Category Archives: Mass litigation

Litigation, Costs, Funding and Behaviour – Implications for the Law

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Just out: my new book on ‘Litigation, Costs, Funding and Behaviour: Implications for the Law‘

This edited volume, with excellent contributions by acclaimed scholars, is devoted to the interplay between litigation costs, funding arrangements and the law. In litigation and other forms of dispute resolution, parties usually incur substantial costs. Apart from the time spent in court and the so-called ‘opportunity cost’ involved in litigation, civil proceedings give rise to attorney fees, expert and witness costs, court fees and disbursements. Some of these costs may be recouped, others may remain where they happen to fall. How does the exposure to cost risks affect litigation strategy? And to what extent does the opportunity to shift costs onto the adversary influence these strategies? Does the legal framework for litigation cost allocation (cost shifting rules) further influence the litigants’ behaviour? And how do private financing arrangement such as insurance and third party funding (TPF) fit into this picture? Do funders exercise specific powers over parties and their lawyers? Do they introduce certain dynamics to the proceedings which would otherwise not exist? And if so, is that bad? Should there be a legal framework in place to restrain these third parties or should this best be left to market forces?

In this volume ‘Litigation, Costs, Funding and Behaviour: Implications for the Law‘, experts from various jurisdictions confront these issues by presenting their legal, economic and policy-oriented perspectives on ‘Litigation, Costs, Funding and Behaviour: Implications for the Law’. Their contributions include topics such as cost shifting rules and the behavioural response they elicit; the insurance, financing, sale and commodification of claims; specific case studies in areas such as IP litigation, personal injury litigation, investment arbitration and class action litigation.9781472482891

Let me briefly summarize the chapters:

  • I contribute with a general chapter on litigation costs and third party funding which offers a comparative analysis of the issues, developments and regulatory choices concerning costs of litigation and funding arrangements. It also reflects on the behaviour of litigants and others involved and how the legal environment influences that behaviour.
  • Jef De Mot, Michael Faure and Louis Visscher offer an economic analysis of third party funding and its alternatives.
  • John Peysner reviews recent developments concerning the financing of access to justice in England and Wales.
  • Charlotte Vrendenbarg explores ‘Legal Costs Awards and Access to Justice in Dutch Intellectual Property Cases’.
  • Eric De Brabandere takes us into the domain of investment treaty arbitration, where he investigates the duty to disclose third-party funding involvement.
  • Ben van Velthoven and Peter van Wijck test whether a recent Dutch legislative experiment allowing conditional quota pars litis (QPL) agreements between client and attorney in personal injury case is fit for purpose.
  • Vicki Waye and Vince Morabito thoroughly analyse the development of litigation funding in Australian class actions.
  • Astrid Stadler charts and discusses the response by the German legislature and judiciary to the involvement of funders in mass damages claims.
  • Ilja Tillema deconstructs the often used argument that the involvement of litigation funding in collective damages actions encourages an unethical ‘compensation culture’ detrimental to society.

 

About the Book

This collection explores the practical operation of the law in the area of litigation costs and funding, and confronts the issue of how exposure to cost risks affects litigation strategy. It looks at the interaction of the relevant legal regime, regulatory framework and disciplinary rules with the behaviour of litigants, courts and legislatures, examining subjects such as cost rules and funding arrangements. The book discusses a wide range of topics such as cost-shifting rules, funding and mass tort litigation, cost rules and third-party funding (TPF) rules in specific areas such as intellectual property (IP) litigation, commercial arbitration, investment arbitration, the role of legal expense insurance arrangements, fee regulation and professional ethics. The contributors include renowned scholars, experts in their respective fields and well-versed individuals in both civil procedure and the practice of litigation, arbitration and finance. Together, they present a broad approach to the issues of costs, cost-shifting rules and third-party funding. This volume adds to the existent literature in combining topics in law and practice and presents an analysis of the most recent developments in this fast developing area.

