Why Scotland is weighing bold expansion of group proceedings five years on

2025 marked five years since the introduction of group proceedings (known in some jurisdictions as ‘class actions’) in Scotland.  

The Scottish Civil Justice Council (SCJC), the statutory body responsible for drafting and reviewing civil court procedure rules in Scotland, used the milestone to launch a review of the current procedure and possible future changes.

One change drawing attention is the possible introduction of opt-out group proceedings.

At present, court rules in Scotland provide for an opt-in group procedure, which requires individuals and entities to take an active step to be included in a group action.

By contrast, the starting point for opt-out procedure is that any person or entity that has been harmed by the action or conduct complained of will automatically form part of the group making the claim, unless they take active steps to remove themselves from the group. 

If the opt-out procedure were to be introduced, those in Scotland who fall within the defined group would automatically be included in the proceedings unless they opt out, and those outside Scotland who fall within the defined group can choose to participate in the proceedings.

Legal basis for opt-out

The provisions which enable group proceedings to be brought in Scotland are contained in Part 4 of the Civil Litigation (Expenses and Group Proceedings) (Scotland) Act 2018. This allows for court rules to be prepared to provide for group proceedings in the Court of Session on an opt-in or opt-out basis.

When it came to drafting the first set of court rules, it was felt that introducing an opt-in system and allowing the court to gain experience in dealing with this would assist in the development of any opt-out procedure in the future. 

Since the principle of an opt-out group procedure has already been accepted by the Scottish Government, no further primary legislation is required to implement an opt-out regime. All that is required is the introduction of new court rules. 

While change is not likely to take place immediately, it appears to be a question of when, not if, opt-out procedure will be introduced in Scotland.

For and against opt-out

The possible introduction of an opt-out procedure has elicited strong, often opposing views.

Supporters of an opt-out procedure point to increased access to justice, as the opt-in model often involves campaigns, publicity and outreach to find and register those who wish to be involved. 

There are various reasons why someone may decide not to opt-in, including concerns about cost, a feeling that litigation is ‘not worth it’ given the often small compensation sums involved, a failure to reach everyone who may be eligible and psychological and cultural barriers.

Opt-out tends to facilitate legal redress for vulnerable members of society who would not typically be aware of or take the steps to join opt-in proceedings. 

An opt-out procedure also allows for actions in situations where each individual may have only suffered a small loss but which collectively amount to large sums – for example in data breach, consumer and environmental cases.

Views from consumer groups are split over opt-out. Concerns include the potential for large payouts to funders and the legal system, with a small fraction reaching claimants.

Those representing business interests in Scotland are also wary. In the recent consultation by the Department for Business and Trade (DBT) on the opt-out regime for competition claims in the Competition Appeal Tribunal (CAT), the DBT notes that since its introduction in 2015, the opt-out caseload of the CAT has grown significantly. 

The resulting tens of billions of pounds awarded in damages claimed and hundreds of millions of pounds spent on legal fees are far higher than those estimated in the original impact assessment.

The existence of an opt-out procedure significantly increases litigation risk, particularly for data breach, product liability, consumer protection and climate-related claims, or those with a large customer base or workforce. 

There is also a risk speculative actions may be brought claiming large amounts of damages even where there is no realistic prospect of recovering such damages, but where the size of the claims, costs of defending the action and potential for reputational damage may be used to induce settlement.

Funding

While litigation funding is permitted in Scotland, the market is underdeveloped compared to England, due to the comparatively lower volume and value of Scottish litigation.

The majority of group proceedings brought in Scotland to date have been funded by a single funder, however the financial rewards that might be available from successful opt-out litigation may attract more players.

The Civil Litigation (Expenses and Group Proceedings) (Scotland) Act 2018 contains provisions which would require the disclosure of funder information and the funders’ potential liability for costs, but these are not yet in force and there is no indication as to when they might be implemented. 

If an opt-out procedure is adopted, activation of these provisions may help strike the right balance between the competing interests at play. 

The move to introduce a general right to opt-out group proceedings could create a divergence between Scotland and England, where the rights to an opt-out action are limited, and may make Scotland a more attractive jurisdiction for those wishing to bring claims.

Business considerations

Finding the right balance between achieving redress for consumers, limiting the burden on business and protecting against speculative claims is essential to ensure businesses can operate with certainty. 

Issues businesses will want the SCJC to consider are likely to include the scope of an opt-out procedure and whether it should always be available, or whether some types of claim are unsuitable for opt-out procedure.

Another issue to resolve is how opt-out procedures should be conducted, and the role of courts in approving any settlement agreement and distribution of the funds also needs to be considered, as does how litigation funding is managed.

Fiona MacGregor is a counsel and Philip Knight is a partner in the disputes team at Dentons Scotland