Scotland Is Considering Passive Class Actions – FRT is Helping Shape the Discussion
Complete the form below to watch the full recording of the FRT’s 2026 Class Action Market Insider.
When the rules governing a country’s group proceedings change, so too can the legal and recovery mechanisms available to shareholders.
Scotland is the latest example. Five years ago, the country passed the Consumer Scotland Act 2020, which authorized both opt-in (direct) and opt-out (passive) group proceedings. Scottish courts began by implementing opt-in rules. Now, with successful use of the opt-in system under its belt, the Scottish Civil Justice Council (SCJC) has established a working group to develop fair and effective rules for opt-out group proceedings.
FRT is one of the largest players in the shareholder class action landscape, with 2,500 institutional clients recovering more than $1 billion per year in aggregate. Our market presence affords us the ability to participate in policy discussions and shape the broader discourse. As such, when the SJCJ recently sought public input on opt-out proceeding rules, FRT’s in-house legal team offered its perspective.
Two Distinct Class Action Approaches
As an established market, the UK is a critical venue for shareholder recovery that uses an opt-in system for group actions – to bring their claim, investors must deliberately and actively participate as parties to litigation against a defendant.
In contrast, the United States and Australia rely on an opt-out system that automatically includes harmed investors in the larger group or “class.” These investors can then either participate in the class action passively (without financial or reputational risk), or they can elect to “opt out” of the larger group and pursue direct legal action.
The language of the Consumer Scotland Act 2020 already legally permits opt-out group proceedings. At this stage, the Scottish working group’s primary goal is to introduce an effective opt-out framework for all group actions, including securities cases. The SCJC asks what these rules should look like and how they might differ from opt-in rules.
Last month, FRT submitted commentary encouraging the SCJC to adopt rules that would make participation in group proceedings more feasible for institutional investors. We shared our experience filing and managing securities class action claims in U.S. and Australian, highlighting those jurisdictions as potential models for Scottish opt-out rules. We also referenced our knowledge of working with third-party litigation funders across group actions in Europe and Asia.
UK Shareholder Recovery: The State of Play
Throughout the UK, there has been general movement away from representative processes, highlighted by recent setbacks or failures to establish them.
- Two securities cases (Reckitt and Indivior) brought via representative proceedings under Civil Procedure Rule 19.8 were struck out by the High Court, with the decisions later upheld on appeal.
- The Supreme Court’s denial of class certification in the Foreign Exchange (“FX”) antitrust case removes the Competition Appeal Tribunal as a viable avenue for opt-out investor recoveries.
The prevailing opt-in system comes with challenges and risks that make group participation less favorable for investors – such as adverse cost-shifting or court disclosure of a claimant’s identity.
Against this backdrop, Scotland’s adoption of opt-out class actions could be a significant positive development within the broader UK investor rights landscape. FRT will continue to monitor relevant legal developments in all countries where group shareholder recovery exists and, when possible, advocate for our clients’ interests.
Click here to read FRT’s submission to the SCJC.