Aansluiten bij een massaclaim? Lees eerst de kleine lettertjes

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Mijn collega Charlotte Pavillon en ik schreven onlangs een annotatie bij HR 30 januari 2015, ECLI:NL:HR:2015:178 (Stichting Exploitatie Nederlandse Staatsloterij / Stichting Loterijverlies.nl). De annotatie is opgenomen in het oktober-nummer van Ars Aequi (okt. 2015, p. 784-793).

In de rechtszaak waar het om draait, vorderde Stichting Loterijverlies onder meer een verklaring voor recht dat Staatsloterij misleidende reclame in de zin van art. 6:194 BW (oud) had gemaakt. Wat was het geval? Tot 1 januari 2008 werden in de staatsloterij de grotere prijzen getrokken uit de verzameling van verkochte én niet verkochte loten. Dat betekent dat er doorgaans meer prijzen ‘vielen’ dan daadwerkelijk werden uitgekeerd. Dat is, zo bepaalde de Hoge Raad in deze zaak kort gezegd, een misleidende voorstelling van zaken (tegenwoordig spreken we van een oneerlijke handelspraktijk) over de winstkansen in de loterij.

Consumenten verkeerde of onvolledige informatie geven, zet ze op het verkeerde been. En dat mag niet. Op dezelfde wijze kan straks komen vast te staan dat het voorspiegelen van een bepaalde emissiewaarde bij dieselmotoren die in de praktijk aanzienlijk hoger uitpakt, een oneerlijke handelspraktijk is.

Het is echter niet duidelijk wat de uiteindelijke juridische consequentie zal zijn van een verklaring voor recht dat er misleidende reclame is gemaakt.  Het betekent namelijk niet één op één een recht op schadevergoeding (art. 6:162 BW) of vernietiging (art. 6:193j lid 3 BW; voor contracten gesloten na 13 juni 2014). Om als individuele consument schadevergoeding te krijgen, zijn er namelijk daarna nog een paar flinke hobbels te nemen, zoals die van bewijs van schade en bewijs van causaal verband. In onze annotatie gaan we uitgebreid in op die hobbels.

Maar er zijn ook andere hobbels, waar consumenten rekening mee moeten houden als zij zich aansluiten bij een collectieve actie. Ook daar gaan we in onze annotatie verder op in. Om een actueel voorbeeld te geven: op www.volkswagenaudiclaim.nl kan men zich ‘direct & gratis aanmelden’ om tegen ‘no cure no pay’ voorwaarden opdracht te geven aan Stichting Volkswagen Audi Claim om de schade door verminderde inruilwaarde te verhalen. “Indien het Stichting Volkswagenaudiclaim lukt om een schadevergoeding voor u te bewerkstelligen ontvangt de stichting een succes fee van 15% van het schadebedrag.”

Het is echter de vraag of de gemiddelde consument er ook op bedacht is:

  • dat er geen wettelijke plicht bestaat om zich aan te sluiten bij een collectieve actie (wie weet gaat VW zélf rechtstreeks tot vergoeding over zonder tussenkomst van deze claimstichting?)
  • dat een opdracht aan dergelijke claimstichtingen meestal inhoudt dat een onherroepelijke volmacht wordt gegeven om te schikken
  • dat meestal bedongen wordt dat het percentage verschuldigd blijft, ook als men de opdracht later intrekt
  • dat er nauwelijks rechterlijk toezicht is op de ‘governance’ van claimstichtingen en ook niet op het bedongen percentage.

Zou de gemiddelde consument dat allemaal weten? Collectief claimen wordt allengs populairder. Daarmee wordt ook de noodzaak groter om te doordenken welke informatie aan consumenten gegeven moet worden voordat zij hun handtekening zetten onder een ‘gratis’ deelname aan een collectieve actie. Bovendien kan het geen kwaad als consumentenorganisaties zoals de Consumentenbond de deelnamevoorwaarden van dit soort claimstichtingen (en BVs!) eens langs de lat van de regels over algemene voorwaarden leggen. In onze annotatie onderbouwen we deze behoefte aan duidelijkheid rondom ‘bedrijfsmatig collecteren voor de collectieve actie’.

Mass Torts in Europe

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In recent years, the issue of mass tort litigation and the fair and efficient settlement and adjudication of mass torts has drawn increasing attention in academic discourse, legal practice and policy debates. Indeed, academics, practitioners, courts, legislatures and policymakers throughout Europe have been struggling with the ‘massification’ of private law relationships, both in and outside of tort law.

