Chapter 1: Introduction to Class Action

1. Statement of problem:

One of India's worst corporate scandals, the "Satyam scandal," often known as "India's Enron," occurred in January 2009. It was being investigated whether Satyam Computers Services Limited ("SCSL") had misrepresented its financial information to its board, stock exchanges, regulators, investors, and other stakeholders. Following that, the approximately 300,000 SCSL shareholders who attempted to file class action lawsuits under the Companies Act, 1956 but were unsuccessful due to the lack of such a mechanism. On the other hand, American investors were allowed to pursue their portion of damages in US courts in a class action lawsuit against SCS. Which compelled the Indian Government to add such a mechanism in 2013 act, even after the mechanism being in place, India has not seen a big class action suit since then, attributing to this problem could be the lack of awareness of the stakeholders of their rights. This paper aims to see all the rights and remedies that are available to the stakeholders as well as the corporation.

A class action lawsuit is a legal proceeding in which a large group of people collectively sue a defendant, typically a corporation or business, for damages or other legal remedies. The group of people, known as the "class," must have suffered similar harm or injury, and the lawsuit is typically initiated by one or a few individuals who represent the entire class. The need for a class action lawsuit arises when it is not feasible for each member of the class to file an individual lawsuit. This can occur when the harm or injury is widespread, and it would be impractical for each person to file a separate lawsuit. It can also occur when the damages sought by each individual are relatively small, making it financially unfeasible for them to pursue their claims on their own. In these cases, a class action lawsuit allows the group to pool their resources and pursue their claims as a collective.

1.2 Review of Literature:

• Thomas S. Ulen : An introduction to the law and economics of class action litigation The author Thomas S. Ulen explains that "Class action litigation" refers to the combination of related compensation claims into a single, sizable class of plaintiffs. Both negative and positive social effects may result from this practise. If the facts giving rise to the claims are significantly similar, then there may be significant savings in litigation and court administrative costs from presenting those facts once rather than numerous times. This is an example of the societal benefits of combining disparate claims. However, establishing a class of litigants and combining their claims may come at a huge social cost. This method, for instance, might enable people who have baseless negative expected-value claims to extract an arbitrary settlement from the defendant or defendants. The paper surveys additional sources of class-action litigation's social costs and benefits, assesses the empirical research on these cases, and analyses current policy discussions in the United States regarding class-action litigation reform. The essay comes to the conclusion that class action litigation can have significant net social benefits, but only if courts diligently manage the class certification process in order to discover and prevent the class action lawsuit's social cost-generating elements.
• Brian C. McTier & John K. Wald: The Causes and Consequences of Securities Class Action Litigation -The authors explain look at how securities class action lawsuits affect a company's investment and financing decisions. Overinvesting businesses are more likely to face legal action. In general, businesses increase leverage, cash reserves, and firm-specific risk after a lawsuit, while decreasing overinvestment activity and compensation. In addition, there is some evidence that corporations reduce their diversification after a lawsuit. Overall, these modifications are consistent with a post-suit decline in agency issues that resulted in sizable adjustments to real investment practices. The research supports the idea that security class action lawsuits bring agency issues to light, which are subsequently at least partially rectified.
• By Matteo Arena & Brandon Julio: The Effects of Securities Class Action Litigation on Corporate Liquidity and Investment Policy- The authors have elucidated in their article about the possibility of securities class action litigation affects business investment and savings practices. Companies that are more exposed to securities lawsuits have a lot more money on hand in case potential settlements or other associated liabilities arise. The outcome is not a result of plaintiffs picking on companies with large cash levels, but rather a result of businesses building up capital in preparation of lawsuits. Firms at risk of litigation have lower market values for their cash. Litigation risk has an impact on corporate investment decisions as well because businesses tend to cut back on capital expenditures as a result. Their findings are impervious to endogeneity issues and any erroneous temporal effects.
• Amar Gande & Craig M. Lewis: Shareholder-Initiated Class Action Lawsuits: Shareholder Wealth Effects and Industry Spillovers -This paper examines how dramatically lower stock prices respond to class action lawsuits brought by shareholders. Based on lawsuit filings against other companies in the same industry, we discover that shareholders partially anticipate these lawsuits and capitalize some of these losses prior to a lawsuit filing date. We demonstrate that the filing date effect (shareholder losses quantified on the lawsuit filing date) is smaller and the partial anticipation effect (shareholder losses capitalized prior to a lawsuit filing date) is bigger the more likely a corporation is to be sued. Our research reveals that the filing date impact understates the size of shareholder losses, and that this understatement is more pronounced for companies that are more likely to be sued.
• Dishi Bhomawat: Class action suits by shareholders in India -The author has come to the conclusion that the inclusion of class action lawsuits in the Indian corporate governance system is merely a token effort. The Indian legislators have not taken advice from their international colleagues. There are no clauses to prevent pointless lawsuits. It is also debatable whether Indian law would be able to accommodate global class action lawsuits. Literature on Indian corporate governance standards is scarce. This essay explores the relatively new idea of class action lawsuits in India. In the last ten years, India has developed as a center for investment. In order to understand the Indian legal system in relation to its overseas equivalents, this paper has practical consequences. The law's deterrents are not strong enough to stop pointless lawsuits. It's important to strike a balance between the company's interests and the rights of the shareholders. A pointless class action lawsuit could be bad for the business's financial standing. As a result, the clause regarding class action lawsuits is a futile effort. Class action lawsuits have a long way to go before they are a successful form of relief. One can only hope that the specific procedure, if it is announced, will help to clarify this murky clause.
• Theodore Eisenberg & Geoffrey Miller: The Role of Opt-Outs and Objectors in Class Action Litigation: Theoretical and Empirical Issues -This paper revealed that class action opt-out and objection rates are typically trivially low percentages of the class, which is consistent with earlier research into more constrained data sets. Dissent rates rise as the per capita class recovery rises and fall as the number of class members does. Opt-outs are the most prevalent form of dissent in bulk tort and civil rights cases, whereas objections are the most common form in those involving civil rights. In situations involving stocks and consumers, dissent is far less frequent. For unknown reasons, dissent rates have likewise been declining over time throughout the spectrum of cases, including optouts and objections. As for the pattern of class approval, we find that objection rates are higher for unapproved settlements than for approved ones, suggesting that courts may give weight to objections when evaluating class settlements or that the objections reflect weaknesses in the settlement that are also independently identified by the class. Opt-outs and objections have no statistically significant relationship with attorney fees, either in absolute terms or as a percentage of the recovery.
• Tobias Barrington Wolff: Preclusion in Class Action Litigation -This paper revealed that the preclusive effect that a class judgement should have upon the no class claims of absentees has not received sustained attention despite the significant focus placed on class action over the past 25 years. It is a serious omission. When a claim is certified for class treatment, claim and issue preclusion would proceed as usual, which could jeopardize the process and the high-value claims of individual absentees. In turn, such a danger can led to ex ante conflicts of interest within a class that, if unresolved, can prohibit certification. The few courts that have acknowledged the issue have thrown up their hands in defeat and declined to certify potentially helpful classes out of concern for the potential for preclusive outcomes. Even worse, the majority of courts have done nothing to solve the issue. This situation was not just brought about by a lack of diligence. Due to a serious misunderstanding of the positive law bases for a judgment's preclusive consequences, courts have been reluctant to consider preclusion during certification. The first comprehensive analysis of these difficulties is provided in this article. It discusses the risk that claim and issue preclusion, when those doctrines are applied to class litigation in their original form, can present to class members. Then it provides a more thorough explanation of the positive law bases for a judgment's preclusive effect, pointing out the way for courts to regain their rightful role in limiting the preclusive implications of the class actions they oversee.
• Param Pandya: The Fate of Class Action Suits in India: Then & Now? -This paper examines the establishment of the statutory class action in India in great detail. It starts with an economic analysis of corporate law to highlight the numerous issues that affect minority shareholders, then it delves into a critique of the Foss v. Harbottle Rule. Derivative Actions are afterwards acknowledged as an exception to the stated rule.This dissertation attempts to enumerate the evolution that this very thought through in order to explain the pre-existence of derivative and representative suits in India as a common law heritage. This justifies the logic behind their rarity in terms of litigation practise in India. It then concentrates on examining the factors that led to the introduction of statutory class actions in India. A thorough understanding of Section 245 of the 2013 Companies Act, read in accordance with the Rules for Chapter XVI and the procedure thereunder, is made available. In addition, a look at the structural transformation of class action in India is essential. The second half is a critical examination of the challenges that this new iteration of Class Action in India is going to confront in the future. This new iteration of the class action will take place in India in an effort to resolve the unresolved disputes surrounding class actions in that country.
• Parimala Veluvali: An Overview of Progressive Activism - The Class Action Suit This paper examines the stands Pre-2013 Act, where the shareholders are regarded as the company's owners, they are only witnesses to the Directors' decisions. The phrase "shareholder activism" refers to the shareholders' active involvement in the fight against the management's improper actions. The Companies Bill, 2011 aims to improve the protection of stakeholder rights and interests by proposing numerous changes to the laws governing the Indian corporate sector. One such improvement is the addition of the class action clause, which, if put into practice, will give the minority shareholders a powerful weapon to use against the Management's repressive practices. According to Clause 245 of the proposed bill, any specified number of members, depositors, or any class of them, as the case may be, may file a class action lawsuit if they believe that the management or conduct of the company's affairs is being done in a way that is harmful to the interests of the company, its members, or its depositors. The Company's minor stockholders, whose wealth was lost within a matter of days without their fault, suffered silently in the context of the hotly contested, widely published, and in-depth Satyam Case.

