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| US Chamber of Commerce lobbies against class actions in UK courts | US Chamber of Commerce lobbies against class actions in UK courts |
| (about 11 hours later) | |
| The US Chamber of Commerce is lobbying to prevent US-style class actions being brought in the UK courts as litigation funding expands to promote consumer rights. | The US Chamber of Commerce is lobbying to prevent US-style class actions being brought in the UK courts as litigation funding expands to promote consumer rights. |
| Campaigning under the title Justice not Profit, the organisation is claiming that the Consumer Rights Act 2015 will open the door to spurious legal claims that undermine the profitability of business. | Campaigning under the title Justice not Profit, the organisation is claiming that the Consumer Rights Act 2015 will open the door to spurious legal claims that undermine the profitability of business. |
| The UK litigation-funding industry has expanded rapidly in the past few years. It is estimated to have amassed more than £1bn in capital to invest in court cases. Firms take on the costs and risks of cases and in return receive a proportion of compensation awarded in the final judgment. | |
| Over the same period, legal aid for claimants in civil cases has been repeatedly cut. Litigation funders, who operate like hedge funds, mainly target very high-value cases and have now begun repositioning themselves to take on mass lawsuits. | |
| I would like to see regulation that prevents groups of companies getting together and trying to sue however they like | I would like to see regulation that prevents groups of companies getting together and trying to sue however they like |
| Relatively few class actions have been funded by private funders in the UK so far. Bentham Europe, whose parent company is based in Sydney, is coordinating legal action against Tesco for aggrieved shareholders. The law firm Hausfeld is funding litigation by Apple users who claim Google has breached their privacy. | Relatively few class actions have been funded by private funders in the UK so far. Bentham Europe, whose parent company is based in Sydney, is coordinating legal action against Tesco for aggrieved shareholders. The law firm Hausfeld is funding litigation by Apple users who claim Google has breached their privacy. |
| But the Consumer Rights Act, which comes into force in October, introduces an opt-out regime, so that claims for redress can be brought on behalf of groups of individuals without the need to identify all the claimants. Cases will be brought in the Competition Appeal Tribunal. | |
| The current opt-in regime, which is about to disappear, is deemed not to be working and has resulted in only one collective action, when Which? magazine sued JJB Sports for overcharging on England and Manchester United replica football shirts. Other countries, including Australia, Canada and Portugal, have already introduced opt-in regimes. | |
| The Justice not Profit campaign is calling for tighter regulation. “Without adequate safeguards, the new ‘opt-out’ collective litigation system in the UK creates a commercial opportunity for ‘unregulated and predatory’ hedge funds and other investment firms with a specialised interest in litigation finance,” claims the organisation. | The Justice not Profit campaign is calling for tighter regulation. “Without adequate safeguards, the new ‘opt-out’ collective litigation system in the UK creates a commercial opportunity for ‘unregulated and predatory’ hedge funds and other investment firms with a specialised interest in litigation finance,” claims the organisation. |
| It added: “Ever since the 2008 financial crash, use of third party litigation funding, which is not regulated by the Financial Conduct Authority, has significantly grown.” It is demanding the retention of the opt-in system. | |
| Justice not Profit’s website acknowledges that: “The campaign is backed by the US Chamber Institute for Legal Reform, a not-for-profit public advocacy organisation affiliated with the US Chamber of Commerce, the world’s largest business federation, which represents the interests of more than 3 million businesses of all sizes, sectors and regions, in addition to state and local chambers and industry associations. | Justice not Profit’s website acknowledges that: “The campaign is backed by the US Chamber Institute for Legal Reform, a not-for-profit public advocacy organisation affiliated with the US Chamber of Commerce, the world’s largest business federation, which represents the interests of more than 3 million businesses of all sizes, sectors and regions, in addition to state and local chambers and industry associations. |
| “Many of the US Chamber’s members are companies that conduct substantial business in the UK or are British-owned and operated. ILR is therefore deeply interested in the orderly administration of justice in the UK.” | “Many of the US Chamber’s members are companies that conduct substantial business in the UK or are British-owned and operated. ILR is therefore deeply interested in the orderly administration of justice in the UK.” |
