It is often said that there is nothing new under the sun: sooner or later, everything is recycled, re-packaged and re-presented to a new and enthusiastic audience. This is true even for legal concepts. Class actions, which enable one or more parties to act in a representative capacity to bring an action on behalf of a larger class of litigants, are seen here as a very "American" idea, having long been used to resolve disputes in the United States.
The origin of the class action, however, is English - a holdover of medieval law which clung on long enough to be exported to the colonies before withering on the home vine in the 19th century. Now, however, they have returned, albeit in an updated form, to their ancestral lands, and, in the fallout from the recession, they are once again staking out territory in the Courts of England & Wales.
The current incarnation of the class action in England & Wales is the Group Litigation Order ("GLO"), which permits multiple claims against a defendant to be grouped into a single action, provided the Court is satisfied that the claims give rise to common or related issues of fact or law.
GLOs remain relatively uncommon, with only 80 orders having been granted since 2000. However, they are gaining ground and while many of the GLO actions involve personal injury claims (most commonly in relation to pharmaceutical product liability), there is an increasing trend for GLO actions in the financial services arena. We are currently seeing GLO actions being commenced against single institutions which have allegedly caused loss to a vast group of investors, which may be the product of the recent economic crisis. Such actions provide claimants who on their own would otherwise have been unable to bring a claim, the opportunity to seek redress collectively. Given the initial financial outlay that is required in GLO actions, these large, complex, commercial actions involving financial institutions are becoming an attractive opportunity. The existence of various action groups looking to bring collective actions in this area have been reported on the press in recent years, but in this article we focus on two particularly substantial, and prominent, collective actions which are making their way through the Courts at the moment.
RBS rights issue litigation
This case concerns a rights issue of shares in RBS which took place between May and June 2008. Shortly thereafter, Lehman Brothers collapsed in September 2008 and the...