A recently published book titled “Mass Torts in Europe“, co-edited by Gerhard Wagner and myself, is devoted to European perspectives on mass tort litigation. With this blog entry, I summarize the introductory chapter to the book.Mass Torts in Europe

Undoubtedly, the quantity and quality of the extant literature on mass litigation and class actions is overwhelming. Within the European legal debate, however, the emphasis seems to be mostly on ‘massification’ in competition, consumer and securities law. Our book adds to the existing literature by collecting a number of case studies mostly on tort cases and, by combining these with thematic chapters in which the challenges concerning mass torts are mapped, explored and analysed from a European perspective. By implication, this book thus combines substantive law and procedural law aspects on the one hand, and issues concerning the practical operation of law and related mechanisms of behaviour modification and dispute settlement on the other. As a result, this book does not only involve reference to ‘the law in the books’ but extends well into the domain of ‘the law in action’.

The set-up of the book is briefly as follows. The introductory chapter sketches the contours of the issues of mass torts and related problems of substantive and procedural law. Then, the book follows two main threads: insights from practitioners and academic reflections.

Insights from Practitioners

In the first section, case reports written by expert practitioners give an insight into the practical operation of the law in various cases of mass tort. These chapters cut through jurisdictions and vary from mass breast implant scandals to large-scale financial fraud. Although other orders would have been perfectly tenable, we have decided to arrange the case studies in the following order. First, under the heading of ‘several events with common causes’, there are two case studies on defective products and business processes endangered life and health: asbestos and silicone breast implants. Secondly, under the heading ‘one event with multiple victims’ we deal with two salient disasters that caused widespread death and injury: the grounding, tilting and capsizing of the Costa Concordia (2012, Italy) and the derailment and collision of a high-speed train at Eschede (1998, Germany). Thirdly, the theme of ‘multinationals and multi-district actions’ deals with the accountability in tort of multinational corporations for mass damage caused elsewhere, illustrated by the litigation of African silicosis claims against mining companies and environmental claims against Shell before UK courts. The fourth and final category of case studies involves financial markets and mass damage. One case study involves the allegedly misleading annual report of the German Telekom-case, a second one the Italian bank (over)charge class action and a final third one the claw-back actions by the trustee in the Madoff bankrupt estate.

Academic Reflections

In the second part of the book, we bring together academic reflections on wider issues of mass torts. The section covers a broad range of underlying legal and policy concerns. The chapters were written by outstanding scholars, expert in their fields, with a broad and comparative vision on the issues involved. Here, the volume focusses at a more general level on many of the problematic issues that were raised at case level in the case studies. How do fundamental principles of substantive tort and insurance law (such as joint and several liability, standards of proof of causation), as well as principles of civil procedure (such as rules of evidence, burden of proof and the right to be heard) stand up in face of the challenges posed by ‘massification’? Can civil procedure effectively deal with aggregation of claims, collective damage actions, model case and test case proceedings? What alternatives to litigation have developed in terms of dealing with mass dispute adjudication in tort law and related areas? Have alternative pathways to compensation been successful in addressing all stakeholders’ interests in a fair and balanced way? What is the role of conflict of laws in the market for dispute adjudication services within Europe? And finally, what is the relevance of insolvency proceedings in examining responsibility and fairly distributing compensation?Mass Torts in Europe

Challenges ahead

As can be concluded from the previous, this edited volume covers the breadth and depth of mass tort litigation, negotiation, settlement, adjudication and compensation. In doing so, it offers further guidance in a highly complicated area of the law which involves concepts and principles derived from both substantive and procedural law. The book does not offer rough and ready answers to the challenges posed by mass torts. Underlying the cases and reflections, however, is at least one issue that may merit further discussion: are we ready yet for a common pan-European approach to mass tort litigation? If European legal systems are to tackle the issue of mass tort litigation and the fair, efficient and expedient settlement and adjudication of mass torts, they need to rebalance both substantive and procedural law and principles.

Reference