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UK courts continue to clarify the basis and scope of ‘representative actions’

Tuesday 12 October 2021

Conway Blake

Debevoise & Plimpton, London

cblake@debevoise.com

Mark McCloskey

Debevoise & Plimpton, London

mmccloskey@debevoise.com

Group litigation has a long history in United Kingdom courts, dating back to the Court of Chancery, where a claimant could bring a representative suit on behalf of a group whose members shared a common interest and grievance, provided that the relief sought was beneficial to all those represented.[1] Representative actions have historically been used in a range of cases, including: (1) stallholders seeking to restrain a landlord from imposing excessive fees; [2] (2) shareholders alleging conspiracy and fraud against a company and its directors;[3] (3) ship-owners pursuing a leading underwriter and insurer;[4] and; (4) owners and occupiers in a block of apartments suing a housing association in relation to generic building defects.[5]

Large ‘class actions,’ in the sense understood in the United States, have been less common in the UK. However, that is beginning to change with the advent of large and complex ‘representative actions’ in the UK courts. A prime example is the case of Lloyd v Google LLC UKSC 2019/0213, in which a single representative initiated a claim on behalf of approximately four million iPhone users against Google in relation to alleged breaches of its duties under data protection legislation.

But while the use of these collective redress mechanisms continues to expand, there are many aspects of the law and procedure in this area yet to be clarified. For example, there is still some uncertainty about the scope of the representative action and, in particular, the legal requirement that representative actions may only be brought on behalf of members in an ascertainable class having the ‘same interest’ in the claim.

The UK Court of Appeal has most recently addressed these issues in the case of Harrison Jalla and Abel Chujor v (1) Shell International Trading and Shipping Company Limited, and (2) Shell Nigeria Exploration and Production Company Limited [2021] EWCA Civ 1389 (‘Jalla’), which is now the latest and most authoritative statement of the law concerning ‘representative actions’ and its application to environmental cases.

In this article, we examine the Jalla decision and its import for the use of ‘representative actions’ in the UK.

The ‘representative action’

UK Civil Procedure Rule (CPR) 19.6 provides that a claim may be initiated or continued by or against one or more persons as representatives of others who have the ‘same interest’ in the claim. Representative actions operate on an ‘opt-out’ basis – the claim is brought on behalf of claimants falling within a defined class unless they take affirmative steps to opt out. The key elements of a representative action are often a common interest, a common grievance, and a remedy beneficial to all members of the class.

A representative action is in contrast with a ‘Group Litigation Order’ (GLO), which provides for the case management of claims that give rise to common or related issues of fact or law. A GLO is an ‘opt-in’ regime, meaning that individual claimants are not included in the action unless they take affirmative steps to join a register of claimants. Those claimants entered on the register will all be bound by any decision on the common issues (or ‘GLO issues’) identified by the court as common to the whole claimant cohort. While GLOs are flexible and it is relatively straightforward to identify legal and factual issues common to members of a GLO register, representative actions impose more stringent requirements regarding the unity of interest that must be established as between the representative parties and those whom they represent. This is evident from the recent ruling in the Jalla proceedings.

Representative actions and the judgment in Jalla

The Jalla claims relate to an oil spill from an offshore oil platform off the Atlantic coast of Nigeria in December 2011, which residents from nearby coastal communities allege was insufficiently remediated. The claim was originally brought by two representative claimants, purportedly on behalf of an underlying class of 27,830 individuals and 457 communities (the ‘Bonga Community’) pursuant to CPR 19.6.

When the action commenced, the two representative claimants purported to sue on behalf of individuals and communities residing on communal land located along the Atlantic coast of Nigeria. The pleadings suggested, and it had been assumed, that all the individuals and communities would have been impacted at the same time and in the same manner from oil  proven to have impacted the shoreline (if any). In this way, both the representatives and the thousands of individuals in the class would have had the ‘same interest’ in the claim, because there would be no individuation with respect to each class member’s claim. A judgment issued in favour of the two lead claimants would bind and apply equally to all members of the putative class.

However, during the preliminary stages of the proceedings, it came to light that the claimants wished to rely on significant differences in their individual circumstances in advancing their claims. For example, it was established that the claimants did not claim communal title to land. Some individuals claimed to hold private title to the land in question. This meant that some claimants may have been able to establish exclusive possession of land (and hence an entitlement to claim in the law of nuisance and trespass), but others may not have been able to sustain similar claims. Further, some individuals claimed that they were impacted by oil within days of the oil spill, whereas others argued that they were first impacted years after the event. The consequence was that some claims were manifestly time-barred, while others were potentially in time. Including for these reasons, the defendants argued that the members of the putative class could no longer be said to have the ‘same interest’ in the claim as required by CPR 19.6.

