The Court of Appeal of England and Wales has reversed a decision made by the Competition Appeal Tribunal in March 2022 regarding Evans –v-. Barclays Bank PLC which significantly supports the ability of defrauded investors in their attempts to recover their lost money.
The case under the consideration of the Court of Appeal involved a number of banks believed to have infringed Article 101 of the Treaty on the Functioning of the European Union and Article 53 of the Agreement on the European Economic Area in respect of their foreign exchange spot trading of G10 currencies and their discussions regarding sensitive information and also the fact that the foreign exchange traders from the banks had coordinated their trading plans between them. effectively creating a cartel in the foreign exchange market.
Frequently victims of investment frauds or as in this case, where banks have contravened the law, do not have sufficient funds to mount a legal case alone against the wrongdoers, therefore Philip Evans, who previously sat on the Competition and Markets Authority panel and also had been the inquiry chair, approached the Competition and Markets Authority in order to request permission to bring collective proceedings on behalf of the 40,000 claimants who had suffered financial losses as a consequence of the banks' infringements. Collective proceedings pursuant to Section 47B (4) of the Competition Act 1998 can only be brought if the Competition and Markets Authority make a collective proceedings order which must state whether the proceedings are "opt-in" or opt-out" as defined in Sections 47B(10) and (11) of the Competition Act 1998.
Demetri Bezanites, an associate, commented
"the basis of the claim, whether opt-in or opt-out, makes a
fundamental difference to the
viability of the proceedings. If the claimants have to opt-in to be
party to the claim there is a strong chance that there will be
insufficient claimants actively opting in and the claim will
fail." Demetri further commented "alternatively, in an
opt-out claim all the eligible claimants are automatically
represented and entitled to receive compensation if the proceedings
are successful. If a person does not wish to participate they have
to actively opt-out. An opt-out claim has a greater chance of
success as group litigation (class action) is persuasive, in that
the volume of claimants demonstrate that a breach has taken place
repeatedly and cannot be brushed off as a one-off misunderstanding
or the claimant was partly to blame."
There are tests that apply to determine whether a claim is eligible for an opt-out or opt-in procedure under Rule 79930 of the Competition Appeal Tribunal Rules 2015. Also consideration is given to the strength of a claim – the strength test and also whether it is practicable in light of the estimated damages the individual claimants may recover – the practicality test. The Competition and Markets Authority recognised that it was unlikely that there would be sufficient claimants opting in and the claim would fail. Furthermore, it also believed that the strength test had not been satisfied and together with its consideration of other factors related to the matter it concluded that the claim was not suitable to be run on an opt-out basis.
The Collective Proceedings Order was stayed and Mr. Evans was given permission to submit a new application. The decision was not met with complete agreement from the Competition and Markets Authority, Justice Lomas stated that he felt that the Collective Proceedings Order should be granted on an opt-out basis. He believed that the claim had been poorly drafted and additional weight should have been applied in consideration of access to justice. Neither did he think the practicality test had been correctly interpreted and did not accept the speculation that the potential claimants were reluctant to opt-in.
Mr. Evans appealed the Competition and Markets Tribunal decision at the Court of Appeal which agreed that the Competition and Markets Tribunal had erred in its decision and supported all Justice Lomas opinions.
Giambrone & Partners' banking and financial litigation lawyers believe that the Court of Appeal's decision will encourage more claims to be brought on an opt-out basis ensuring that there will be adequate numbers of claimants in cases where large numbers of individuals have been defrauded or manipulated.
Demetri has a thorough knowledge of investment fraud and fund tracing. He works tenaciously for our clients, advising on cryptocurrency, Forex trading disputes and regulatory investigations. He draws his expertise in investment law from his experience in the banking sector and his studies in banking and financial services regulation. Before joining Giambrone & Partners Demetri was employed at an international bank, where his main focus was the enforcement of freezing orders and third-party debt orders.
He approaches cross-border jurisdiction matters with a comprehensive view, based on his knowledge of both civil and common law.
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