1.3 Research Objectives:

• Understanding the legal framework of class action lawsuits.
• Exploring the impact of class action lawsuits on companies.
• Investigating the role of lawyers in class action lawsuits.
• Assessing the effectiveness of class action lawsuits in promoting social justice.

1.4 Research Methodology:

The methodology that has been adopted for this research is Doctrinal method. Under this methodology, secondary information such as articles, research papers, websites, books and journal, case law along with review of statutes is adopted.

Books and other reference as guided by the faculty that have been primarily helpful in giving this project a firm structure. Newsletters, websites, dictionaries, and articles have also been referred. Footnotes have been provided wherever needed, either to acknowledge the source or to point to a particular provision of law. Furthermore certain Research Parameters has been adopted to compare the various factors that impacts Class action in various judications. The Research Parameters are as follows, The possible comparison parameters for class action lawsuits between US, UK & India:

• Legal framework
• Types of cases
• Certification process
• Opt-in/opt-out system
• Damages and remedies
• Cultural factors

Chapter 2: Introduction to Class Action

2.1 Historical development of class actions

The historical basis for class actions, sometimes known as "group litigation," may be traced back to the legal practices of the Anglo-Saxon and Norse societies during the period commonly referred to as the "Dark Ages." It is worth noting that, alongside activities like as pillaging and plundering, litigation held a prominent position among the preferred pursuits of the Vikings. In Anglo-Saxon society, the English common law had established the recognition of a plaintiff's entitlement to initiate a case on behalf of a wider collective.

During the reign of King John of England (1199-1216), legal disputes between villages, cities, and trade guilds were frequently observed. From the 1400s until the mid-19th Century, the transition from feudalism to capitalism, together with political disruptions, resulted in the diminishing prevalence of collective legal actions. By the year 1850, its presence in England had essentially become non-existent.

Within the United States, Supreme Court Justice Joseph Story (1779-1845) rendered a legal opinion in the case of West v. Randall10, which laid the groundwork for the contemporary concept of class action by delineating the criteria for individuals eligible to partake in a lawsuit. Justice Story articulated that "It is a prevailing principle in equity that all individuals possessing a substantial interest, whether as plaintiffs or defendants in relation to the subject matter of the lawsuit, should be included as parties to the litigation, regardless of their numerical abundance." The notion in question was solidified in U.S. legislation by the implementation of Federal Equity Rules, which regulated civil proceedings from 1822 to 1938.

The Supreme Court established Rule 48 in 1842, thereby creating a legal requirement. Including all of the parties in the procedures may be difficult and impractical in situations where there are many parties on both sides. The court may use its discretion in these circumstances to exclude some parties from inclusion. After that, the court can move on with the litigation by making sure that there are enough parties in attendance to fairly represent the opposing interests of the defendants and plaintiffs in the properly filed lawsuit. But in certain cases, the decree will be issued without impairing or disadvantageously affecting the rights and claims of all absentee parties.

This rule made it possible to designate one single person to represent a larger group of people, which established the essential need for a class action lawsuit: a significant number of plaintiffs. The last substitution was Rule 4812. Since 1938, class actions have been governed by the guidelines found in Federal Rule of Civil Procedure, Rule 23. When Rule 23 was revised in 1966, class members were given the opportunity to withdraw from a lawsuit, maintaining their right to file a case on their own.

The following is a compilation of notable and captivating class action lawsuits that have taken place within the United States.

State of Tennessee v. John Thomas Scopes

The "Scopes Monkey Trial" might be considered as one of the earliest instances of a class action lawsuit that garnered significant media coverage, subsequently serving as the inspiration for various theatrical productions and cinematic adaptations. The initial impetus for this legal dispute arose from a legal action initiated by the American Civil Liberties Union (ACLU) in response to a Tennessee state legislation enacted in 1925. This legislation effectively prohibited public school educators from imparting knowledge pertaining to Darwin's theory of evolution.

John Scopes, a schoolteacher in Dayton, Tennessee, intentionally contravened the legislation often referred to as the "Butler Act" at the request of the American Civil Liberties Union (ACLU). The individual in question was formally charged with a criminal offence in the month of May during that particular year. The trial attracted notable figures from the legal field during that age, such as William Jennings Bryan, a former Secretary of State, and Clarence Darrow, who served as the leader of Scopes' defence team.

Subsequently, Scopes was convicted and mandated to remit a monetary penalty of $100. Despite the subsequent reversal of the decision, the consequences prompted other state legislatures to propose legislation prohibiting the instruction of scientific principles in public educational institutions. The enactment of the National Defence Education Act was prompted by concerns over Soviet dominance in the sciences, a sentiment that only gained traction in the late 1950s. As a consequence of this legislation, there was a proliferation of newly published biology textbooks that placed significant emphasis on the significance of Darwin's theories.

Within a broader framework, the Scopes trial revolved around the issue of the division between religious institutions and governmental entities. As expected, there has been a persistent opposition in numerous conservative areas of the nation that persists up to the present time. The Butler Law of Tennessee was in effect until the year 1967. In the year 1999, the Kansas State Board of Education made the decision to exclude Darwin's theory from the curriculum taught in public schools.

2.2 Overview of class action lawsuits globally

While class lawsuits have been a common practise in the United States for many years, their usage in other parts of the world has not been as extensive. Nevertheless, the current status and potential hazards remain uncertain due to the increasing momentum in multiple countries towards the adoption of class actions or comparable procedural mechanisms.

Procedures exhibit significant variations across different jurisdictions. Differences can be observed in various aspects, such as the level of advancement in procedures, the types of claims that can be raised, the entities eligible to represent classes, the choice between opt-in or opt-out structures for classes, and the regulations governing settlement, remedies, and financial matters. The United States is among the nations that have implemented class processes that are comparatively less rigorous than those observed in other countries. Nevertheless, it is crucial to acknowledge the existence of significant exemptions that present potential risks to defendants who face legal action in a jurisdiction beyond their own.

To date, the majority of other countries that have enacted such systems have used class action proceedings only sparingly. This occurrence is caused by a number of causes, one of which is the incorporation of the class action method into a legal financing structure that restricts or prohibits conditional or dependent fee agreements. Furthermore, this approach lacks a mechanism for cost sharing among opt-out class members, necessitating fee shifting. As a result, in some situations, a class representative may be compelled to post a security bond to cover anticipated adverse costs and incur the risk of having to pay such costs. There is a legislative basis for developing a class action procedure in these specific jurisdictions; nevertheless, there has been little enthusiasm or motivation to actively deploy it thus far. There is a logic to believe that this occurrence will change in the future. Empirical research suggests that class action processes that are originally introduced for specific types of cases are later broadened to include other types of cases. Fee structures have changed as a result of the emergence of class actions and group processes in certain legal systems. These improvements include the deletion of contingency fee limitations and the establishment of one-way fee shifting.

In essence, the establishment of class action procedures may exert pressure on the removal or relaxation of impediments to their use.

The advent of class action lawsuits in jurisdictions other than the United States adds to the difficulties of global litigation. Practically, the use of class actions in Canada and Australia has resulted in an increase in the number of coordinated class action processes in Canada and parallel class action proceedings in Australia. This development has complicated defendants' litigation strategies and given unique managerial issues to judges in the United States. However, there are several extra issues that must be handled. Previously, while deciding whether to approve a class that included individuals from other nations, federal courts in the United States had to consider a number of considerations. One of these considerations was whether foreign courts, who lacked their own class action procedures, would recognise and enforce class action verdicts rendered in the United States. The Vivendi Universal, S.A. Securities Litigation case is a famous example of this probe. Courts in various countries are increasingly confronted with litigation stemming from the same set of facts and actions all over the world. These courts use various class and aggregate methods, raising the question of whether judges should enforce class settlements achieved in other countries for the benefit of their own residents. This phenomena has the ability to cause unanticipated and unexpected outcomes.

