Out-Law News 2 min. read
16 Oct 2009, 9:41 am
Scotland's second most senior judge, the Lord Justice Clerk Lord Gill, has produced the Scottish Civil Courts Review. This backs the introduction of class action suits.
"However well the regulatory regimes may operate, there may still be cases that require to be litigated and a multi-party procedure is, in our view, an essential element of the range of options available for the resolution of disputes involving a number of parties with the same or similar legal or factual interests," said the Review. "There should be a special multi-party procedure."
Class action suits as practiced in the US are highly controversial. They involve the taking of a case against one defendant on behalf of tens, hundreds or even thousands of claimants.
Though settlements can run to billions of dollars in successful cases, once the money has been divided thousands of times litigants can end up with just a few dollars each. Lawyers organising the case, though, often walk away with 20% or even 30% of the massive payouts.
Lord Gill's Review recognised this as a danger in class action systems. "US class actions have been criticised for being cumbersome, expensive and ruinous for many defendants," it said. "There have been significant battles over the certification of a class, (‘satellite litigation’), while the costs and risks of defending a claim are sometimes alleged to be so high that it may be cheaper to settle (‘blackmail litigation’)."
Lord Gill said in the report, though, that a solution had to be found to the problem of conducting cases where many people have the same experience. Mass litigation in Scotland is possible, but cumbersome, he said.
"Recent mass litigation in the Scottish courts has highlighted problems arising from the lack of a formal multi-party procedure," he said in the Review. "The availability of such a procedure to manage prisoners’ ‘slopping out’ claims might have reduced the burden on the public purse and the pressure on the courts."
"The recent dispute concerning the lawfulness of bank charges has resulted in more than 400 actions being litigated in sheriff courts throughout Scotland. Despite the common issues these actions raise, there are no mechanisms whereby they can be transferred to a single court and managed as a group," the Report said.
John Mackenzie, an expert in Scottish litigation at Pinsent Masons, the law firm behind OUT-LAW.COM, told technology law podcast OUT-LAW Radio that while group litigation is possible currently in England, the possibility of taking class action suits will be welcomed.
"The class action is a development on the English model which allows for a group litigation order. What that allows for is the case management of claims that give rise to a similar issue of fact or law," he said.
"Where I think the class action has a distinct advantage is that it comes together in a concept that people on the street will understand," said Mackenzie. "The English procedure is perhaps about trying to manage existing cases rather than starting with the concept of a big group of people."
Lord Gill's report was commissioned by the Scottish Justice Minister. The Scottish Government will decide which of his recommendations to adopt.
Hear John MacKenzie on OUT-LAW Radio