Exploring the Path to Resolving Mass Torts: A Look into Collective Settlements

London, UK – Resolving mass torts has become a pressing issue for commercial litigators in both the UK and the US. Whether it involves personal injury cases or the mis-selling of financial products, the question of how to reach a resolution affects various legal specialisms and intersects with numerous business sectors. Settlements can occur at any stage of the proceedings, offering advantages for both claimants and defendants.

In the US, where processes for resolving mass torts are more advanced, court approval of class action settlements is required. The court’s role is to assess whether the settlement is “fair, reasonable, and adequate.” In contrast, English lawyers have three developing procedures for settling mass torts. The Competition Appeals Tribunal (CAT) requires a collective settlement approval order for opt-out proceedings, ensuring that the terms are “just and reasonable.” While there hasn’t been a collective settlement approval order in the CAT yet, the principles governing collective redress are expected to evolve soon. The Financial Conduct Authority (FCA) also has powers to impose redress schemes on firms, and with the new Consumer Duty, the FCA is likely to increasingly utilize these powers. In High Court proceedings, there are no specific rules or procedures for collective settlement, allowing parties to either create ad-hoc schemes or seek court assistance in designing them.

To improve the process, court-approved redress schemes have been advocated for, echoing the approach taken in the US. Lord Woolf, in 1996, emphasized the need for court approval of multi-party settlements to address the difficulties of managing group claims, polarized positions, and different interests. However, English law procedure in the High Court has not further developed, and there is no requirement for court approval. While ad-hoc redress schemes have experienced design and implementation issues, court-assisted compensation schemes like the Jimmy Savile Scheme have had more success. Therefore, mass settlements through court-approved compensation schemes could offer the best outcome in certain cases.

The absence of a formal High Court procedure for collective settlement provides an opportunity for innovation. Claimants in High Court class actions have been pioneering new ways to initiate group claims, but the focus on launching these claims has overshadowed discussions on their conclusion. Parties involved in collective actions can take the lead in legal innovation, suggesting innovative solutions that the court can approve and establish as precedents for future redress schemes. Hedge funds and institutions defending mass torts both have a vested interest in this process.

Finding effective resolutions for mass torts is a complex matter that affects both claimants and defendants. While the US has more established processes for resolving mass torts, English law is still developing in this area. Court-approved redress schemes offer potential benefits, but ad-hoc schemes have faced challenges. The lack of a specific procedure in the High Court presents an opportunity for parties to lead legal innovation and work towards fair and efficient collective settlements.