The WCAM mechanism enables representatives of claimants, such as established consumer associations or shareholders foundations created specifically to advocate for claimants, as well as potential defendants who have reached an extrajudicial settlement for mass claims, to collaboratively request the Amsterdam Court of Appeals to endorse the settlement and enforce its terms upon all class members who choose not to opt out.

After the submission of the petition to the court, notification of the proposed settlement is disseminated through publication and, whenever feasible, conveyed on an individual basis. Upon careful examination of the objections put forth in written form or presented during an oral hearing, when any member of the class is afforded the opportunity to speak, the court proceeds to evaluate the reasonableness of the settlement. In the event that the court grants approval for the settlement, individuals belonging to the class will be duly notified and will be given the opportunity to voluntarily exclude themselves from the settlement and instead pursue an independent legal case. Once the settlement is affirmed by the Amsterdam Court of Appeals, class members are precluded from pursuing further appeals, as the settlement provides an avenue for people dissatisfied with its terms to opt out. Private foundations established specifically for this objective are responsible for managing settlements. The parties engaged in the negotiation of the settlement possess significant discretion in establishing the various aspects of the settlement, including the allocation of settlement funds, provisions for challenging individual claim determinations within the settlement structure, and the ability for the parties involved to terminate the settlement in the event of a substantial number of opt-outs.

The parties may also reach a consensus on terms that regulate the attorney's fees of the representative association. In the context of settlement, fee agreements are not subject to judicial scrutiny or endorsement, which aligns with the prevailing practise in private civil litigation in the Netherlands. However, it is anticipated that these agreements adhere to the professional rules established by the Dutch bar organisation. It is plausible for a legal professional to engage in a contractual agreement wherein they agree to lower their hourly fees significantly in return for a big success fee, contingent upon the client achieving a favourable outcome.

In 1994, the Netherlands implemented a collective action statute, which preceded the collective settlement act by over ten years. This statute enables associations to initiate tort claims on behalf of shared interests, effectively establishing a mechanism akin to a class action in litigation. Nevertheless, within these legal proceedings, organisations are limited to obtaining declaratory or injunctive relief. According to the law, a court in a collective-action case is not authorised to assess any owing damages, whether they are aggregate or individual, to the association, its members, or the interested parties it represents.

The establishment of WCAM collective settlements might arise as a consequence of a collective action whereby it has been determined that a defendant has engaged in illicit conduct. However, it is possible for parties to petition the court to authorise a legally binding collective settlement, even in the absence of any prior court proceedings. In summary, the Netherlands has adopted the settlement class action framework, which characterises the majority of damage class actions in the United States19, as its own model for class action litigation. Similar to the situation in the United States, the settlement class action paradigm has received criticism in the Netherlands. Dutch commentators have referred to it as a "back end device without a front-end." This criticism stems from the perception that the paradigm tends to prioritise the interests of potential defendants over those of the plaintiffs involved. Nevertheless, it is worth noting that the Dutch Ministry of Justice is currently engaged in discussions regarding potential amendments to the collective settlement procedure. However, it is important to highlight that the inclusion of damages as part of the collective action statute, which would serve as a "front-end" for the collective settlement procedure, does not seem to be under consideration at present.

The WCAM was developed with the purpose of addressing a particular case of widespread harm and collective legal actions, a practise observed in numerous countries that have implemented class action or group litigation mechanisms. In the Netherlands, this entailed children seeking compensation for injuries caused by their mothers' use of a hormone medication called diethylstilbestrol during pregnancy. The litigation surrounding DES in the United States has persisted through the pursuit of aggregated nonclass action cases in both federal and state courts, and remains an ongoing matter. The DES litigation in the Netherlands has reached its final stage with the completion of the settlement negotiated under WCAM. This settlement encompasses all individuals who may be affected in the future due to their mothers' use of DES, including those commonly referred to as "futures" in the procedural terminology used in the United States.

2.3 Types of class actions lawsuits

It is common known that there is strength in numbers, but it is as essential to be aware of the potential for power that may be derived from large groups of individuals working together. Because of the excessive costs connected with litigation, it may be conceivable for a collective group of plaintiffs to achieve a resolution in a class action lawsuit that would otherwise be unreachable for individual plaintiffs. This is especially true when considering the potential scale of the compensatory judgements. As a consequence of this justification, class action lawsuits usually include all of the kinds of issues mentioned in the coming paragraphs.

• Civil rights

Class action lawsuits have demonstrated a notable efficacy in adjudicating significant matters pertaining to civil rights. The landmark case of Brown v. Board of Education22, which was resolved by the United States Supreme Court in 1954, effectively terminated the practise of racial segregation in public schools. In contemporary legal discourse, there has been a notable emergence of class action civil rights cases that aim to contest the equitable practises of specific law enforcement agencies, said gender-based discriminatory policies implemented by prominent corporate entities, and the alleged prejudiced treatment of individuals with disabilities.

• Employment

When an individual employee files a lawsuit against their employer, it is usual for the case to end in a confidential settlement. While such settlements may provide restitution to the individual, they typically fail to result in broader systemic modifications that extend beyond the specific business involved. When evaluating the issue, it is clear that class action lawsuits have the potential to influence not just the defendant, but also other firms in similar situations, to change their practises. Employment class action lawsuits commonly arise in connection with issues such as noncompliance with wage and hour regulations, sexual harassment, discriminatory hiring or compensation practises, the presence of hostile work environments, and other violations of state or federal legislation.

• Finance

Class lawsuits frequently revolve around matters pertaining to predatory lending and violations of securities law. Frequently, individuals who have fallen victim to predatory lending or financial securities fraud or misconduct initiate legal proceedings, seeking redress and advocating for reforms that safeguard the welfare of prospective customers and investors.

• Environment

Environmental problems, like stopping waste and keeping clean water safe, usually affect not only one person but also large groups of people who could be sued. As an example, groups of property owners have been able to get good results by filing class action cases. The people who are suing say that the contamination on their homes has made them worth less. In situations like this, businesses like the defendants change how they get rid of waste and work harder to protect the environment so they don't get sued in the future.

• Product defects

Problems with products have been the subject of numerous class action lawsuits in the past and present. A significant class action lawsuit was filed against Toyota in 2010 for allegedly defective vehicles that, among other things, accelerated by accident. In the event of a successful settlement or decision, the injured parties in a product liability class action will receive compensation for their losses, and the responsible corporation will be required to make changes to ensure that its customers are never in risk.

• Dangerous drugs

There is no occurrence of harm to any individual resulting from pharmaceutical equipment and pharmaceuticals that exhibit hazardous defects. The utilisation of drugs and technologies frequently results in the occurrence of injuries among a substantial population. Several class members have initiated and won class action lawsuits against producers of subpar surgical supplies, medications, and contraceptives. Pharmaceutical enterprises are required to enhance their testing practises and ensure the production of safer products in response to class action lawsuits pertaining to the presence of defective pharmaceuticals.

The prevalence of class action lawsuits in the United States extends beyond the aforementioned examples. Nevertheless, considering the importance of the matters they tackle and the extensive population they impact, they provide a vital representation.

2.4 Evolution development of class actions in the US, UK, and India

The class action paradox is rooted in the observation that the American approach to collective litigation encounters significant internal scrutiny, yet it concurrently garners global recognition as a model for legal transformation.

Nevertheless, the unique challenges faced by India necessitate the implementation of tailored legal remedies. The Bhopal accident posed challenges to the procedures of accountability within the context of restorative justice. When considering the concept of redistributive justice, it is important for individuals in India to assess the influence of their legal framework on the preservation of inequalities that have been established over thousands of years through the assignment of social roles, distribution of economic advantages, and acknowledgment of social status within the caste system. Regardless, it is imperative that the discourse surrounding legal reform remains uninfluenced by an idealised viewpoint of the American civil justice system.

In order to comprehensively assess the potential and constraints of social transformation via law reform in India, it is imperative to rely on empirical research, draw insights from historical precedent, and consider the cultural values ingrained throughout Indian culture. The challenges surrounding collective litigation in the United States dismantle the perceived notion that their legal system is an exemplary model for effecting legal reform. The examination of Public Interest Litigation23, affirmative action, and the mass torts system in India could potentially gain insights from a comparative analysis, provided that it is conducted through a rigorous evaluation of the merits and shortcomings of the American "law in action". The Law and Society Movement posits that the act of cross-cultural borrowing ought to be a deliberate political choice, rather than an unquestioning replication of a legal framework driven by the dominance of a more influential nation. Social change does not occur abruptly, but rather emerges as a consequence of prolonged processes in which the involvement of legal decision-making is crucial. The challenge that lies ahead for India is to shape the historical landscape and future societal perspectives through the implementation of law and justice.

