court decision underlines high threshold to find a contract void for common mistake

In a recent decision, the High Court found that two five-year aircraft lease agreements were not void on the grounds of common mistake, where it was understood that the aircraft would be used to undertake airlifts for the Hajj and Umrah pilgrimages and the required regulatory approval was not obtained: Triple Seven MSN 27251 Ltd v Azman Air Services Ltd [2018] EWHC 1348 (Comm).

At the time of the contract the parties had shared a mistaken common assumption about the possibility of obtaining approval, when in fact approval had already been refused. However, the court found that the mistaken assumption was not sufficiently fundamental. It did not render the lease agreements “essentially and radically different” from what the parties had understood, nor impossible to perform, and therefore the agreements were not void due to the common mistake. In any event, the lease agreements allocated the risk of not obtaining approval, which meant the doctrine of common mistake could not apply.

Although this is a first instance decision where the court applied existing principles, it is a helpful reminder of the high threshold for establishing that a contract is void due to a shared mistaken assumption underlying it.

Ramyaa Veerabathran, an associate in our dispute resolution team, considers the decision further below. Continue reading

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Anti-suit injunction refused for EU proceedings but granted for non-EU proceedings

In a recent decision, the High Court refused to grant an anti-suit injunction to restrain Cypriot court proceedings brought in breach of an arbitration clause, but granted an injunction in respect of Russian proceedings: Nori Holdings Limited et al v PJSC Bank Okritie Financial Corporation [2018] EWHC 1343 (Comm).

The court found that there was nothing in the Recast Brussels Regulation (Council Regulation 1215/2012) to cast doubt on the continuing validity of the decision in West Tankers Inc v Allianz SpA (Case C-185/07) [2009] AC 1138. An anti-suit injunction directed at an EU Member State court’s proceedings, while not itself within the scope of the Regulation, undermines the effectiveness of the Regulation and is, therefore, prohibited.

At the same time, the court found alleged Russian mandatory jurisdictional rules referring an insolvency dispute to the Moscow Arbitrazh Court insufficient to displace the wide and general wording of an arbitration clause, with the result that it granted an anti-suit injunction in relation to the Russian proceedings.

For more information see this post on our Arbitration Notes blog.

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Agreement reached in principle on Brexit transitional provisions for jurisdiction and enforcement of judgments

On 19 June, the UK and EU negotiators published a joint statement outlining the progress made on the draft Withdrawal Agreement since it was last published in March 2018. The joint statement confirms that agreement has been reached in principle on the provisions relating to jurisdiction and enforcement of judgments, under article 63 of the draft Withdrawal Agreement. This means that, assuming the Withdrawal Agreement is ultimately finalised and put into effect, current rules on both jurisdiction and enforcement will apply where proceedings are commenced before the end of the transition period (31 December 2020).

Disappointingly, however, there is no provision for the current rules on either jurisdiction or enforcement to apply where a jurisdiction agreement was entered into before the end of the transition period, if proceedings are commenced only after that date. Continue reading

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Court of Appeal considers when court can use hindsight in assessing damages for “loss of a chance”

The Court of Appeal has considered the proper approach to awarding damages for the loss of a chance where a claimant has been deprived of a claim in litigation because of its lawyers’ negligence. It held that when courts value a lost chance, they should only exceptionally take into account evidence that would not and could not have been available at the notional trial date: Edwards v Hugh James Ford Simey, a Firm [2018] EWCA Civ 1299.

There has been some uncertainty as to the proper approach to this question. Comments in some previous cases arguably suggested that such evidence should ordinarily be taken into account in valuing the lost chance, to ensure that a claimant is not over- or under-compensated (see for example, Dudarec v Andrews [2006] EWCA Civ 256, considered in our blog post here).

In the present case, the Court of Appeal does not seek to establish a precise threshold as to when such evidence may be taken into account, but it clearly considers that a high threshold is needed. This threshold will be met where the original claim was based on fraud, or where there is a “significant or serious scale to the consequences of the supervening event” such that not taking into account that evidence would result in injustice.

Alex Sharples, a senior associate in our disputes team, outlines the decision below. Continue reading

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Filed under Evidence, Remedies, Tort