The Court of Appeal has recently determined an appeal in the FX CPO proceedings, against a first instance decision of the CAT.
The proceedings arise from two Settlement Decisions of the European Commission, which found 'by object' infringements of Article 101(1) TFEU, in relation to FX spot trading undertaken by multiple banks (a separate decision against Credit Suisse, which did not settle with the Commission, was published after the CAT had given judgment).
In its judgment, the CAT expressed concern as to how the proposed class representatives (PCRs) could prove that the breach established in the Commission decisions caused the alleged loss. The CAT considered that whilst a plausible case at the level of economic theory had been advanced in the PCRs' pleadings, this was not sufficient, and the CAT did not see how disclosure would fill the void. The CAT considered, of its own motion, whether to strike out the claims, but ultimately declined to do so; instead deferring any decision on strike out until the PCRs had been given the opportunity to amend their pleadings. The majority held that the proceedings should be certified on an opt-in basis, concluding that the weakness of the claims was one factor that militated in favour of that conclusion (Mr Lomas dissented). The CAT unanimously determined that the claim brought by Phillip Evans should be certified at the expense of the rival claim for certification brought by Michael O'Higgins FX Class Representative Ltd.
The Appellants (Evans and O'Higgins) appealed on several grounds, including (i) whether the CAT erred in deferring the possibility of a dismissal decision on the merits, and whether it was wrong to consider this issue of its own motion (there having been no dismissal application made by the defendant banks); (ii) whether the CAT had erred in concluding that the proceedings should be opt-in; and (iii) whether the CAT had erred in selecting Evans as the PCR.
The Court of Appeal held that the CAT had not erred in postponing the possibility of a dismissal decision, holding that this was fundamentally a case management decision, and that there was no basis for concluding that the CAT had misunderstood the strike out test. The Court noted that the CAT had not actually struck out the claims, and so the issue to be considered on appeal was relatively narrow. Similarly, the CAT had not made an error of law in selecting Evans (over O'Higgins); this was a "quintessential multifactorial evaluation", and there was no basis for interfering with the CAT's decision.
However, critically, the Court of Appeal held that the CAT majority had erred in determining that the proceedings should be opt-in. It erred both in its analysis of how the strength of the claims should factor into this decision, and in relation to its analysis of the practicability of opt-in proceedings. On the former, having concluded that it would form no final view on the merits pending the submission of reformulated cases by the PCRs, it was wrong to treat that necessarily provisional view as definitive and afford it decisive weight (particularly given that the CAT found that the implication of this decision would be to stymie the claim, such that it would not proceed). On the latter, the evidence demonstrated why opt-in proceedings would be impracticable, and the CAT majority erred in its analysis of that evidence. The Court of Appeal directed that the case should proceed on an opt-out basis and remitted the proceedings to the CAT for further case management (the Court of Appeal rejected the Appellants' contention that it should order remittal to a differently constituted Tribunal).
The judgment is an interesting and detailed analysis of the factors that the courts will weigh in determining whether collective proceedings should be certified as 'opt-in' or 'opt-out'. The judgment also contains a useful analysis of where disputes concerning a judgment of the CAT should be brought by way of appeal, and where they should be brought by way of judicial review; the Court concluding that "the statutory right of appeal should be construed broadly in order to minimise the scope of judicial review", and that "judicial review inserts a unnecessary non-specialist step in the progress of a CAT decision to an appeal".
Originally Published by 23 August 2023
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