• The Bhopal gas tragedy in India

A well-known American scholar named Marc Galanter has written a lot about the terrible accident at the Union Carbide Company in Bhopal in 1984. In his academic work called "When Legal Worlds Collide: Reflections on Bhopal, the Good Lawyer, and the American Law School," Galanter says that the Indian legal system isn't good at giving enough justice for mass torts disasters. In areas that aren't well developed, tort law faces big problems that make it take longer to settle cases. A small number of judges, a disorganised way of judging cases, and many ways to appeal are some of the problems that need to be solved. The high court fees also make it harder to get cases resolved quickly. Also, lawyers in these areas mostly represent clients in court and don't have the specialised knowledge or aggressive approach to fact-finding investigations. It is important to note, though, that the American legal system is strong, and that there was a lot of legal information flowing between the US and India after the terrible accident at Union Carbide27. The way Galanter talked about this exchange became known as the Bhopal connection. When looking at things from the US point of view, it's important for Americans to think about their moral duty when it comes to sending new, possibly dangerous technology to countries that don't have good regulatory systems. In this situation, it is very important to think about whether accountability systems should also be used when these tools are exported. If this were true, would the US be setting a double standard where victims of wrongdoing by foreign companies get paid while victims of wrongdoing by American companies don't get paid?

• Crisis of American Model of Class Action Suit

The class action model in the United States is founded on the principle that attorneys will assume the responsibility of acting as "private attorney generals," thereby serving as advocates for the public good by means of upholding laws and safeguarding societal interests through the pursuit of class action lawsuits. Stephen Yeazell articulated the prevailing doubt surrounding this notion by posing the following inquiries: "Does the private-attorney-general theory primarily serve as a superficial disguise for lawyers' personal gain?" Is it appropriate to question the validity of legal principles when lawyers may only be involved in a secondary or indirect manner? Should political mechanisms have authority over the types of legal actions that a private attorney general is permitted to initiate?

A research team from the RAND Institute did a thorough empirical study on many challenges related to Class Action cases. The research outcomes revealed the inherent challenges within the American class action model. Initially, it is important to note that private class solicitors are primarily motivated by their own financial motivations. However, it is possible that over time, they may also develop an interest in safeguarding public interests. Furthermore, in the event that a class comprises a substantial number of individuals who have incurred minimal damages, all parties interested in a collective settlement may be inclined to engage in collusion. Plaintiff attorneys have the potential to obtain substantial fee awards by opting for early settlements, thereby avoiding the allocation of their resources towards protracted and costly discovery processes. Defending attorneys may have a vested interest in mitigating adverse publicity, minimising litigation expenses, and circumventing the potential ramifications that may arise from an extensive inquiry into their client's misconduct. Judges may lack the necessary expertise to assess the presence of collusion, particularly in cases when evidence is lacking due to an early settlement and the burden imposed by their caseload. The researchers indicated that the inclination to engage in collusion poses a potential challenge to the goals of collective litigation in the United States, as evidenced by their references to the individuals interviewed and their descriptions of different settlements. Furthermore, it is worth noting that private solicitors specialising in class action lawsuits may possess economic motivations to initiate premature class actions, even if they rely on contentious scientific data, with the aim of pushing for settlements in cases that lack merit33. Fourthly, the task of attaining a comprehensive resolution in mass torts class actions on a global scale is an exceedingly challenging endeavour, owing to the intricate dynamics that arise from the participation of individuals who choose to opt-out of the class and those who subsequently join as new claims. These highly uncertain actions have a significant impact on the intricate equilibrium of international agreements. Furthermore, a recurring concern arises regarding potential future claimants, posing the problem of reconciling the imperative to safeguard those who may assert future claims with the defendant's objective of achieving closure. In conclusion, the class action system in the United States fails to provide sufficient representation for absent parties, and victims of mass torts typically lack sufficient information and tools to effectively oversee their legal counsel.

Stephen Yeazell also discusses the issue of the "kidnapped rider" in his work. This concept pertains to situations where an individual is included as a member of a class, despite their personal interests conflicting with the specific case put forth by the attorney representing the class action.

The researchers at the RAND Institute have reached the conclusion that the class action system in the United States has several noteworthy shortcomings35. These include the provision of financial incentives for litigation that lacks merit, the failure to effectively enforce regulations, the inadequate ability to prevent collusion, the preferential treatment of class members with weaker cases over those with stronger claims, and the exacerbation of the judicial difficulties associated with handling scientific evidence.However, it should be noted that the discontinuation of collective litigation is not being advocated. Class action lawsuits are indeed a potent strategy for mitigating industrial misconduct and preventing large-scale disasters

Legal frameworks for class actions in each jurisdiction

• UK

In the English legal system, there exist two distinct informal systems that facilitate the initiation of group claims on an opt-in basis. One of the strategies is the inclusion of several claimants on a single claim form. This strategy can be employed in situations where the claims have the potential to be efficiently resolved within the same legal proceedings. The second procedure involves the issuance of separate claims, followed by a court order for their consolidation or joint trial. The consolidation or joinder of claims can be initiated through an application submitted by either the claimant(s) or defendant(s), or at the discretion of the court. The court possesses significant discretionary authority regarding this matter and will be swayed by arguments pertaining to the efficiency and cost-effectiveness of case management.

The implementation of a more structured method for initiating opt-in group proceedings is exemplified by the Group Litigation Order mechanism, which was established in 1999. In this particular strategy, individual members of a group present their respective claims, and the court has the authority to approve a Group Litigation Order if these claims demonstrate the existence of common or interconnected concerns pertaining to facts or laws. Subsequently, the court will establish a Group Register which will enumerate the claims that fall under the ambit of the Group Litigation Order. Decisions and determinations pertaining to matters of common concern, commonly referred to as GLO issues, has a legally binding effect on all claims that fall within the purview of the GLO.

There exist two opt-out mechanisms.

1. The Collective Proceedings Order regime (CPO), implemented by the UK Government in 2015, is a nationwide class action process designed expressly for competition disputes. The initiation of these procedures is limited to the specialised jurisdiction of the Competition Appeals Tribunal (CAT), which serves as the designated court for competition-related matters. The current CPO (Class Proceedings Act) framework allows a designated representative to initiate legal actions on behalf of a collective group, with the option for individuals to join the lawsuit either by actively choosing to participate (opt-in) or by being automatically included unless they want to opt-out, depending on the specific conditions deemed acceptable. The implementation of a statutory system for opt-out claims in the UK was perceived by some individuals as a groundbreaking measure, marking the first instance of such a provision being enacted. The Certification and Tribunal (CAT) will convene a hearing at the initial phase of the proceedings to determine the appropriateness of the claim for the procedure, the granting of a Collective Proceedings Order (CPO), and whether the claim should proceed on an opt-in or opt-out basis. In the event that the latter option is chosen, judgements and settlements will possess legal force and effect for all members of the class, with the exception of those who elect to exercise their right to opt-out.

2. Another such avenue for opting out is the Representative Action procedure. This mechanism has a historical origin spanning several centuries; yet, its utilisation has been infrequent up until the present time. It is necessary for both the representative and the members of the class to possess a shared interest in the claim. The English courts have consistently maintained strict scrutiny over the application of the "same interest" test, dismissing numerous attempts to employ this mechanism. Nevertheless, the ruling in the Lloyd v Google case by the Supreme Court has reduced the standard set by this assessment.

• USA

The United States possesses two distinct court systems, namely the federal and state courts, which are established in accordance with the principles of federalism as outlined in the US Constitution. Federalism entails the division of governmental functions between the federal government and state governments. State courts are created in accordance with the legal statutes of individual states and possess extensive jurisdiction. The establishment of federal courts is mandated by the United States Constitution, and its jurisdiction is significantly more limited in scope. Class actions have the potential to be initiated in either state or federal courts.

 Rule 23 of the Federal Rules of Civil Procedure governs class actions in federal courts. State court jurisdictions possess their own equivalent to Rule 23. In the legal context, a class action complaint initially operates as an individual action until the court issues an order officially designating it as a certified class action. In order to get class action status, the plaintiffs are required to submit a formal petition for class certification. During this process, the court assesses whether the plaintiffs have successfully demonstrated the fulfilment of each component outlined in Rule 23 through the evidence presented.

