On July 31, 2020, Scotland implemented a new legal mechanism for group proceedings. The ‘opt-in’ class actions represent a hybrid between U.S. opt-out class actions, where claimants are automatically included and remain fully anonymous, and non-U.S. opt-in countries where claimants file group complaints with each a named party.

Opt-in group proceedings

The Civil Litigation (Expenses and Group Proceedings) (Scotland) Act 2018 that passed in June 2018 enables legislation included both opt-in and opt-out class actions. The statute was short and broadly written, leaving it for the judiciary to develop Court Rules with details.

In March 2020, the Scottish Civil Justice Council (SCJC) created a working group to make the Rules, which produced The Act of Sederunt (Rules of the Court of Session 1994 Amendment) (Group Proceedings) 2020 that went into effect at the end of July. The Rules only permit opt-in classes. Opt-out classes may or may not come later.[1]

Neither the enabling Act nor the Court Rules specify the types of claims that can be prosecuted this way. At least one consumer class action is already in the works, for car purchasers harmed in the VW Dieselgate emissions scandal. However, it remains to be seen whether opt-in securities class actions can or will be brought for that matter.

Group proceedings must be filed in the Court of Session, which has a minimum claim value of £100,000. The Rules permit class actions where there are (a) two or more members (called pursuers); and (b) there exists one or more issues common or related to all pursuers. The group representative must petition and be approved by the court. He/she can but is not required to be a group member. Only one representative is allowed, so courts must resolve competing applications.

It is important to keep in mind that the representative must make all reasonable efforts to identify and notify potential group members of proceedings. This may include advertising the proposed representative’s application if required by the Court. It includes advertising after the application is granted, letting group members know the deadline and process for opting-in. Claimants must affirmatively ‘opt-in’ to group proceedings by giving the representative a court-approved Form of Notice of Consent. Those expressly joining get listed on a court-approved Group Register. Group members can withdraw by submitting a court-approved Notice of Withdrawing Consent and will then be stricken from the Group Register.

After group members know the deadline and process, filing and service of the Group Register on the defendants’ start proceedings for listed group members. Before trial, claimants may be added or removed from the Group Register. After the trial starts, the Register can only be changed with court permission. The representative must inform all group members of membership changes. The Rules do not specify whether the Group Register is publicly accessible.

While the Court Rules specify deadlines around applications, they give courts broad discretion to set later case events and their time frames. As a result, the likely duration of class action proceedings is not clear. Representatives must consult with group members on the terms of any proposed settlement before damages may be distributed.

Conclusion

Scotland permits success fees and litigation funding. With these and the new opt-in group proceedings, we will likely see a significant increase in the number of class actions filed there. However, many details still need to be worked out, and only time will tell whether Scotland emerges as an effective venue for shareholder suits.

[1] Under the Act, opt-in proceedings require the express consent of each group member on whose behalf proceedings are brought.  For opt-out classes, which have not yet been implemented, the class definition automatically encompasses residents of Scotland; however, claimants outside the country must affirmatively opt-into the classes.

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