Tribunal rules against FX class action on opt-out basis

Both O’Higgins and Evans say they will appeal the ruling

Jonathan Stapleton
clock • 4 min read

A tribunal to deal with an application for a collective proceedings order in a legal action against Barclays, Citigroup, JP Morgan, Royal Bank of Scotland and UBS for foreign exchange rigging has ruled against a class action on an opt-out basis.

The ruling by the Competition Appeal Tribunal (CAT) yesterday (31 March) follows a hearing held last July which considered whether a £1bn-plus claim against the banks could proceed as a collective action and, if so, whether it should be certified on an opt-in basis (in which class members must actively opt-in to the proceedings at the outset) or opt-out (in which class members are automatically included in the claims unless they choose to opt-out).

The tribunal also looked at which of two class representatives would be most suitable to take the claim forward - the so-called ‘carriage' part of the claim.

The two claims considered by the tribunal included one being brought by the former chairman of The Pensions Regulator Michael O'Higgins, the so-called UK Foreign Exchange Cartel Claim, and a second being brought by former Competition and Markets Authority inquiry chair Phillip Evans, a claim called FX Claim UK.

On the first issue, the tribunal found that the proceedings should be certified as collective proceedings.

However, it declined to certify them on an opt-out basis - largely basing its decision on concerns about the strengths of the claims and its view that opt-in proceedings would be practicable.

Despite this, the tribunal's decision was not unanimous - with a dissenting opinion from the third member of the tribunal, Paul Lomas, stating that he believed the claims should proceed on an opt-out basis.

On the second issue, the tribunal said it did not need to consider carriage as they were minded to rule against opt-out proceedings but noted if the claims were to continue on an opt-out basis, they would have decides carriage in favour of Evans' application, FX Claim UK.


Both the class representatives in the action expressed their disappointment at the decision ruling out an opt-out basis claim.

O'Higgins said: "This decision is extremely disappointing, because this claim is exactly the sort of the claim that opt-out proceedings were introduced to facilitate in order to provide access to justice to all entities affected by the illegal behaviour of cartelists.

"The application I brought was based on strong foundations, solid legal and economic principles and evidence from distinguished experts. In particular, it followed the binding European Commission decisions in which the banks conceded liability and similar proceedings in the US, where the banks agreed to a settlement of over $2bn (£1.52bn)."

Evans added: "I am disappointed however with the CAT's refusal to authorise the action as opt out proceedings, deciding instead that each class member should opt-in before the claims can continue.

"Based on my background in consumer welfare, I have first-hand knowledge of the practical difficulties of opt-in legal proceedings, which I presented to the tribunal. In my view, the CAT has underestimated these challenges although one of the three CAT members recognised this and stated that the proceedings should be certified on an opt-out basis."

Evans added: "If these claims are blocked from continuing on an opt-out basis, the result will be that tens of thousands of individuals and businesses will be excluded from the opportunity to recover compensation in relation to admitted anti-competitive behaviour by the banks. That would be contrary to the principle of access to justice that underpins the collective action regime."

Moving forward

Both O'Higgins and Evans said they intended to appeal the decision.

Hausfeld is the law firm behind the FX Claim UK. Partner and global co-chair Anthony Maton stated: "The CAT has refused to allow these claims to proceed other than on an opt-in basis which, as I testified to the CAT, is impracticable. It also means that thousands of UK businesses will be denied the chance to recover compensation in relation to illegal conduct which the banks have admitted and in relation to which they have paid billions of dollars in compensation to affected customers in the US and Canada.

"The CAT has recognised that our client, Mr Evans, should have carriage of these claims and we therefore intend to take the case to the higher courts to reverse this decision, allowing ordinary businesses compensation for the illegal behaviour of the banks as parliament intended."

The action comes after a European Commission ruling in May 2019 found that, between 18 December 2007 and 31 January 2013, traders employed by the banks exchanged commercially sensitive information and trading plans and occasionally coordinated their trading strategies through various private, online professional chatrooms, contrary to EU competition law. The commission fined the banks more than €1bn (£860m) collectively.

The CAT tribunal consisted of Justice Marcus Smith, Paul Lomas and Professor Anthony Neuberger.

Update: This article was updated at 15:47 on 1 April to reflect the fact that O'Higgins had also decided to appeal the decision.

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