| Some UK law academics are backing the campaign. Dr James Griffin, a senior lecturer at the University of Exeter and expert in intellectual property law, said: “I would like to see some regulation that prevents groups of companies getting together and trying to sue however they like. There needs to be some regulation in my area.” | Some UK law academics are backing the campaign. Dr James Griffin, a senior lecturer at the University of Exeter and expert in intellectual property law, said: “I would like to see some regulation that prevents groups of companies getting together and trying to sue however they like. There needs to be some regulation in my area.” |
| Professor Richard Grimes, director of clinical programmes at the University of York’s law school is quoted on the Justice not Profit website as saying: “Consumers should get fair compensation. The question is if that will happen when there are no caps on funders’ fees.” | Professor Richard Grimes, director of clinical programmes at the University of York’s law school is quoted on the Justice not Profit website as saying: “Consumers should get fair compensation. The question is if that will happen when there are no caps on funders’ fees.” |
| We are not introducing a US-style class actions regime. This is about getting a better deal for businesses and consumers | We are not introducing a US-style class actions regime. This is about getting a better deal for businesses and consumers |
| Chris Bogart, chief executive of Burford Capital Ltd, one of the largest litigation funders operating in the UK, said: “The US Chamber of Commerce is a very well funded lobbying group and represents the interests of a small number of very large companies. | Chris Bogart, chief executive of Burford Capital Ltd, one of the largest litigation funders operating in the UK, said: “The US Chamber of Commerce is a very well funded lobbying group and represents the interests of a small number of very large companies. |
| “In their corporate self-interest they want as little legislation as possible. [The British courts] seem eminently capable of managing these issues. It’s clearly the policy of the UK government to encourage litigation funding.” | “In their corporate self-interest they want as little legislation as possible. [The British courts] seem eminently capable of managing these issues. It’s clearly the policy of the UK government to encourage litigation funding.” |
| The industry is self-regulated through the Association of Litigation Funders. “There’s no evidence of any problems in the UK,” Bogart added. “Litigation funding is a very small percentage of an enormous market. | The industry is self-regulated through the Association of Litigation Funders. “There’s no evidence of any problems in the UK,” Bogart added. “Litigation funding is a very small percentage of an enormous market. |
| “Litigation is extremely expensive and means in many cases consumers can’t get redress. In the US, pretty much the only way is through a class action,” he said. | “Litigation is extremely expensive and means in many cases consumers can’t get redress. In the US, pretty much the only way is through a class action,” he said. |
| Bogart added that he had recently taken part in a class action against a credit card company to recover disputed sums lost in foreign exchanges. “I couldn’t have recovered that relatively small sum of $300 unless it was through collective action.” | Bogart added that he had recently taken part in a class action against a credit card company to recover disputed sums lost in foreign exchanges. “I couldn’t have recovered that relatively small sum of $300 unless it was through collective action.” |
| There is no sign of government concern over the issue. The Ministry of Justice said it was a matter for the Department of Business, Skills and Innovation. | There is no sign of government concern over the issue. The Ministry of Justice said it was a matter for the Department of Business, Skills and Innovation. |
| A spokesperson for the department said: “We are not introducing a US-style class actions regime. The Consumer Rights Act is about getting a better deal for businesses and consumers. The current opt-in regime isn’t working, so we are transforming the system to ensure consumers and small businesses can hold those that breach competition law to account in the way big businesses can.” | A spokesperson for the department said: “We are not introducing a US-style class actions regime. The Consumer Rights Act is about getting a better deal for businesses and consumers. The current opt-in regime isn’t working, so we are transforming the system to ensure consumers and small businesses can hold those that breach competition law to account in the way big businesses can.” |
| The business department has said there would be significant safeguards to control the types of cases that will be brought in the UK. Treble or exemplary damages charges will not be permitted, cases will be restricted to the specialist Competition Appeal Tribunal and claims will have to be certified that they are representative of broader consumer problems and not vexatious. | The business department has said there would be significant safeguards to control the types of cases that will be brought in the UK. Treble or exemplary damages charges will not be permitted, cases will be restricted to the specialist Competition Appeal Tribunal and claims will have to be certified that they are representative of broader consumer problems and not vexatious. |