With the UK and wider global economy both flirting with recession, the usual expectation is that there will be an increase in claims brought (as with previous recessions).
After getting off to a slow start, 10 Collective Proceedings Orders (“CPOs”) have now been approved by the UK Competition Appeal Tribunal (“CAT”). Some 24 opt-out CPO applications were launched in 2022, and a 30% rise in competition claims is expected this year given the helpful decisions in this regime.
One case that may slow down the number of claims commenced is the eagerly awaited Supreme Court’s judgment in R (on the application of PACCAR Inc and others) v Competition Appeal Tribunal and others 2021/0078. This judgment may impact the way these claims are fundeddepending on whether the court determines that a litigation funding agreement constitutes a damages-based agreement.
Securities class actions
Investor appetite has changed in securities class actions, and this area is increasingly popular with litigation funders. Numerous cases are in the courts, including the G4S, Standard Chartered, Serco and Barclays actions as well as recent claims under the Financial Services and Markets Act 2000 against mining company Glencore PLC. The case law in this area is expected to develop as a result, and law firms and funders will examine the judgments in these actions keenly.
It is hard to say whether fraud-based litigation is on the rise because of or despite the Covid-19 pandemic. A lack of supervision during the Covid-19 pandemic created an environment where fraudulent activity could thrive. Corporates in various industries are under increased financial stress and are now uncovering all types of fraud. The results of some of these investigations may soon lead to active claims.
We also predict a rise in insolvency litigation. Some struggling businesses were kept going during the Covid-19 pandemic because of the moratorium preventing the presentation of winding up petitions, which wasn’t lifted until April 2022. Nearly 2,000 corporate insolvencies are said to have occurred in December 2022, which is around 75% higher than the number three years ago. There were also approximately double the number of compulsory liquidations last month compared to February 2022. Possible claims will have to be painstakingly investigated by officeholders, and we anticipate an increase in these sorts of insolvency-related claims over the next few years.
A buzz acronym coming to the fore has been ESG (environmental, social and governance), even though recognisable claims in this category have been pursued for many years.
Litigators report an increase in “greenwashing” claims, protests against states for the latter’s climate inaction, and some interest by regulatory authorities in claims for false advertising. The continued warning is that companies should be aware they could face claims in English courts for the acts of their overseas subsidiaries. An example is the claim against BHP Group (UK) Ltd concerning the collapse of the Fundão dam in Brazil, which may progress to a trial in April 2024, subject to any further appeal to the Supreme Court.
Mergers and acquisition litigation
Further to the private equity boom of 2020/2021, litigators are seeing disputes arising from rapidly acquired companies or assets. There is also a theory that the volume and speed of deals completed during that period will result in valuation and warranty disputes and claims for misrepresentation.
In times like these, with reports flying around of possible claims due to the SVB/Credit Suisse debacle and the forecasted increase in the claim types mentioned above, anyone could be forgiven for thinking a deluge of claims is coming.
As ever, careful investigation and due diligence will be undertaken on new claims by officeholders, litigators, litigation funders and ATE providers alike. There will inevitably be some lag before these claims are well and truly up and running. Nonetheless, only meritorious and well-supported claims will prevail.
If you would like to discuss ATE insurance cover, please contact David Chase at firstname.lastname@example.org.
Disclaimer: The above is not a financial promotion but is merely general guidance and/or opinion and should not be relied on as formal advice or a recommendation. We suggest you take professional advice before taking any action in relation to the issues discussed above.
Harbour Underwriting Ltd is authorised and regulated by the Financial Conduct Authority (FCA).