For a class to get certification in federal court, it is necessary to demonstrate compliance with the conditions outlined in Rule 23(a). These qualifications must be proven by the plaintiffs. The class is of such a large size that it is not feasible to gather together all of its members. The presence of common questions of law or fact among the class is evident. The claims or defences put forth by the represented parties are reflective of those made by the entire class. The interests of the class will be adequately and fairly protected by the representative parties. In order to satisfy the Rule 23 prerequisites, certain federal jurisdictions additionally necessitate the plaintiff to demonstrate that the class is 'ascertainable', indicating that the individuals comprising the class may be feasibly identified. Furthermore, it is imperative for the plaintiffs to fulfil a minimum of one of the prerequisites outlined in Rule 23(b) in the following manner:

The implementation of separate adjudications may introduce the possibility of decisions that are incongruous with or conclusive for the claims of other members within the class. Consequently, the granting of declaratory or injunctive relief is justified due to the defendant's actions that have affected the class as a whole.

Forum: There are both state and federal courts that hear class cases. When it comes to power, federal courts are limited. People can file lawsuits in federal courts when they have subject matter power over a federal issue, like when a case comes up because of the US Constitution or a federal law. There is also the idea of "diversity jurisdiction," which means that legal processes can begin in federal courts. This happens when the people involved are from different states and the case has a certain minimum amount of money in it.

Judges: When it comes to class certification motions, the matter is formal and must be decided by a court. In the same way, judges decide the outcomes of dispositive motions, like motions for summary judgement, which could end the case before it goes to trial because there aren't any important issues that are being argued.

It depends on the legal claims being made, but either a judge or a jury can decide what the important benefits of class actions are. Some types of claims may be able to have a hearing by jury, while other types of claims may not be able to have one and instead rely on a judge to decide what happened.

• India

Several Indian statutes exist that establish procedures for initiating, managing, and legally resolving a range of collective or interconnected claims, usually known as representative or class actions.

1. Representative actions under the Code of Civil Procedure, 1908: All civil actions filed in Indian courts must follow the procedural guidelines set forth in the Code of Civil Procedure, 1908 (often known as the "CPC"). Kindly submit an order. One legal framework provision, Rule 8, states that, with the consent of the court, a collective group of plaintiffs may file a lawsuit in a representative capacity on behalf of a larger group or class of people. This provision creates a particular exception to the general rule that all parties to a lawsuit should be named as parties, and it permits a group or class of people with a shared grievance or interest in a given subject to file a lawsuit on behalf of a finite number of named representative plaintiffs. The provisions outlined above enable a group of defendants who are representational in nature to provide a defence on behalf of the group as a whole. In order for any person on whose behalf or for whose benefit the lawsuit is being brought (or defended) to request to be included as a party to the proceedings, the court must notify all parties with a vested interest of the litigation's beginning. The adoption of a decree places a legally binding duty on every member of the class or group.

In addition, Section 91 permits a group of people to petition a court for permission to launch a collective action to recover damages for a public nuisance or other wrongdoings that have affected or are likely to affect the public at large, even if none of the parties to the action have personally suffered any particular harm.

2. The Companies Act, 2013: The legal codification of class actions was initially established with the enactment of the Companies Act. Individuals who have invested in a corporation, excluding banking institutions, have the right to individually or collectively approach the National Corporation Law Tribunal (NCLT) for the purpose of seeking redress and relief. This right is granted under Sections 241-246. The National Company Law Tribunal (NCLT) currently possesses jurisdiction over all legal matters related to corporations and company law. The details pertaining to the necessary numerical threshold can be found in question 1.5 that follows. The liability of the firm, its directors, auditors, experts, counsellors, or consultants may be incurred in cases involving fraudulent, criminal, or wrongful acts. Redress include the potential provision of financial compensation for acts of fraud, as well as remedial measures aimed at mitigating harm inflicted upon the company, its stakeholders, depositors, or the broader public interest.

3. The Consumer Protection Act, 2019: India's consumer protection laws were reformed by the Consumer Protection Act, 2019 (the "CP Act"), which included explicit provisions for class actions in Section 35. A class action may be filed on behalf of the group by one or more customers who have a grievance or common interest regarding any products or services received and who wish to pursue the same remedy on behalf of the group. With the consent of the applicable Consumer Dispute Redressal Commission, the case may be continued. Additionally, both the federal and state governments have the authority to make a complaint on behalf of all customers, either individually or as a representative. The customer may be awarded punitive damages in extreme circumstances in addition to reimbursement for actual damages incurred.

4. Representative actions under the Competition Act, 2002: A class of individuals with similar interests who have suffered losses or damages as a result of an enterprise's misuse of its dominating position in the market or anti-competitive practises may file an action under Section 53N(4) of the Competition Act, 2002, for their benefit. The National Company Law Appellate Tribunal ("NCLAT") is where the action is pending and clearance from the NCLAT is required. The CPC's protocol must be followed in this case as well.

Chapter 3: Class Action Lawsuits in the United States

3.1 Overview of the legal system

• India and USA

In both India and the United States, the Constitution serves as the preeminent legal framework, with the judiciary assuming the role of safeguarding and interpreting its provisions. India adheres to the doctrine of Procedure Established by Law. In contrast, the United States of America adheres to the principle of Due Process of Law.

The jurisdiction of the Indian Supreme Court is limited to federal disputes in its original jurisdiction. While its American equivalent have more jurisdiction, The Supreme Court of India, in the exercise of its appellate jurisdiction, adjudicates on questions pertaining to constitutional, civil, and criminal law. The jurisdiction of the Supreme Court of the United States is limited only to issues involving constitutional matters.

1) The Indian Judicial System possesses significant discretionary power in granting Special Leave to Appeal. Nevertheless, the American judicial system lacks the authority to issue such an appeal. 2) The Indian judicial system has a provision for advisory jurisdiction. 3) In contrast, the American Judicial System does not include any such clause. 4) In India, the extent of Judicial Review is constrained, while in the United States, it possesses a broader scope. 5) The authority of Judicial Review has been obtained by the judiciary in both India and the United States. However, the judicial body in the United Kingdom does not possess such authority.

• India and UK 

 India's and the UK's legal systems show both similarities and differences. Convergence is the progressive fusion of different parts or viewpoints that eventually result in the achievement of a common goal. Because disconnected pieces of laws and procedures can have negative impacts on the judicial system, the convergence of laws, legal processes, and systems is very important. Increased uncertainty, disruptions, delays, and transaction costs are some of these impacts that add to the system's divergence.

The substantial backlog of cases facing the legal systems in both nations could potentially hinder the proper operation of the criminal justice system. A great deal of work has gone into addressing the problems caused by insufficient funding, which has left a gap in terms of upholding public confidence.

The amount of time needed to resolve a case differs greatly depending on the kind of issue. Judges' decision-making procedures show a lack of uniformity. Divergent views persist on the application of capital punishment in the Indian setting.

1) India has a single legal system, with the Supreme Court supervising the administration of both State and Federal legislation.
2) It is said that the United Kingdom is a unitary state with a single, cohesive legal system. The United Kingdom's judicial system has experienced swift transformation. In an effort to reduce the backlog of cases and expedite legal proceedings, the Indian judiciary has likewise seen tremendous impetus.
3) Unlike the Indian Supreme Court, the nation's highest court lacks the authority to declare laws unconstitutional.
4) Nonetheless, it possesses the power to carry out judicial review, scrutinising the legitimacy of actions that bear noteworthy public and constitutional importance, with the objective of maintaining the fundamental concepts of natural justice.

The evolution of the legal system in the United Kingdom has occurred in a progressive manner over time. The Indian Constitution laid forth the framework and delineated the jurisdiction of the court. The United States Constitution establishes the framework for the composition of the judiciary inside the United States. Nevertheless, throughout the past few centuries, it has evolved into a fully operational legal system.

In the contemporary era of globalisation, legal systems are increasingly converging due to the reciprocal impacts and expanding interconnections between nations. The objective of this essay is to demonstrate that the application of a comparative legal approach encompasses more than mere acquisition of knowledge from other legal systems or assessment of similarities between aspects of other legal systems and one's own.

The judiciary occupies a prominent and influential role within the liberal democratic systems of the United States of America, the United Kingdom, and India. The legal system of the country in question is characterised by its impartiality, independence, trustworthiness, and effectiveness. These sovereign governments adhere to the fundamental principle of the separation of powers, which ensures the autonomy of the judiciary from interference by the executive and legislative departments.

Disseminating information regarding these significant matters would enhance public awareness within the general populace. A more pragmatic and optimistic societal viewpoint is predicated upon a thoroughly educated and accurate understanding and grasp of the legal system.

3.2 Key legal provisions

1. The genesis of this theory can be traced back to its initial formulation in the Federal Rules of Civil Procedure of the United States, specifically under Rule 23, in the year 1938. The criteria for class action lawsuits include the condition where the size of the class is so extensive that it is impractical to join every individual member.

