Insights from the 5th Annual Conference on Globalization of Class Actions

The impact of social media on mass litigation, third-party litigation, and the rise of ADR were the main topics discussed at the 5th Annual Conference on Globalization of Class Actions, sponsored in part by Swiss Re.

Some 150 distinguished legal experts, policymakers, litigation funders and plaintiff lawyers discussed the evolution of class action schemes and their spread across civil justice systems around the globe at the conference, held in The Hague in December 2011.

Huge impact of social media

Facebook, Twitter and other social media tools can have a dramatic impact on the formation, management and defense of mass litigation. Social media is immediate and viewed by many users as trustworthy.  Given the potentially disruptive impact of social media, defensive communication social media strategies are needed as many interested parties (media, court, counsel, existing and potential claimants and others) seek out information on the internet.

Third-party litigation finance is here to stay

Litigation financing, third-party funding of court and other related case costs, was also a topic of debate at the conference. While some litigation financiers described their business as useful, others asserted that such financing will increase the amount of litigation and change traditional litigation dynamics.

The economic crisis seems to be a driver in this particular sector. This reinforces the need to monitor developments closely and work towards adequate regulation and safeguards to prevent abuse and conflicts of interest.  Also, more research is needed on the impact of the shift of litigation control from the person or business harmed to third-party litigation finance companies.

Alternative Dispute Resolution on the rise

Participants discussed recent EU developments including a decision to mandate Alternative Dispute Resolution (ADR) procedures if the respective industries are willing to fund such mechanisms. This presents an opportunity for the industry sector to avoid US-style litigation in the EU. This opportunity should be seized. Should legislators detect unwillingness by the industry sector to embrace and use such ADR mechanisms, a legislative backlash towards court-based schemes might result.

Netherlands: hot spot for collective redress in Europe

In 2005, the Netherlands introduced the Dutch Collective Settlement of Mass Claims Act. Based on this act, the Netherlands courts have been used to achieve the voluntary shareholder settlement over unstated Shell reserves, the settlement of unit-linked life insurance policies, the industry settlement of DES claims, and the pending mass settlement of security claims against Converium.

Europe: a fresh approach to collective redress?

The University of Oxford’s Centre for Socio-Legal Studies is conducting research to learn from the US experience and develop a fresh approach for Europe by using the best schemes already in effect on the Continent. It is clear that an ADR-based approach might be more efficient and less disruptive for most situations in Europe than litigation alternatives, and could indeed deliver satisfactory redress solutions for claimants and defendants. Further research on proper, practical procedures is needed. Eventually, insights from European research might even feed back into the US justice system: public policy advocates could use these insights to improve the US legal liability system, which clearly has weaknesses, is too costly and inefficient.

Swiss Re: supporting research and stakeholder dialogue

According to Swiss Re Executive Claims Counsel Robert Hammesfahr, insurers should engage both in enabling academic research to inform the debate and in the policy dialogue about which solutions are best for Europe. Hammesfahr, who provided the re/insurance industry perspective at the conference, stressed that continued empirical research on the strengths and weaknesses of various solutions, including the economics and unintended consequences of the US civil justice system, remains a key prerequisite for designing adequate and solid collective redress instruments.

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