The High Court has thrown out almost 65,000 claims brought on behalf of Chinese businesses after finding the firm acting had no authority to do so.
Mrs Justice Rose (pictured) also criticised international firm Hausfeld & Co LLP for a ‘complete lack of candour’ in the process, which she said amounted to an abuse of process.
The claim was brought in May 2014 in the name of Bao Xiang International Garment Center of Beijing. It involved 64,696 claimants alleging unlawful price-fixing for air freight services by British Airways and four other airlines.
The combined value of the case, according to the particulars of claim, was estimated at almost £8bn. The claim form was signed by Boris Bronfentrinker, a former partner in Hausfeld, under a statement of truth.
But within month the airlines had applied to strike out the claim on the grounds that it had been issued without Hausfeld having the necessary authority of any of the 64,697 claimants to bring proceedings. The airlines also argued for a strike-out due to an abuse of process of the court.
By the time of a hearing earlier this month, the number of potential claimants was down to 5,277. Of those, 362 have ratified commencement of proceedings on their behalf.
According to the judgment, the claim started through a Chinese chamber of commerce which Hausfeld contacted in late 2011. Between June 2012 and May 2013 the chamber, assisted by Hausfeld, held around 70 seminars across China to gather potential claimants.
By early 2014, it was asserted by the claimants that they feared any claims they might have would be barred as a matter of Chinese law, and Hausfeld accepted it had to work ‘very quickly’ to review its database.
But by September 2014 it became apparent that Hausfeld was not instructed directly by any of the claimants and the firm said it was ‘retained’ by the chamber of commerce to act.
By January 2015, defendant solicitors from magic circle firm Slaughter and May noted that a large number of the purported claimants did not even work in industries affected by air freight prices.
Hausfeld asked for an extension to the end of this year to ratify proceedings, but Rose said there was no justification for allowing any claims to proceed.
‘None of the 64,697 claimants on whose behalf this claim was brought by Hausfeld has either authorised the bringing of the claim or ratified Hausfeld’s actions in starting the claim on its behalf,’ she said. ‘[Even] if I were considering whether to exercise a discretion to strike out the present claim I would undoubtedly consider it was appropriate to strike it out as an abuse of process.’
Rose said Hausfeld had no grounds for believing at the time of issuing proceedings that any particular claimant had shipped air freight over the relevant period.
‘It was wholly irresponsible of Hausfeld to launch proceedings in the name of tens of thousands of additional claimants when there was no basis for signing a statement of truth in the claim form and in the particulars of claim asserting that those claimants had shipped goods by air,’ added the judge.
Rose said Hausfeld had chosen to participate in the wider process rather than pin down a smaller number of claims, and to allow the claim to proceed would be ‘manifestly unfair’ on the airlines.
Hausfeld said it respectfully disagreed with the judgment and would appeal. A spokesperson said: ‘We consider the claim was properly brought and will be appealing. We will continue to pursue these claims, as well as the ongoing claim on behalf of Emerald Supplies and 564 co-claimants.’