• There are certain legal and factual questions that are commonly encountered in these classes.
• If the claims and defences of the aforementioned parties align with the claims and defences of the classes;
• Can the parties that are representing effectively safeguard the interests of the involved stakeholders?

The subject matter being discussed is a specific academic course or educational session. Subsequently, the Federal Jurisdiction experienced an expansion as a result of numerous class action cases. The Class Action Fairness Act of 2005 was introduced as a means to address and regulate class action lawsuits. There are several factors that contribute to the classification. Action litigation relating to a firm often emerge in instances where the company violates the terms of employment.

The company is engaged in unfair labour practises and exhibits mismanagement in its affairs. There has been a significant amount of research conducted on this topic. There has been a significant increase in the prevalence of such cases in the United States, leading to the emergence of numerous law firms specialising in class actions. The legal professionals that advocate for the class are commonly referred to as contingency lawyers and are geographically situated. The fees charged by legal professionals are contingent upon their performance and the outcome of the case. 

2. As previously mentioned, shareholders are engaged in multiple disputes. The claims typically revolve around the violation of regulations established by the Securities Exchange Commission (SEC), specifically Rule 10b-5. This rule states that it is illegal for any individual, either directly or indirectly, to employ deceptive tactics, provide false information or omit material facts that would render their statements misleading, or engage in fraudulent activities in connection with the buying or selling of securities. These claims primarily focus on instances where individuals have breached these provisions.

3. The Supreme Court of the United States ruled in the case of Dura Pharmaceuticals v. Broudo that a claim can be established under Rule 10b-5 only if the Plaintiff alleges the following elements: 1. The defendant made a material representation. 2. The sale or purchase of securities is linked to the misrepresentation. The plaintiff or plaintiffs relied on the misrepresentation. The term "scienter" refers to the knowledge or awareness of a particular fact or circumstance. However, the aforementioned rule has been subject to criticism due to its failure to offer sufficient compensation and the essential deterrent effect. The Private Securities Litigation Reform Act of 1995 includes superfluous processes that provide obstacles for claims falling within the scope of Rule 10b-5. In Europe, the initiation of class action lawsuits is limited to consumer associations rather than individual plaintiffs, as the primary aim is to curtail the ambitions of firms.

4. In India, the company law places significant emphasis on safeguarding the rights of minority shareholders against instances of mismanagement and oppression within a company. Simultaneously, it adheres to a fundamental principle established in the case of Foss V. Harbottle, which prioritises the interests of the majority over those of the minority. Furthermore, the latest revisions might be regarded as a favourable measure aimed at ensuring the company's accountability in the event of any violations committed by it.

5. According to Order 1 Rule 8 of the Civil Procedure Code, in cases when a substantial number of individuals collectively oppose a common party, they are entitled to initiate legal proceedings as a group. In such instances, one or more individuals from the group may be authorised to serve as representatives on behalf of the entire group. However, parties typically choose not to exercise their claim under this Article due to the lengthy and cumbersome procedure involved. Hence, there arose a necessity for a more practical provision, especially in light of the Satyam case. In this instance, American investors were able to recover their funds due to the robust framework for class action lawsuits in the United States. Conversely, Indian investors were left with no recourse but to navigate the aforementioned protracted procedure.

3.3 Landmark class action cases

1. Brown v. Board of Education: The landmark decision in the case of Brown v. Board of Education rendered by the Supreme Court declared the "separate but equal" doctrine to be in violation of the Constitution, effectively bringing an end to the practise of racial segregation in American schools. The ruling of the Court had a profound and far-reaching impact on several facets of American society, serving as a significant educational experience. It unequivocally established the fundamental moral principle that racial segregation is intrinsically unjust and necessitates its cessation. However, it is important to note that Brown v. Board of Education was a class action lawsuit, serving as a quintessential illustration of such legal proceedings. The policies implemented by states, known as "separate but equal," had detrimental effects on individual pupils. This theory was used to rationalise racial segregation in educational institutions, on the condition that the facilities provided were deemed to be "substantially equal." Nevertheless, the students had challenges in substantiating the direct harm caused by these policies. Additionally, it is important to acknowledge that not all families possessed the necessary means to initiate legal proceedings and seek compensation. However, when the students collaborated, they were able to effectively illustrate the inherent inequity in the states' pattern and practise, ultimately resulting in harm to the collective.

2. In re Agent Orange Product Liability Litigation: Concerns regarding the potential hazards associated with the utilisation of herbicides in warfare, specifically the United States military's deployment of Agent Orange, were raised as early as 1964. Nevertheless, despite these concerns, the practise persisted until 1975. Upon their return from the Vietnam battle, veterans voiced concerns over health issues associated with chemical exposure. However, their claims for benefits pertaining to these issues were subsequently refused. Subsequently, in 1979, a collective of military veterans initiated a class action lawsuit against the five entities responsible for the production of Agent Orange. Ultimately, the litigation was resolved, resulting in the establishment of a financial resource aimed at providing compensation to the soldiers and their respective families. However, the consequences of the legal proceedings had only just commenced following the resolution. During a period characterised by widespread societal rejection of Vietnam veterans, legislative measures were instituted at both the federal and state levels to safeguard their rights and allocate supplementary resources and support. In the interim, the scandal has prompted the implementation of fresh laws pertaining to the utilisation of chemicals inside the military, as well as ongoing scientific investigations. The Agent Orange litigation can be credited with raising public awareness of the environmental and human health effects of dioxins, as exemplified by notable cases such as Erin Brockovich and the Flint, Michigan water crisis.

3. Deepwater Horizon Oil Spill: On April 20, 2010, an oil rig located in the Gulf of Mexico exploded, leaving eleven people dead and spilling a significant amount of oil into the surrounding waters. This event is known as the Deepwater Horizon tragedy. Two more months passed while the oil spill continued. A class action lawsuit with 100,000 claims was filed in addition to the criminal and civil actions the U.S. government had already taken against BP. People who claimed to have been harmed by the oil leak, including fishermen, landowners, and other impacted parties, filed these claims. BP will eventually pay out billions of dollars in damages as compensation for what it has suffered. In order to meet the needs of individuals, two settlement funds with a focus on medical and economic claims, respectively, have been established. It took just two years after the explosion for these major agreements to be reached.

4. Lane v. Facebook: In the year 2007, Facebook launched a programme known as "Beacon" that undertook the task of monitoring and disseminating users' non Facebook activities without obtaining their agreement. A class action lawsuit was initiated by Facebook users in response to the privacy violation. As part of the settlement, Facebook was compelled to discontinue the Beacon feature and was additionally obligated to establish and financially support a foundation aimed at educating individuals on matters pertaining to online privacy and safeguarding personal identities. In a broader sense, Beacon has emphasised the significance of customers' capacity to choose participate in data exchanges, as opposed to being automatically enrolled and having to actively withdraw: Companies face potential consequences when they disclose individuals' personal information without obtaining explicit prior consent. The recent revelation by Facebook regarding the sharing of user data with third-party entities, including Cambridge Analytica, has brought to light ongoing problems in this area. It is worth noting that Cambridge Analytica is currently facing many class action lawsuits.

3.4 Current trends and challenges

1. Standing to Pursue Statutory Claims: In Spokeo, Inc. v. Robins, the U.S. Supreme Court said that a person must have a concrete harm in order to have standing under Article III, even if the violation of a law is the cause of the action. This decision made it clear that having a legal right created by Congress does not instantly give someone standing. Based on the Spokeo case, saying that a simple violation of procedure without any real harm is not enough to create legal standing. Since the Spokeo decision, defendants, especially in class action lawsuits, have questioned the legal standing of plaintiffs seeking relief under federal laws like the FCRA, FACTA, TCPA, and FDCPA. Many decisions have been made by federal courts across the country because of the problems listed above. There has been a lot of variation in the choices, but patterns have become clear. Take the Telephone Consumer Protection Act (TCPA) and the Fair Debt Collection Practises Act (FDCPA) as an example. A lot of courts have decided that people have standing in cases regarding these laws. When it comes to issues involving the Fair Credit Reporting Act (FCRA), however, judges are pretty evenly split. There is no clear winner. Also, most judges have decided that there is no such thing as "standing" when it comes to the Fair and Accurate Credit Transactions Act (FACTA). However, many courts have come to different decisions even though the facts were the same. The legal framework for these issues is likely to become more solid over a long period of time, as decisions made by judges move through state courts and possibly go back to the Supreme Court.

