A Carriage To Nowhere: CAT Willing To Certify FX Class Action, But Only On An 'Opt-In' Basis

• Published date: 20 June 2022
• Subject Matter: Insurance, Litigation, Mediation & Arbitration, Insurance Laws and Products, Class Actions, Trials & Appeals & Compensation
• Law Firm: Milbank LLP
• Author: Mr Julian Stait, Emma Hogwood, Cormac Alexander, Mark Padley and Hollie Fenwick

At the end of March 2022, the UK Competition Appeal Tribunal (the "CAT") handed down a detailed and wide-ranging 255-page judgment¹ in relation to two competing applications (the "Applications") for an 'opt-out' Collective Proceedings Order ("CPO") in follow-on damages proceedings arising out of the 2019 European Commission infringement decisions concerning cartels in the FX spot markets.² The claims were brought on behalf of approximately 40,000 users of the foreign exchange markets.

In the judgment of the majority,³ the CAT found that it would be just and reasonable to authorise either proposed class representative ("PCR")⁴ and that the claims advanced were eligible for inclusion in collective proceedings. However, the CAT indicated that it had serious doubts about the merits of the pleaded claims for market-wide harm and was only minded to grant an 'opt-in' CPO (where claimants need actively to opt into the proceedings, rather than being included automatically with the option to 'opt-out'). The CAT stayed both Applications, granting the PCRs permission to submit revised applications for certification of the proceedings on an opt-in basis within three months.

In addition to addressing certification, this was the first time that the CAT had to consider how to resolve the fact that two PCRs were competing to represent the same class (known as a 'carriage dispute'). The CAT took the point relatively shortly and, although it ultimately concluded that the Evans PCR should be preferred on the basis that it had advanced a marginally better-pleaded case (even though it had filed its CPO application slightly later in time), the CAT did not provide further guidance on how such disputes ought to be resolved in the future. Further guidance has, however, now been provided in the CAT's recent decision in Trucks, which will be the subject of a separate client alert.⁵

The decision is noteworthy because it follows a series of decisions granting opt-out CPOs that have been made in the wake of the Supreme Court's decision in Merricks,⁶ which set down an apparently claimant-friendly approach to the certification of class actions. Defendants should take heart from the CAT's willingness to scrutinize claims that it considers lack merit and to refuse to certify opt-out proceedings where it would be more appropriate for such claims to be brought on an opt-in basis.

In this article, we first set out the background to the claims advanced by the two PCRs and then go on to consider...