In our latest article, Nishad Morjaria, Lisa Mazzucotelli and Katherine Parker examine the aftermath of commercial litigation
Unlike the spike in commercial litigation anticipated by us and many industry commentators, 2021 has remained a quiet year for litigation. Indeed, litigation analytics platform Solomonic reported in October 2021 that new High Court litigation was down 9% year-on-year as the rise in COVID-19 litigation failed to materialize. not.
This is contrary to the expected upsurge in dispute-related work initially expected by us and many industry commentators in early 2021. However, the inherent lag between issues arising and the identification of those issues continues to push solutions and resolution to the future. That said, the warning signs of what is likely to come remain. So what can we reasonably expect over the next 12 months?
In part one of our three-part series, we look at what 2022 could hold for business interruption claims and class actions in the UK.
Business Interruption Claims: What’s Next After FCA’s Test Case Decision?
The Supreme Court’s decision to allow COVID-19 business interruption claims under certain policy wordings in the Financial Conduct Authority (FCA) test case resulted in the payment of more than a billion to policyholders. However, the application of this decision was not exhaustive and more complex claims are now pending in the UK and US courts.
In UK courts, these cases include Stonegate and Greggs claiming against their insurers issues such as whether each change in government pandemic restrictions constituted a “new” loss event, and whether the business interruption suffered by each of their sites and stores constituted separate claims. A ruling in favor of these plaintiffs could well have a similar impact on the test case, paving the way for a slew of new quantum demands from retail and hospitality.
Collective actions: a historic decision opens the doors?
Traditionally opposed to American-style class actions, the legal landscape in the UK has nevertheless changed considerably in recent years. While it has been legally possible to bring a collective action on the basis of the opt-out under competition law since 2015, it was not until the decision at the beginning of 2021 concerning Merricks vs Mastercarda case following a European ruling that the financial services company breached competition law, to open the door to future class action.
Since then, the UK has seen an increase in class action claims, including where wrongdoing had not yet been established, as seen in CAT certified claims against British Telecom for allegedly overcharging line customers fixed only. There have also been some setbacks, with the UK Supreme Court ruling in November 2021 ruling against an opt-out request against Google over its use of personal data due to, among other things, a lack of evidence that it caused financial harm. or distress. This suggests that the issue of calculating damages in class actions in the UK remains a difficult one and will be followed with keen interest by the forensic accounting and competition economics communities.
Overall, the number of class actions is expected to rise in the UK, with an ongoing debate over whether the opt-out regime should be extended to other areas law than competition. Other trends are expected to contribute to a growing number of class action claims in the UK, including the role of funders in venturing beyond traditional commercial affairs. The complaint filed in January 2022 against Meta, the parent company of Facebook, for allegedly exploiting the data of millions of users of the social network, will be an example of this. The case, which is operating on an opt-out basis, is being funded by a US backer and will require a detailed quantum computation exercise to assess the damages suffered by the 44 million Facebook users that make up the group.
In Part 2 of our series, we will examine the impact on litigation of M&A activity and the transition from the London Inter Bank Offered Rate (LIBOR) to the Sterling Over Night Index Average (SONIA).