2. Ascertain ability Requirement: The concept of ascertainability refers to the ability to determine or establish something with certainty or accuracy In order for a class to obtain certification, it is necessary for the class definition to establish objective criteria that can be used to ascertain the inclusion or exclusion of a specific individual from the proposed class. The term used to describe this need is "ascertainability." Although Federal Rule of Civil Procedure 23 does not explicitly mention ascertainability, it has been widely acknowledged by numerous courts that the ascertainability requirement is inherent in Rule 23. There exists a divergence among courts about the specific evidentiary burden that a plaintiff must meet during the class certification phase in order to fulfil the ascertainability requirement. The 3rd Circuit, along with certain lower courts, has imposed a more rigorous ascertainability test on plaintiffs seeking class action status. This standard necessitates not only the establishment of objective criteria to delineate the class's parameters, but also the presence of an administratively practicable approach to identifying individual class members. In the legal case of Carrera v. Bayer Corp., In contrast, it has been observed that the 2nd, 6th, 7th, 8th, and 9th Circuits, along with the majority of subordinate courts, have established a stance wherein they do not impose a "heightened ascertainability" requirement within their respective jurisdictions.

3. Fairness in Class Action Litigation Act of 2017: The Fairness in Class Action Litigation Act of 2017, which was approved by the United States House of Representatives by a vote of 220-201 on March 9, is presently gaining traction in the Senate. The proposed legislation proposes to make many changes to the requirements and processes of class action lawsuits, with the majority of these changes favouring defendants and placing more obligations and risks on class representatives. As an example, consider the proposed legislation would require that every member of the proposed class have experienced the same "type and scope" of suffering in order to acquire class certification. This rule effectively prevents those who have not been injured from being included in the class. Furthermore, the bill would impose a "administrative feasibility" criterion for class certification, despite the fact that multiple courts have ruled that such a requirement is not required under Rule 23. The proposed legislation would include a clause that would halt the collection of evidence until a request to transfer or dismiss class charges is filed. This would result in lower costs and responsibilities for defendants throughout the early stages of a court battle. Furthermore, the law intends to secure the ability to timely challenge class certification orders, which is now at the discretion of appellate courts and is frequently denied. In addition to the aforementioned changes, the proposed legislation would subject plaintiffs' lawyers to additional scrutiny. This would be accomplished by requiring that attorney's fees be calculated based on the actual amount recovered by the class, requiring class action complaints to disclose any affiliations or potential conflicts of interest between the proposed class representatives and their legal counsel, and establishing new disclosure obligations pertaining to class settlements and third-party financing.

Chapter 4: Class Action Lawsuits in the United Kingdom

4.1 Overview of the UK legal system

The United Kingdom is characterised by the presence of three distinct legal systems, namely those of England and Wales, Scotland, and Northern Ireland. This phenomenon can be attributed to its historical roots and the persistence of distinct legal systems and traditions in Scotland and Ireland, which were subsequently maintained in Northern Ireland following the implementation of the Acts of Union in 1707 and 1800. This page pertains to the judicial system of England and Wales. The text also provides a brief reference of the Tribunals Service, which encompasses Scotland, as well as the Supreme Court of the United Kingdom, which assumed jurisdiction over the entirety of the United Kingdom following the replacement of the Judicial Committee of the House of Lords in October 2009.

The justice system constitutes one of the three branches of the state. The remaining two branches encompass the executive, sometimes referred to as the government, and the legislature, which comprises the two Houses of Parliament. In the majority of democratic systems, there exists a clear separation among the three branches of government. The duties and functions of the branches are delineated in written constitutions, so avoiding the consolidation of power in any single branch and facilitating the ability of each branch to act as a check on the other two branches. The concept being referred to is commonly recognised as the separation of powers.

The United Kingdom is renowned for its distinctive characteristic of lacking a formal constitutional document to codify its constitution. The legal framework can be located within the legislative enactments of Parliament and the body of customary law, which has evolved over time through judicial rulings. In terms of this particular characteristic, the United Kingdom has similarities with only two other nations, namely Israel and New Zealand. These three countries have a unique characteristic that sets them apart from the majority of other nations. Constitutional instruments, such as the one observed in the United States, are well recognised for their written constitutions, which enjoy a prominent position above regular legislation. The enactment and removal of constitutional provisions necessitate adherence to a distinct procedure.

The absence of a codified constitution in the United Kingdom can be attributed to the historical development of its political and legal institutions since the year 1066. Another result of the aforementioned situation is the failure of our institutions to effectively delineate and segregate the functions and powers of the three distinct branches of the state, namely the executive, the legislature, and the judiciary.

As an illustration, the government, or executive branch, comprises Members of Parliament and peers who concurrently hold membership in the legislative bodies, namely the House of Commons and the House of Lords. In contrast, the United States maintains a clear separation between the executive branch, which includes the President and members of the Cabinet, and the legislative branch, consisting of the Senate and the House of Representatives.

Throughout history, the United Kingdom has witnessed numerous instances of the amalgamation of responsibilities. Prior to the conclusion of the 19th Century, it was permissible for judges to attain their positions through electoral processes, so potentially assuming roles as Members of Parliament (MPs). In exceptional instances, judges, including the Lord Chief Justice, were known to concurrently hold positions within the Cabinet, thereby establishing their membership within the government. It is worth mentioning that prior to October 2009, the highest court in our legal system was constituted as a committee within the House of Lords. Since the latter part of the 19th century, only judges appointed as Lords of Appeal in Ordinary (referred to as "Law Lords") and other peers who have held esteemed judicial positions have been eligible to participate in the activities of the Committee. However, Law Lords have persisted in actively engaging in discussions, particularly regarding legislative proposals concerning the courts and the management of justice.

The convergence of the state's judicial branch with the other branches was mostly terminated throughout the 19th Century. Nevertheless, there existed a notable deviation from the aforementioned pattern, which pertained to the esteemed position of Lord Chancellor. The office of the Lord Chancellor holds a significant historical standing in the United Kingdom65, with its origins dating back to the Anglo-Saxon era, as claimed by some scholars. However, its formal establishment may be traced to the year 1068, following the Norman Conquest. Throughout the course of history, numerous renowned individuals have fulfilled the role of Lord Chancellor. The individuals encompassed by this group are Thomas à Becket, Cardinal Wolsey, Thomas More, and Francis Bacon.

The position of the Lord Chancellor serves as a prominent illustration of the British constitution's lack of separation and, in fact, its intertwining of the three parts of the state. The Lord Chancellor held a prominent position within the Cabinet, serving as a high-ranking government official. This role encompassed various responsibilities, including serving as a judge and overseeing the judicial system in England and Wales. Additionally, the Lord Chancellor held a seat in the legislature and assumed the role of presiding over the proceedings of the House of Lords, thereby acting as its Speaker. The office in question is responsible for the integration and consolidation of the three branches of government. This could have been deemed appropriate at the time of the office's establishment. The persistent presence of its current form, however, has been subject to scrutiny on numerous occasions during the past two centuries. The English Constitution (1867) received notable criticism from Walter Bagehot, who expressed his disapproval in the following manner.

The entirety of the Lord Chancellor's office is characterised by a multitude of irregularities. The individual in question has the esteemed position of a judge, and it is in direct opposition to a well-established principle that any aspect of the administrative process should be assigned to a judge. It is of utmost significance that the impartiality and integrity of the judicial system remain untainted by any potential corrupting influences. However, it is worth noting that the Lord Chancellor, who holds the esteemed position of our primary judge, also holds a seat in the Cabinet and delivers political speeches in the House of Lords.

The aforementioned concerns persisted throughout the 20th Century. Despite a decrease in the frequency of the Lord Chancellor's judicial duties during the 1960s, the appointment of judges remained under his purview. Furthermore, the implementation of the Courts Act 1971 led to a notable escalation in the administrative duties of the court system's office. This was primarily due to the transfer of court responsibilities from cities and local authorities to the central government and the Lord Chancellor.

The aforementioned concerns were effectively resolved in the year 2003, when the government put out a proposal for the elimination of the office of Lord Chancellor. However, the outcome of this enhanced understanding of the principles underlying the separation of powers with regards to the exercise of judicial tasks did not lead to the elimination of the office, but rather prompted a process of reform. The enactment of the Constitutional Reform Act 2005 resulted in a notable transformation in the role of the Lord Chancellor, thereby separating their position from that of a judge and the head of the judiciary in England and Wales, as well as from the role of Speaker of the House of Lords. The current position of the Lord Chancellor entails serving as a Secretary of State and, similar to other Cabinet ministers, holding membership in the legislative body.

In January 2004, as a component of the Constitutional Reform Act's development, the government and judiciary engaged in a formal agreement known as a "Concordat." An crucial objective of this measure was to ensure the enduring autonomy of the judiciary. The Concordat delineates the specific activities previously carried out by the Lord Chancellor that are now classified as "judicial" and fall under the jurisdiction of the judiciary. It also identifies the functions that are deemed "administrative" and continue to be the responsibility of the government. Additionally, the Concordat designates certain functions as "hybrid" and recommends their combined execution.

