With less than two weeks to go until The Lawyer’s Managing Risk and Litigation conference, White & Case partner Charles Balmain shares his thoughts on some of the event’s key themes, ahead of his session on class actions risk in the UK.
Will Brexit affect litigation in the English courts?
Most of the factors contributing to London’s status as a litigation hub (impartiality and sophistication of the judiciary, the commercial certainty of English law contracts, and the large pool of legal talent, to name a few) will not be affected by Brexit.
One thing that could be is the jurisdictional regime in place between the UK and EU Member States. This is largely governed by EU Regulations, with all stakeholders having called for the maintenance of the status quo. Nevertheless, uncertainty over the future of those regulations and in particular, concerns over reciprocal enforcement of judgments, could lead commercial counterparties to choose alternative fora for resolving English law disputes, or incline towards arbitration.
My discussions with clients to date, however, as well as recent LMA/ISDA consultations, suggest that there is yet to be any significant shift away from London in this regard. While Frankfurt, Brussels and Paris are all taking steps to compete with London’s commercial courts, I am confident that London will remain a major disputes hub post-Brexit.
Further, while there may be a modest shift in the pattern of English law dispute resolution post-Brexit, I don’t anticipate a material decline in English-law disputes.
Is Britain on its way to getting a US ‘class actions culture’?
‘Class actions’ in the US sense have yet to emerge in the UK. We have the opt-out collective proceeding mechanism in the CAT, but that is the sole example, and it has yet to be used in a meaningful way.
That being said, shareholder activism has undoubtedly found its footing in the UK in the past three or four years. A number of the biggest cases coming before the Commercial Court this year featured large groups of shareholder-claimants, with listed companies as defendants.
In the US, securities class actions are ubiquitous. By contrast, in the UK there have only been a handful of these large securities claims to date, and they are not class actions in the strictest sense, but rather high-value multi-party group actions against UK issuers of securities.
Barring radical legislative changes in the UK, we do not expect anything like the volume of securities and class action claims that our colleagues in the US see. However, we do believe that the market in the UK has matured to the point that, in the future, any meritorious securities claim against issuers in the UK are highly likely to be pursued.
Is the risk of class actions significant only for businesses with exposure in the US?
There’s always going to be some risk of securities and class action litigation in the United States. However, going forward we have to be clear with our clients that there is a growing risk of securities and class action litigation outside the US as well. Issuers of securities in the UK have been, and are likely to continue to be pursued by large groups of shareholders where a meritorious claim exists.
As it stands, the risk of securities litigation is undoubtedly greater for business with exposure in the US. However, the presence of sophisticated claimant firms who have acquired the know-how to mount group actions, coupled with the availability of litigation finance and ATE insurance, means that, in the future, meritorious securities claim against issuers in the UK are highly likely to be pursued.
Tell us two truths and one lie about yourself (in any order):
- I have a much better looking identical twin brother
- I am an eternal optimist
- The photo above is of my brother
Charles Balmain is one of the 30+ speakers at this year’s Managing Risk and Litigation conference taking place in London on the 5th December. For more information on the conference, a copy of the agenda, or to enquire about tickets to attend, please contact Bruce Allmand-Smith on +44(0) 20 7970 4625 or Bruce.Allmand-Smith@centaurmedia.com.