Judgment (Certification, Basis of Certification and Carriage Dispute)

Judgment of the Tribunal regarding the separate applications (together, “the Applications”) by Michael O’Higgins FX Class Representative Limited (“O’Higgins PCR”) and Mr Phillip Evans (“Evans PCR”) (together, “the Applicants”) for a collective proceedings order (“CPO”) under s.47B of the Competition Act 1998 to combine follow-on claims for damages arising from two separate infringement decisions of the European Commission (Case AT.40135 FOREX (Three Way Banana Split) and Case AT.40135 FOREX (Essex Express)) (together, “the Decisions”) on an opt-out basis.  The Decisions were both adopted on 16 May 2019 pursuant to the settlement procedure and found that certain major banking groups (together, “the Respondents and Proposed Objectors”) had variously infringed Article 101 of the Treaty on the Functioning of the European Union and Article 53 of the European Economic Area Agreement by participating in a single and continuous infringement covering the whole EEA in foreign exchange spot trading of G10 currencies.

The Applicants sought certification on an opt-out basis and contended, contrary to the Respondents/Proposed Objector’s submissions that the proceedings should only be certified on an opt-in basis, that the Tribunal could only certify on the basis sought in the Applications (the Opt-in v. Opt-out Issue).

Should the Tribunal have been minded to grant a CPO on an opt-out basis the Tribunal would also have had to consider which of the Applicants would be most suitable to act as class representative (the Carriage Issue).

Although there was no application by the Respondents to strike out either of the putative claims, the Tribunal considered: (i) whether it was open to the Tribunal to consider the question of strike out at all; and (ii) if the Tribunal had jurisdiction, whether it should – of its own initiative – consider the question or whether it should refrain from doing so (the Strike-out Question). The majority concluded:

(i) Considering the express wording of rule 41(1) the Tribunal may, of its own initiative, strike out a claim and the wording of rule 79(4) does not preclude the Tribunal, on the hearing of an application for a CPO, from acting on its own initiative.

(ii) The Tribunal is obliged to consider of its own initiative whether the Applicants have reasonable prospects for making the claims they do. The concerns of the majority relate entirely to the question of causation. The litigation of these issues of causation is going to involve all parties in enormous expenditure of cost and time, and considerable court time. It would be irresponsible, in these circumstances, not to at least consider the Strike-out Question.

Considering the cases advanced by the Applicants and the pleaded cases on market-wide harm, the majority concluded that due to the level of generality or abstraction contained in the pleadings that both Applications could be struck out under rule 41(1)(b). The majority stated that they are satisfied that the averments in both Applications lack the specificity to enable them to be tried, and that is both unfair to the Respondents and an impossible burden on this Tribunal. However, the majority decided that this is a jurisdiction the Tribunal should not – at this stage – exercise as the Applications raise novel and difficult questions. It is right that the strike-out jurisdiction not be exercised in an area of law that is subject to some uncertainty and is in a state of on-going development, and not without the Applicants having the opportunity to address the concerns articulated in the judgment.

On the Opt-in v Opt-out Issue, the Tribunal considered that s.47B of the Competition Act 1998 does not simply oblige the Tribunal to record the nature of an applicant’s application for a CPO, without exercising any form of control at all. Rule 79(3) expressly articulates a discretion in the Tribunal as to whether a CPO that it is minded to grant is on an opt-in or opt-out basis. The Tribunal concluded that there can be no doubt that the power, and so the discretion, exists to find opt-in collective proceedings more appropriate even where an applicant only seeks certification on an opt-out basis (or vice versa). The majority concluded that a number of factors point weakly in favour of opt-in, rather than opt-out, collective proceedings, including: (i) neither the O’Higgins PCR or the Evans PCR are a pre-existing body; (ii) the level of funding available to the Applicants; and (iii) the existence of the Allianz proceedings. Cumulatively, these point away from certifying on an opt-out basis, but they are all by themselves pretty marginal. However, they are reinforced by the two specific factors articulated by the legislation as being especially relevant to the Opt-in v. Opt-out Issue (“strength” and “practicability”). For the reasons given, both of these point clearly and strongly away from certifying on an opt-out basis.

Given the conclusion by the majority that certification on an opt-out basis is not appropriate, it is not necessary to determine the Carriage Issue. However, the majority stated that if it were minded to certify on an opt-out basis, the carriage of the proceedings should be granted to the Evans PCR.

The majority concluded that each Application – if it were the only application in issue – could and should be certified as collective proceedings because each met the Authorisation and Eligibility Conditions. However, for the reasons given, the Applications are both stayed, and the Applicants are given permission (if so advised) to submit a revised application for certification on an opt-in basis within three months of the date of the Tribunal’s judgment.

For the reasons specified, Mr Lomas dissented from the majority in relation to the Opt-in v. Opt-out Issue and considered that the CPO should be granted on an opt-out basis.