Class action avalanche: Report reveals litigations are eight times greater than UK population

Class action litigation is dominating the UK as a new report shows claims filed by the end of 2023 encompassing over 540 million members, eight times greater than the population of the UK.

CMS’ 2024 European class action report revealed that there is yet more growth in the number of class actions filed in Europe, and in particular in the UK, as the litigation risk continues to rise.

In its spotlight on the UK, its competition class action landscape has seen significant activity and landmark settlements since its introduction in 2015.

By the end of 2023, over 540 million class members had been involved in these actions, which reflects a 170 per cent increase from 2022’s figure of 200 million members.

“By the end of 2023, class actions encompassing more than 500 million class members had been filed in a country with a population of 67 million people, this equated to 8.1 class actions for each person in the UK,” noted CMS’ report.

It has been a busy year for the Competition Appeal Tribunal (CAT), as 2023 followed 2022 and saw another 15 new claims being registered.

In addition, in December 2023, the CAT approved the first competition class action settlement, awarding £1.5m in the McLaren ro-ro car delivery case.

This was followed by another significant settlement in May 2024, in the “Boundary Fares” claim against South Western Trains, totalling £25m, with additional costs and advertising expenses amounting to £5.5m.

As of 31 December 2023, the total claimed value of class actions in the UK – opt-in and opt-out –
is in excess of €145bn (£123bn).

Opt-in was just ahead with €78.69bn (£66.85bn) while opt-out totalled €66.29bn (£56.32bn). Despite the gap, the value of UK opt-out claims in particular has risen considerably as it grew by 48 per cent on its 2022 figures of €44.83bn (£38.09bn).

The data also shows that the UK maintained its position as the top jurisdiction in Europe for class actions.

In terms of its risk map, CMS allocated high risk for England and Wales, and medium risk for Scotland.

The report also highlighted the UK Supreme Court shake-up of the litigation funding sector, after the court in July 2023 in the ‘PACCAR’ case ruled that litigation funders provide “claims management services”, potentially classifying funding agreements as damages-based agreements, which are prohibited in opt-out competition class actions.

Following the ruling, many funders adjusted their agreements to mitigate risks, opting for returns based on a multiple rather than a percentage of damages. The CAT upheld these revised agreements in three notable cases, though appeals are pending.

However, in the background, many were lobbying the previous UK government, and in response, the Litigation Funding Agreements (Enforceability) Bill was introduced in March 2024 to counter the judgment.

However, due to the Election, this bill did not get passed and there is currently no sign of it being re-introduced. In the meantime, the Civil Justice Council is reviewing litigation funding, with an interim report expected in the summer of 2024 and a full report by the summer of 2025, potentially leading to formal regulation.