On an application by the defendants, the first instance judge struck out the representative aspect of the claim (ie, the claims of the 27,830 individuals and 457 communities in the putative class) on the basis that the putative representatives and represented class did not satisfy the ‘same interest’ test, and the case was therefore not properly constituted as a ‘representative action’ under CPR 19.6. The judge found that there was no jurisdiction for the court to entertain a representative action because:

 ‘[…] the demonstration of some common issues of law and fact is [not] sufficient to satisfy the requirement that the multiple parties have “the same interest” within the meaning of CPR r. 19(6)(1) […] The matters that the Claimants have in common are insufficient to lead to the relief that they claim; and it is impossible to escape the conclusion that these are a very large number of individual claims requiring individual consideration and proof of damage and generating individual defences.’[6]

The claimants appealed the judgment at the Court of Appeal, arguing that the judge erred in law in his finding (among others) that the representative claimants and the Bonga Community did not have the same interest in the claim, because each represented individual or community claimant would need to prove individual damage and loss as a result of the oil spill. In essence, the claimants argued that the fact that the court would need to examine the circumstances of thousands of putative class members did not disqualify the action from proceeding on a representative basis.

After considering the nature of the claim, the Court of Appeal concluded that the ‘same interest’ requirement had not been satisfied, and that the action ‘was not and could never have been a representative action’.[7] In dismissing the appeal, the Court made a number of observations and substantive findings, including that:

  1. The ‘same interest’ test under CPR 19.6(1) requires that the representative claimants and represented class are in the same position ‘for all practical purposes’ so that a ruling in respect of the representative claims can bind all the represented class without the need for an individual assessment of the merits of (potentially thousands or even millions of) individual cases. In the case at bar, a ruling in respect of the two representative claimants could not possibly bind the represented class. This is because the individual circumstances of each putative representative claimant and represented claimant were very different in a number of important respects, leading to different legal consequences for the individuals and communities in the claim. Thus, the purposes of CPR 19.6 (namely procedural efficiency and cost saving) would not be achieved by allowing the case to proceed on a representative basis.[8]
  2. Due to the varying circumstances of the claimants, the assessment of damages in the claim would:

 ‘[…] require […] an individual analysis of the individual parcels of land (however broken down) to identify whether or not they suffered damage; whether or not that damage was at such a level that it justified remedial works and if so, the scope of the necessary works; when the oil first made landfall (and therefore whether or not the claim was statute-barred); and whether or not the damage was due to this or another oil spill or event.’[9]

The Court found that the fact that it would be required to analyse the individual circumstances of each individual in the putative class was at odds with the purpose of the representative action procedure, which is to achieve procedural efficiency and time saving in claims that are practically the same.

  1. It was wrong to suggest that, when assessing whether the ‘same interest’ requirement is fulfilled, the Court should not take into account the fact that the defendants would potentially have different defences as against different individuals in the claim.[10] In this respect, the Court found that ‘the possibility of mixed success [within the class]…demonstrated why these proceedings are incapable of comprising a representative action.’[11]
  2. Finally, the fact that claimants had set up a ‘common fund’ to distribute damages was ‘at most […] an administrative mechanism for the distribution of any monies’,[12] and did not evidence or give rise to a ‘common interest’ in the claim sufficient to satisfy the requirements under the CPR.

The Jalla decision provides welcome guidance on ‘representative actions’ and sheds further light on the categories of claim that qualify for this collective redress procedure. The Court of Appeal has made clear that the objectives of CPR 19.6 are primarily to save time and costs in proceedings, and to avoid procedural complexity. For this reason, a representative action will only be appropriate in circumstances where, to form a view on the merits, the court is not required to examine the claims of the many constitutive members of the class.

A representative action will not be appropriate for all mass claims. The Court of Appeal affirmed that the fact that claims share commonalities does not necessarily mean that they share the ‘same interest’ so as to allow the court to try the claims collectively on a representative basis.[13] Where a group or class of claimants have claims that share factual and legal commonalities, but not necessarily a unity of interest (in the sense that the claims are practically the same), it may be appropriate to adopt a more flexible procedure, such as a GLO.

 

Notes

[1]          Adrian Zuckerman, Zuckerman on Civil Procedure: Principles of Practice (3rd Ed, Sweet & Maxwell 2013) 13.30.

[2]           The Duke of Bedford v Ellis (1901) AC1

[3]           Prudential Assurance Co Ltd v Newman Industries and Others (1981) 1 Ch 229.

[4]           Irish Shipping Limited v Commercial Union Assurance Co PLC (1991) 2 QB 206.

[5]           Millharbour Management Limited and Ors v Western Homes and Anr (2011) EWHC 661 (TCC).

[6]           Harrison Jalla and Abel Chujor v (1) Shell International Trading and Shipping Company Limited, and (2) Shell Nigeria Exploration and Production Company Limited [2020] EWHC 2211 (TCC), (75).

[7]           Harrison Jalla and Abel Chujor v (1) Shell International Trading and Shipping Company Limited, and (2) Shell Nigeria Exploration and Production Company Limited [2021] EWCA Civ 1389, (110).

[8]           Ibid (51(d)).

[9]           Ibid (102).

[10]          Ibid (99).

[11]          Ibid (108).

[12]          Ibid (109).

[13]          Ibid (49).