Justice: Collective Actions

Statement

The Parliamentary Under-Secretary of State, Ministry of Justice (Lord Bach)
My honourable friend the Parliamentary Under-Secretary of State (Bridget Prentice) has made the following Written Ministerial Statement.

Today we are announcing the Government’s response to the Civil Justice Council’s report Collective Actions: Improving Access to Justice through Collective Actions.

The Civil Justice Council published its report on collective actions on 12 December 2008. The report proposed that a general legal right for representative bodies to bring collective actions should be created and that this should be possible either in respect of an identified group of claimants or on behalf of an entire class—that is, for both named and unnamed claimants. Whether to allow a particular collective action to proceed, and whether on an identified group or class basis, would be a matter left to judicial discretion.

The council’s recommendations included:

increasing the types of representative bodies that can bring claims;

making the judiciary the gatekeeper of the procedure;

permitting claims to be brought on an opt-out basis where it is in the best interests of justice; and

changing the law to permit the award of aggregate damages.

The Government are grateful to the Civil Justice Council for carrying out this review and welcome the report and its analysis, identifying where further work or reforms are needed and setting out the case for change. The report has been carefully considered and the Government have concluded that collective actions would be best taken forward on a sector-by-sector basis. We do not believe that the creation of a generic right to collective action would be appropriate.

There are a number of reasons why we have reached these conclusions. A generic right would introduce the possibility of collective actions for any and all types of civil claim in every sector of society and the economy. It would be very difficult to assess impacts across the entire economy and, if the overall benefit was positive, that might fail to highlight individual areas where the impact might be adverse.

In addition, there may be substantive law issues relating to damages. The potential for a shortfall or surplus cuts across the compensatory principle underpinning (most) civil damages and the appropriate approach may vary according to the type of claim involved and, in particular, the type of representative body bringing the action.

Nevertheless, collective actions are potentially a useful way to manage mass legal claims in a number of areas where a large number of people are likely to have related grievances. However, there may be strong arguments both for and against the introduction of collective action in any particular sector and the Government do not think that it would make sense to impose a one-size-fits-all policy across the whole economy.

Each sector will be responsible for deciding whether to introduce a right of action and for developing the required legislation, where there is evidence of need and following an assessment of economic and other impacts. For example, if the consumer sector, having considered alternative approaches and taken account of stakeholder views and economic impacts, decided that collective court actions offered a way forward, it would be able to ask Parliament to give representative bodies the right to bring actions on behalf of consumers.

The Government will work to develop a framework document that will in essence consist of a “toolkit” for legislators. It will identify the key features that legislation granting new rights of action will need to contain. In conjunction with this, the Ministry of Justice will develop rules of court. These will be designed to interface with new rights of action and will be sufficiently flexible to deal with any different approaches taken by sectors in respect of such issues as authorisation of bodies, allocation of damages and whether claims are to be brought on an opt-in or an opt-out basis.

Subject to any sector-specific exceptions, the rules will also include provisions for mandatory use of alternative dispute procedures, certification, security for costs, case management and fairness hearings.

Copies of the government response have been placed in the Libraries of both Houses and the response is available on the Ministry of Justice website at www.justice.gov.uk. The Civil Justice Council’s report is available on the Civil Justice Council website at www.civiljusticecouncil.gov.uk.