Non-U.S. shareholder class actions are on the rise and venues for group shareholder litigation continues to expand. Many countries routinely host group actions, with the bulk of actions occurring in Australia and Taiwan. However, other jurisdictions have increasingly allowed such lawsuits. While each jurisdiction has its own particular nuances in how it allows its class action regime to operate, contrary to popular belief, the majority of shareholder litigation matters outside the U.S. and Canada involve opt-out class actions or jurisdiction risk profiles comparable to U.S. passive claim filing.

With increased interest from investors in participating in global actions, fiduciaries have begun to view considering these cases an as an obligation to their clients. Excluding Taiwan, 75% of all non-U.S. matters between 2015-2017 either had claims filing processes, similar to the U.S., or were filed in countries with jurisdictional risk profiles comparable to that of the U.S. This has allowed institutions to establish policies and procedures to streamline the majority of matters while focusing time and effort on just those jurisdictions with higher risk profiles where more evaluation is appropriate before action is taken.

In fact, our recent report (link) highlights that many securities fraud cases have been pushed overseas and the decision has led to suits in more countries, dynamic legal developments in jurisdictions, more lawyers and funding sources and better outcomes and lower fees. 

Three jurisdiction profiles to help you understand the risks associated with each foreign jurisdiction:

1. Australia – Click here to download the Australia Jurisdiction Profile

Australia is among the most active jurisdictions outside of the US and Canada. To date, class actions there have recovered more than $1.86 billion for investors.

While Australia already had a well-developed class action system in place, it was largely impractical given the costs associated with investors serving as representative plaintiffs. In the wake of Morrison, litigation funding companies became more active, providing a strong impetus for more filings.

2. United Kingdom (UK) – Click here to download the UK Jurisdiction Profile

Most consider the UK the riskiest and most burdensome non-U.S. jurisdiction for prosecuting securities claims. Historically, recouping losses in the UK has meant the lengthy, protracted, and expensive litigation of difficult to prove claims.

With the Morrison v. National Australia Bank decision limiting what may be litigated in the U.S., the UK along with other countries are finding a need to refine and update their class action processes.

3. Taiwan – Click here to download the Taiwan Jurisdiction Profile.

Outside of the U.S., Taiwan is the most active jurisdiction for securities cases, comprising roughly 50% of all non-U.S. and Canada matters. Despite the volume of cases, we consider Taiwan a high-risk jurisdiction given the limited prospects for recovery, the formalities necessary to join, the potential for costs to be taxed back, and the potentially limited anonymity.

Download FRT’s report to gain insight into why suits brought under non-U.S. law in foreign courts have become a prominent component in the effort to maximize recoveries from shareholder litigation.

Overall, the landscape of these global matters is slowly shifting to mirror those of U.S. passive claims filing. It’s important for investors to understand the nuances of their trading jurisdictions in order for them to begin to develop internal policies for foreign actions. In many cases, claims filing can be automated, as in the U.S., freeing up fiduciaries to focus more on higher-risk jurisdictions that require more direct involvement.

FRT has developed mechanisms to help institutions automate their participation in these matters, minimizing the amount of time and effort needed by investors to recover in lower-risk jurisdictions. This leaves clients free to focus on the legal mechanisms for handling group actions in higher-risk, more complex jurisdictions with complicated structures for developing group actions, where it is necessary for investors to thoughtfully evaluate participation.