Opinion: How group litigation is changing corporate accountability in Scotland

Alison Webb and Megan Lafferty provide an update on group litigation in Scotland.

We are now seeing a growing and quickly developing trend towards group litigation across the UK and globally. The Post Office scandal is one such example, receiving renewed attention over the past month in the wake of the ITV drama ‘Bates vs the Post Office’.

In Scotland, momentum is also building. Rules governing group litigation that came into force in July 2020 (under the Civil Litigation (Expenses and Group Proceedings) (Scotland) Act 2018) are now being put to the test, providing case studies for how corporates can be held to account for their actions, including those which cause consumer and environmental harms.

In the past month, we have seen major developments in this area of law, with the Scottish courts giving the green light to three landmark group actions against car manufacturers now known to be involved in the Dieselgate emissions scandal, resulting in over 45,000 claims being granted permission to proceed in the Court of Session.

Following the revelations back in 2015 that Volkswagen was cheating emission tests by making certain cars (those with EA-189 engines) appear less polluting using emissions-defeat devices, many more car companies are being taken to court for similar allegations. A series of recent court decisions mean that group claims against BMW, Mercedes and Vauxhall can all proceed as group actions in the Court of Session, mark a major step forward for access to justice in Scotland for thousands of consumers.

Why is Scotland fertile ground for group actions?

The recent decision of the court in the BMW NOx Emissions Group Proceedings in particular shows that, whilst informed by established procedures in other jurisdictions, the Scottish courts are keen to forge their own way in group litigation, with access to justice at the forefront of considerations. The judgement, provides the clearest guidance yet on the appointment of a Representative Party and the considerations of the court when allowing a group action to proceed. It will likely serve as a useful template for group litigations in Scotland going forward.

Indeed, the implementation of the 2018 Scottish legislation has opened wide Scotland’s doors to consumers who want to join group claims, by allowing similar claims on the same issue to be brought together and handled as one.

Prior to the new regulations, each individual case would have had to be brought to the court. Whilst large cases have been grouped together by case management efforts in the past, the recent Inner House decision in the ongoing Metal on Metal hips litigation in Scotland highlights some of the difficulties with this approach. Not only did this mean that access to the courts was limited to those who had the time, knowledge and money to bring claims; it also meant that the courts could be overwhelmed by hundreds, if not thousands of individual cases related to the same issue.

The Scottish legal system also lends itself particularly well to group claims, with modest court fees compared to other areas of the UK. Combined with the lack of constraints on litigation funding in Scotland (unlike in many other jurisdictions), Scotland has become an ideal place for consumers who want to enter group claims on issues like the Dieselgate scandal.

What does group litigation mean for environmental protection?

The advent of group claims isn’t just important for public access to justice, it also has huge implications for how society at large is able to hold companies to account over their responsibilities to the environment.

Fifty years ago, corporates were seen as untouchable – free to pollute at will, with limited consequences. Group litigation has turned this tide, not only to the benefit of affected individuals, but also for the health of the planet. Regulations and incentives are part of how we can encourage corporates to honour their responsibilities to protect and preserve the environment. But ultimately, the threat of litigation is a powerful tool, to hold them to their commitments. Corporates now know that they can no longer act unchallenged and there could be significant financial consequences if they don’t play by the rules.

Financiers are wising up to this trend too. We’re seeing huge sums of litigation funding being put behind environmental harms cases and the funding for such group actions is only set to increase in the coming years.

For Scotland, this means more opportunities to lead the way on environmental and other consumer actions, and more opportunities for individuals to effectively challenge corporate wrongdoing from an equal footing.

Alison Webb and Megan Lafferty are both partners at Pogust Goodhead

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