Judgment (Preliminary issue)

Judgment of the Tribunal on the preliminary issue of whether as a result of any aspect of their funding arrangements, UK Trucks Claim Limited (“UKTC”) and/or the Road Haulage Association (“RHA”) (together, the “Applicants”) should not be authorised to act as a class representative pursuant to s. 47B(8)(b) of the Competition Act 1998 (“CA”).

On 8 May 2019, the Tribunal ruled that in the light of a possible appeal to the Supreme Court against the Court of Appeal’s judgment in another case concerning an application for a collective proceedings order (“CPO”), Merricks v Mastercard Inc, the applications by UKTC and the RHA for a CPO should be adjourned but that a preliminary issue in relation to their funding arrangements should be heard (see [2019] CAT 15).  The preliminary issue hearing took place on 4-6 June 2019.

The opposition to the funding arrangements was advanced in two parts by various Respondents/Objectors to the CPO applications:

1. DAF, supported by MAN and Iveco, advanced an argument that the Applicants’ litigation funding agreements (“LFAs”) constituted damages-based agreements (“DBAs”) for the purpose of the relevant statutory regulation and were therefore unenforceable and unlawful.

2. All the Respondents/Objectors, with the exception of Volvo/Renault, advanced arguments as to the nature and adequacy of the funding arrangements.

For the reasons given in the Judgment, the Tribunal unanimously concluded that:

1. a litigation funding agreement in the form of the RHA and UKTC LFAs, whereby the consideration paid to the funder is determined by reference to the amount of damages recovered in the litigation being funded, is not a DBA within the terms of s. 58AA of the Courts and Legal Services Act 1990 as amended;
2. the funding arrangements entered into by the RHA with its funder and insurers, as amended following the preliminary issue hearing, do not provide a ground for refusing to authorise the RHA as a class representative pursuant to s. 47B CA;
3. the funding arrangements proposed to be entered into, or entered into, by UKTC with its funder and insurers do not provide a ground for refusing to authorise UKTC as a class representative pursuant to s. 47B CA, subject to certain conditions set out by the Tribunal in its Judgment;
4. the relevant Respondents/Objectors have liberty to apply in writing within 14 days of the handing down of the Judgment if they seek to contend that clause 5 of the endorsement to the UKTC after-the-event insurance policies, as set out in the Appendix to the Judgment, does not give them an effective right to claim under the policies pursuant to the Contracts (Rights of Third Parties) Act 1999.