The number of class actions being pursued in the UK is on the rise and has been for several years but there remains a learning curve.
The trend in class actions is due, in part, to legislative and procedural changes that have broadened the scope for their use. There has also been a shift in thinking from the judiciary, which recognises the potential for costs savings and efficiencies in managing large volumes of claims under one umbrella.
As a result, we have seen class actions being brought against large corporations such as Google, Mastercard and Visa.
However, a recent decision involving Shell underlines the fact that the courts will look closely at whether claims are appropriate for a class action structure. In this case, the decision focused on whether a representative action could be taken forward.
Jalla v Shell International Trading and Shipping Co Ltd
A claim against Shell was issued in the name of Mr Jalla and Mr Chujor on their behalf and on behalf of a very large number of individuals (more than 27,500) and 457 communities in Nigeria. The allegation was that this group had suffered damage as a result of an oil spill off the Nigerian coast in December 2011.
In broad terms, the claimants allege that companies forming part of the Shell group are responsible for that oil spill. Shell is defending the claim on numerous grounds, including that no oil from the spill reached the Nigerian coastline or caused any damage.
Jalla and Chujor sought to pursue the claim against Shell as a representative action. Such an action can be brought where more than one person has the same interest in a claim and the claim is brought by or against one or more of those persons.
However, earlier this year, Shell applied to strike out the proceedings, submitting that they were not properly constituted as a representative action under rule 19.6 of the Civil Procedure Rules of England and Wales (CPR). Shell argued that Jalla and Chujor, and those they purported to represent, did not share “the same interest” pursuant to CPR 19.6(1).
A judgment was handed down at the end of August ( EWHC 2211 (TCC)). The court decided that, even though the claims of Jalla and Chujor and of those they represent raised some common issues of law and fact, the represented claimants did not satisfy “the same interest” requirement under rule 19.6(1).
In reaching this decision, the court determined that the individualised claims of the represented claimants were not merely subsidiary to the main issues raised in the claims brought by Jalla and Chujor.
In particular, the represented claims would require individual evidence of damage, as each claimant would likely allege that they suffered loss in different ways and to varying degrees. This would also mean that the defences that Shell was likely to raise would also be individual in nature.
Therefore, the representative elements of the proceedings were struck out, but the court allowed the personal claims of Jalla and Chujor to proceed in their own right.
Usefully, this latest judgment summarises the relevant principles concerning “the same interest” requirement under CPR 19.1(6) and it is clear from the line of authorities that the courts will adopt a strict approach when applying the relevant test.
The court underlined that “the same interest” requirement is statutory and is to be interpreted having regard to the overriding objective (meaning that cases should be dealt with justly and at proportionate cost). The requirement therefore for claimants to share the same interest should not be used as an “unnecessary technical tripwire”.
The court’s reasoning in this regard leaves scope for the courts to be pragmatic when determining whether future representative class actions should be allowed to proceed.
As for the funding of class actions, third party litigation funders are increasingly willing to finance them in the UK. Many funders operate globally and bring with them experience in jurisdictions, such as the United States, where class actions are already commonplace.
There are a number of significant class actions currently passing through the courts. For example, the action brought by iPhone users against Google for data privacy breaches, as well as the action brought by British retailers against Mastercard and Visa for anticompetitive behaviour when setting interchange fees.
Large corporations and organisations would do well to keep these claims and future developments in mind as it is likely that we will see the trend in the rise of class actions continue.