In December the
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The Court of Appeal held that the appropriate procedural route to challenge the CAT's ruling was by way of an appeal to the
- The Court of Appeal held that there is nothing in the CAT Rules, either express or implied, which prohibits defendants from communicating directly with class members in relation to collective proceedings without permission from the CAT (overturning the CAT's ruling on this issue). The judgment highlights the potential impact any such general prohibition would have on commercial and business-as-usual operations for defendant companies when communicating with class members on matters touching on issues relevant to the claim. However, the
Court of Appeal considered that it would be open to the CAT to impose this type of prohibition on case management grounds in an appropriate case. - alternatively, that the Shipping Companies' conduct in writing the letters crossed the line of what was acceptable and the CAT should exercise its discretion to make the order sought pursuant to its case management powers.
We expand on each of these aspects of the
Background
The CAT ruling challenged before the
The CPO set a deadline of
The Class Representative sought an order from the CAT restraining further communications with class members and seeking disclosure of any other communications. It argued that:
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all communications directly between defendants and class members were prohibited by a rule which was to be implied into the CAT Rules; or
The CAT agreed with the Class Representative's primary argument as to the existence of an implied prohibition in the CAT Rules, which it considered "arose inevitably out of the wording of the Rules and is consistent with, even necessary to, the essential purposes and structure of the collective proceedings regime." In considering the CAT Rules overall, the CAT's view was that the restriction could apply prior to the making of the CPO, as well as afterwards. The CAT's permission was required for the defendants to communicate with class members, and those communications would be subject to the CAT's scrutiny. The CAT made a ruling on
The Court of Appeal judgment: judicial review vs appeal
The parties were both of the view that the appropriate course to challenge the CAT's decision was a claim for judicial review. However, Lord
Section 49(1A)(a) of the Competition Act 1998 provides a right of appeal from a decision of the CAT in collective proceedings where the decision is "(a) as to the award of damages or other sum (other than a decision on costs or expenses), or (b) as to the grant of an injunction."
In
The judgment sets out some important ground rules on this important aspect of the developing competition class actions regime, confirming that the appeal route is not confined to "end of the road" and "potential end of the road decisions." Rather, it extends to challenging decisions of the CAT on any issue capable of having "some causal effect" on the quantum of damages (in the sense of there being a real and material risk of it having such an effect).
The Court of Appeal concluded that as a general rule, interlocutory case management decisions - such as decisions concerning the extent of disclosure of documents, or of admissible evidence - can be presumed to meet the requirement that they may affect the final substantive outcome in terms of the level of damages awarded, and so should be challenged by way of appeal to the
The Court of Appeal acknowledged that there will be some decisions where the causative link to the quantum of damages will be too remote or non-existent, and the appeal route of challenge will therefore not be available (citing
However, it seems clear from the judgment that the appeal route will now be considered the appropriate route of challenge in the majority of cases. In the particular case at issue, the
The Court of Appeal judgment: communications between defendants and class members
The appeal challenged the CAT's ruling (agreeing with the Class Representative) that all relevant communications directly between defendants and class members were prohibited by a rule which was to be implied into the CAT Rules.
The Court of Appeal disagreed with this conclusion, emphasising that as a matter of statutory construction, a prohibition can only be implied as a matter of necessity, not merely because it is reasonable or desirable. It considered that there is nothing in the express words of any of the CAT Rules which gives rise to a necessary implication of the Restriction, noting that "if [the Restriction] had been intended, it would have been easy enough to say so".
Indeed, the
The Court of Appeal also noted that there is no general rule in civil litigation preventing a defendant from communicating directly with a claimant about a case. It referred to other group litigation regimes in the
The Court of Appeal also placed particular weight on the practical consequences of implying a general prohibition into the CAT Rules. It disagreed with the CAT's conclusion that an implied general rule means that communications should take place only between the defendants and the class representative, rather than class members, even prior to the making of a CPO. It noted that this could limit the ability of class members to communicate with defendants who may be in agreement that a proposed class representative is unsuitable. Similar considerations were held to apply after the making of a CPO, where for example defendants and class members may be in agreement that an application should be made to remove or substitute an appointed class representative who no longer met the suitability requirements.
If permission were required from the CAT for communications between defendants and class members as to the litigation, the
The Court of Appeal also recognised that the Restriction could have potential consequences on the ability of the defendants to communicate with potential experts or legal representatives who happened to form part of the class. This could have the overall effect of interfering with the fair conduct of their defence. It also highlighted that the Restriction may interfere with the ability of defendants to act in the normal course of business, for example where usual communications with class members happen to overlap with the subject matter of the proceedings. Implying the Restriction into the CAT Rules could therefore compromise a defendant's commercial confidentiality or impede its business development.
The Court of Appeal therefore rejected the argument that a general prohibition on communications between defendants and class members should be implied into the CAT Rules. It also rejected the Class Representative's alternative argument that the CAT had imposed the Restriction in exercise of its case management powers, and, on the basis of the material before it, declined to uphold the order on the basis that the CAT should have made it under its case management powers. However, the
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