By Neil Rose


The UK moved a step closer to US-style class actions this week as an independent report commissioned by the body in charge of the civil justice system recommended that such procedures are 'urgently' needed to prevent injustice.



The report, commissioned for the Civil Justice Council (CJC) and seen exclusively by the Gazette, said the difficulties encountered with current bank charges litigation and mass equal pay claims showed the need to reform the collective redress system.



The study, by Rachael Mulheron, professor of law at Queen Mary, University of London, notes that an 'opt-out' system could be more effective than the group litigation orders (GLOs) currently used in the UK. The US opt-out procedure attracts far greater numbers of claimants than the UK's opt-in system. However, there are no proposals to introduce the controversial contingency fees or punitive damages in place across the Atlantic.



Prof Mulheron said a UK class action procedure should only supplement what presently exists, not replace it, and should only be used where the court decides that it is the best option.



She identified 'overwhelming evidence' that a further collective redress mechanism is needed. This included the low rates of participation and procedural problems with opt-in GLOs, and a lack of damages claims in respect of widespread cartel and other anti-competitive conduct, or in relation to proven unfair contract terms. She also found an increasing momentum across Europe to facilitate collective redress using an opt-out ?mechanism.



'The bank charges litigation in English county courts has been a recent reminder of how inefficient and burdensome unitary litigation can be,' Professor Mulheron observed, adding that an opt-out procedure would also be a more ?efficient way to deal with widespread employment grievances, such as equal pay and discrimination claims.



Evidence from opt-out schemes elsewhere in the world suggests that far more potential claimants become involved, enhancing access to justice and judicial efficiency, she said.



CJC chief executive Robert Musgrove said the research provided evidence that valid claims were not being brought because of problems with the current system. He added: 'The next consideration... is whether civil procedure can or should be improved to provide greater access to justice, while affording proper protection for defendants against non-meritorious claims.'



Hilton Mervis, a partner at City firm SJ Berwin and a founder member of the Commercial Litigation Forum, said: 'An opt-out procedure would be helpful in enabling redress for consumers or other groups where the damages per person may be small but the overall damages may be large.'