作者

Katie Chandler

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Samantha Brendish

高级律师

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作者

Katie Chandler

合伙人

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Samantha Brendish

高级律师

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2023年10月17日

Disputes Quick Read – 7 / 86 观点

CAT to hear the first application for a collective settlement approval order

  • Quick read

In a procedural first that will be of great interest to the class action market, the Competition Appeal Tribunal (CAT) will be asked to approve a settlement in an opt-out collective action (relating to car delivery charges) later this year.  

Background to collective proceedings orders

The collective proceedings order regime for competition damages actions was established in 2015 and allows such cases to be brought on either an "opt-in" or "opt-out" basis. Unless they expressly choose to opt-out, all members of the class upon whose behalf the action is brought are party to opt-out proceedings, whereas any class member who wishes to be part of opt-in proceedings has to actively choose to join them. Collective proceedings must be commenced by a person who proposes to be the representative in those proceedings, albeit they do not have to be a class member themselves (as long as the CAT is satisfied that it is just and reasonable for them to be the class representative). 

Crucially, in order for any case to proceed as a collective action, it has to be certified by the CAT by way of a collective proceedings order. As part of that process, the CAT will decide whether the proceedings in question should proceed as a collective action at all. Claims are eligible for inclusion in collective proceedings only if the CAT considers that they raise the same, similar or related issues of fact or law and are suitable to be brought in collective proceedings. The CAT will also need to decide whether any collective proceedings order should be made on opt-in or opt-out basis which involves a consideration of:

  • the strength of the claims
  • whether it is practicable for the proceedings to be brought as opt-in collective proceedings, having regard to all the circumstances, including the estimated amount of damages that individual class members may recover.

Settlement of collective proceedings 

Collective proceedings orders also raise interesting questions around settlement and the procedure differs depending on whether the proceedings are opt-in (where the CAT's approval is not required) or opt-out (where it is).  That is because in opt-in proceedings every represented class member would have been identified and in theory able to give instructions to the class representative. However, in relation to opt-out proceedings, not every class member will have been identified and so the CAT's approval is required for any settlement because it would affect the interests of all class members. If a collective settlement approval order is made, that settlement would then bind all UK-domiciled class members who have not opted out to the terms of the settlement. However class members not domiciled in the UK must actively opt into the settlement. 

In deciding whether to make a collective settlement approval order, the Tribunal will consider whether the settlement is "just and reasonable" for the class members, having regard to a number of factors, including:

  • The amount and terms of the settlement.
  • The number of estimated number of persons likely to be entitled to a share of the settlement. 
  • The likelihood of judgment being obtained in collective proceedings for an amount significantly in excess of the amount of the settlement size of the class covered by the settlement.
  • The likely duration and costs of the collective proceedings if they proceeded to trial.

The CAT's decision and how it deals with these considerations when hearing the application in early December will therefore be of particular interest to competition litigators.

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