CAT ruling in FX litigation: class action should be opt-in, not opt-out

In a recent ruling in the FX litigation, the UK Competition Appeal Tribunal (CAT) has ruled for the first time that collective proceedings can only proceed on an opt-in basis, rather than the opt-out basis sought by the class applicants: Michael O’Higgins FX Class Representative Limited v Barclays Bank PLC and Others; and Mr Phillip Evans v Barclays Bank PLC and Others [2022] CAT 16.

The decision highlights that collective proceedings order (CPO) applicants are not guaranteed the ability to bring opt-out proceedings by pointing to the impracticability of opt-in proceedings. It may disrupt the trend towards opt-out, which was emerging from recent certification judgments where the classes were made up of a large number of consumers, on the basis that very few individuals would likely seek to opt-in. It may dampen the anticipated growth of the CPO regime following the Supreme Court's ruling in Mastercard Incorporated & Ors v Merricks [2020] UKSC 51 and could reduce the litigation risks for the financial services sector, as discussed in our recent article: Merricks v Mastercard: the litigation risks for the financial services sector.

As reminder, unlike most other class actions in the English courts, competition class actions in the CAT can be brought on an “opt out” basis, subject to the CAT certifying the proceedings by granting a CPO. An “opt-out” claim means that a claim can be brought on behalf of all those who suffered loss as a result of the relevant conduct, without individual claimants having to come forward and be named in the action.

In the present case, the CAT noted that the class was comprised of mostly sophisticated businesses with potentially large claims on average – for whom opting into a claim would be practicable. The CAT underlined that the relevant question was whether opt-in proceedings would be practicable from the standpoint of the members of the class, rather than from the standpoint of the applicant. The CAT consequently ordered that both applications for a CPO be stayed and that the applicants be given permission to submit a revised application for certification on an opt-in basis within a three-month period.

For more information see this post on our Competition Notes blog.