Clifford Chance

This week (w/c 31 March 2025) the UK's Supreme Court heard an appeal in the O'Higgins/Evans collective proceedings. The hearing follows a pivotal Court of Appeal decision in 2023 which, if left to stand, could significantly lower the bar for bringing opt-out collective proceedings in the UK.

Background

The case stems from pre-Brexit infringement decisions by the European Commission which found that a number of banks had infringed competition law including by exchanging sensitive information and trading plans in relation to Forex spot trading. Two rival proposed class representatives (PCRs), Phillip Evans and Michael O’Higgins, sought to represent those allegedly harmed by the infringements (including, for example, pension funds) and to bring them on an opt-out basis. This means that the claim is brought on behalf of all potential claimants falling within the class, unless they expressly opt out (which is rare).

The Competition Appeal Tribunal (CAT) initially decided that the claims should proceed on an opt-in basis, citing the weakness of the claims and the absence of an "access to justice deficit" (i.e. that the potential claimants were sufficiently sophisticated to bring claims themselves should they wish to do so).

Court of Appeal's Decision

The Court of Appeal overturned the CAT's decision and addressed four key issues:

Opt-In vs Opt-Out: On the most significant question as to whether the claims should proceed on an opt-out basis, the Court of Appeal found that - as a matter of practicality - if a claim would not proceed unless it was on an opt-out basis, this strongly favours making an opt-out order. It highlighted that access to justice is not just about the sophistication of claimants, but also the practicality and proportionality of bringing claims. The size of the claim, and the reluctance of potential claimants to litigate against banks on which they rely, were also significant factors in the Court of Appeal's decision to allow the claim to proceed on an opt-out basis.  

The CAT had also relied on its provisional view as to the merits of the claim in deciding it should proceed on an opt-in basis. The Court of Appeal criticised this approach: having concluded that it would form no final view on the merits pending repleading of the cases, the Court of Appeal found that it was wrong for the CAT to treat a necessarily provisional view of the merits as decisive of whether the claim should be opt-in or opt-out. The Supreme Court must now settle the question of whether the CAT incorrectly relied on its provisional assessment of the merits in this determination.

Deferral of Strike-Out Decision: The CAT had deferred its decision on whether to strike out the claim, although it had expressed concerns about the claim being weak and this had provided part of the rationale for only allowing it to proceed on an opt-in basis. The Court of Appeal found that the CAT was within its rights to defer this decision and adopt a 'wait-and-see' approach, allowing the claimants to amend their pleadings.

Selection of Class Representatives: The CAT had indicated its preference for Phillip Evans as the class representative (pending re-pleading of the case). The Court of Appeal found no error in this decision, and noted that the CAT was better placed to consider the various factors relevant to who could better represent the class.

Procedural Pathway: The Court of Appeal also clarified whether disputes concerning CAT judgments should be addressed through appeal or by judicial review. It concluded that appeals should be the primary route in order to streamline the process, and avoid unnecessary duplication of cost and resources.

The Supreme Court Appeal

The UK Supreme Court, whose panel in this case consists of Lords Reed, Hodge, Sales, Leggatt, and Lady Arden JJSC, is now tasked with considering the opt-in/opt-out question specifically.

In a two day hearing on 1 and 2 April 2025, the Court heard arguments on (1) whether the Court of Appeal was wrong to find that the CAT incorrectly relied on a provisional assessment of the merits of the case determining whether proceedings should be certified on an opt-out basis, and (2) whether the Court of Appeal was wrong to place reliance on factors such as the likelihood of claims proceeding if not certified as opt-out, and the statutory principles and objectives underlying the legal scheme for collective proceedings.  

The case marks the first time since the UK Supreme Court's judgment in Merricks v Mastercard that the UK's highest court has had to consider the threshold for certification in the UK's burgeoning competition class action regime. In that case, the Court lowered the bar to certification of proceedings (finding that “subject to two exceptions, the certification process is not about, and does not involve, a merits test" – these two exceptions being (i) strike out and (ii) whether the claim should proceed on an opt-in or opt-out basis). The Supreme Court is now dealing with the second of these exceptions.

Merricks led to dozens of collective actions being certified in the CAT. Now, the Supreme Court will have to determine the extent to which the CAT should consider the merits of a claim in assessing whether a claim should proceed on an opt-in or an opt-out basis – a judgment which could lower the bar yet further for collective proceedings in the coming years.

Implications for Future Opt-Out Collective Proceedings

The Supreme Court's decision in the O'Higgins case could have far-reaching implications for future opt-out collective proceedings brought before the CAT. In emphasising the importance of access to justice and the practicality of bringing claims in the design of the regime, the Court of Appeal has arguably ensured that the threshold for certifying claims remains low.

If upheld by the Supreme Court, this approach would serve to bolster those seeking to bring opt-out collective actions in the CAT, after a number of significant losses for class representatives. This includes in Le Patourel v BT [2024] CAT 76 (where, in the first liability trial for collective proceedings, the class representative lost), in Riefa v Apple [2025] CAT 5 (where the CAT refused to certify on the basis that the CAT was not satisfied that the PCR would act adequately in the interests of class members), and in Merricks v Mastercard (where the £14bn claim was ultimately settled for a fractional amount of £200m).

The Supreme Court's decision is expected in the coming months.