4.2 Development of Class Action Litigation

The primary procedural instrument utilised for collective litigation in the English courts is known as a group litigation order (GLO). According to CPR 19.10, a Group Litigation Order (GLO) is designed to facilitate access to justice in cases where a significant number of individuals have been impacted by the actions of another party, but the individual losses suffered are too minimal to justify pursuing separate legal actions.

1. This study aims to present efficient strategies for resolving instances in which the damages are substantial enough to warrant individual claims, but due to the high number of claimants and complex nature of the issues, the conventional procedures are inadequate for proper management.
2. The objective is to strike a harmonious equilibrium between the individual rights of claimants and defendants to independently pursue and defend legal claims, and the collective interests of a group of parties to effectively engage in litigation.
3. The proposals were formulated with the intention of rectifying deficiencies in the court regulations pertaining to representative proceedings.
4. The CPR provisions pertaining to GLOs offer a concise structure for managing multiple claims from various parties, while granting the court the necessary flexibility to address the specific logistical and legal complexities arising from such situations.

The document describes the circumstances in which a court may issue a Group Litigation Order (GLO) and the steps that the parties and their solicitors must take to follow the required procedures. These measures cover the application process for a GLO as well as the steps that need to be followed when one has been approved. This covers the selection of lead attorneys as well as the drafting of case summaries, disclosures, and supporting documentation. The analysis assesses the implications of both trial types for the parties concerned and looks at the differences between the trial of test cases and the trial of preliminary problems. It also examines the unique challenges that arise when settling cases involving multiple parties in a group setting. In addition, the document lists numerous possible funding sources that might be available for class action lawsuits and looks at the court's position about costs in Group Litigation Order (GLO) cases.

4.3 Other procedural mechanisms for Class Action litigation

Several individuals who are jointly making a claim are utilising a singular claim form. According to the Civil Procedure Rules, the CPR allows for an unlimited number of claimants or defendants in a case. Additionally, several claims can be included in a single claim form, as long as they can be efficiently resolved within the same legal proceedings. Consolidation of claims occurs when a court utilises its case management powers to transfer multiple individual claims pertaining to a common subject to a single court, where they are then merged and managed together. The practise of consolidating many claims and litigating them together in a single court is widely regarded as a more efficient approach compared to the alternative of processing and litigating these claims separately in various courts throughout the country. Additionally, it mitigates the potential for disparate judgements being rendered across many courts pertaining to same matters.

The utilisation of multiple (or mass) claims case management has traditionally been observed in litigation pertaining to the financial services industry. One illustrative instance is the legal case of McGuffick v The Royal Bank of Scotland.

4.4 Key legal provisions

• Mass Action

In collective legal proceedings, claims are commonly initiated based on accusations of misbehaviour by the defendants, which are considered to have resulted in financial harm to the claimants in a similar or comparable manner. This phenomenon can be contended to have transpired through various possible mechanisms. In situations when a solitary claimant has a loss, the magnitude of the loss may not necessarily justify the pursuit of individual claims from an economic standpoint. However, when claims are pursued collectively, there is potential to realise economies of scale. The consolidation of many cases into a group framework may offer defendants the opportunity to enhance operational efficiency. Nevertheless, both parties have inherent risks and challenges that must be addressed.The United Kingdom has imposed limitations on the feasibility of mass activities, in contrast to other jurisdictions such as the United States and Australia, until now. Nevertheless, there has been a recent endeavour in the United Kingdom to facilitate the engagement of individuals in large-scale social movements. The aforementioned phenomenon has been instigated by a multitude of factors, including a concerted emphasis on the attainment of justice, notably for consumers, both within the United Kingdom and the European Union. Additionally, the swift proliferation of third-party litigation funding has played a pivotal role in rendering the financing of collective legal actions more feasible. These aforementioned factors have played a significant role in facilitating this progress.

Furthermore, the advancement of litigation technology, encompassing case portals, workflow tools, and electronic signing, has facilitated the construction, administration, and resolution of complex legal proceedings. This development has alleviated several practical barriers that were previously encountered.

Mass actions are frequently observed in connection with specific types of claims, including but not limited to competition legislation, data privacy and breach, financial services, shareholder, environmental, personal injury, and product liability claims. Additional types of claims that could potentially lead to mass actions encompass product liability and personal harm.

When it comes to facilitating and overseeing collective acts, political parties and judicial bodies have at their disposal a range of diverse ways from which they may select. This article offers a succinct overview of the main options now available, together with an examination of the potential consequences of collective actions in England and Wales.

• Opt in v. Opt out

The 'opt-in' paradigm is used for the vast majority of mass action alternatives that are presently available in England and Wales. This suggests that in order for each claimant to participate in such actions, they must actively execute certain procedures, such as initiating or entering legal proceedings, or obtaining authorization for another party to pursue the claim on their behalf. For example, initiating or joining legal proceedings.

The alternative method, which is referred to as a "opt-out" technique, permits a party to commence a claim on behalf of an entire class without having explicit authority from each individual member of that class or even awareness on their side. This method is known as "opting out." In the event that the court decides to allow the claim to proceed, any remedy that is awarded will be binding on all members of the class and will also be available to them, unless specific class members choose to opt out, which means they voluntarily elect not to participate in the action.

In contrast to, for example, the United States, the English government has not traditionally prominently embraced opt-out mass activities in their policies. Nevertheless, the installation of an opt-out regime for violations of competition law took place in the year 2015, which prompted an ongoing discourse over the prospective expansion of opt-out procedures inside the English legal system. The next section takes a closer look at a number of different reform proposals that have been advanced in recent years.

• Opt out class action in Competition cases

Currently, in England and Wales, the only legal domain that permits the initiation of genuine opt-out mass activities is competition law.

Individuals who believe they have suffered harm as a result of a violation of European Union (EU) or United Kingdom (UK) competition law have the opportunity to initiate legal proceedings seeking compensation. These claimants can choose to bring their cases before either the Competition Appeal Tribunal (CAT) or the High Court. Both of these judicial entities are located within the jurisdiction of the United Kingdom. In the event that a breach of competition law has been conclusively established by either the Competition and Markets Authority or the European Commission prior to December 31, 2020, it is permissible to file a damages claim as a "follow-on" damages claim. In this particular category of claim, the individual making the claim has the ability to utilise the previous determination of infringement as conclusive proof that the defendant is responsible for the violation.

Nevertheless, historical practises have necessitated the organisation of these procedures as "opt-in" occurrences, despite the inherent suitability of this venue for large-scale mobilisations. Due to the amendments implemented by the Consumer Rights Act of 2015, it is now possible to initiate class actions pertaining to infringements of competition law alone inside the Competition Appeal Tribunal (CAT) on a "opt-out" principle. This capability was not before attainable.

To avail oneself of this procedure, it is necessary to make an application for a Collective Proceedings Order to the Competition Appeal Tribunal (CAT). After the certification hearing, the Competent Authority Tribunal will determine whether or not to provide the Certification of Public Offering. The Competition Appeal Tribunal must be persuaded of the justifiability and rationality of allowing the party seeking representation to act as a representative, in addition to assessing whether the claims satisfy the necessary criteria for inclusion in collective proceedings. Throughout the entirety of the procedure, the Competition Appeal Tribunal (CAT) possesses the jurisdiction to reverse a Collective Proceedings Order and terminate the collective proceedings.

The adoption rate of the CPO approach has been rather low thus far. However, with the recent decision of the UK's highest court in the case of Merricks v. Mastercard in 2021, which marked the initial application of this new legal framework, and the subsequent issuance of the first Collective Proceedings Order (CPO) by the Competition Appeal Tribunal (CAT) in that particular case, it is expected that the utilisation of CPOs will become more prevalent in the future. The outcome of the Supreme Court's ruling in the legal matter of Merricks v. Mastercard86 will yield the following consequences.

The case of Merricks v. Mastercard concerns a lawsuit brought by Walter Merricks on behalf of a class of consumers, contending that a significant portion of 46.2 million consumers in the United Kingdom suffered financial harm as a result of the excessive "interchange fees" levied on retailers in exchange for accepting Mastercard debit and credit cards between 1992 and 2008. Furthermore, it is argued that these fees were allegedly passed along to customers in the form of higher retail pricing.

Initially, the Competition Appeal Tribunal (CAT) found that the matter was unfit to be included under the system of collective procedures. The basis behind this ruling was that the claims did not support a collective award of damages, and there was no workable way to divide the damages in a way that would fairly pay the affected customers. But the Supreme Court found that the CAT made a mistake while assessing a candidate's eligibility for a CPO by applying an exacting threshold. The Supreme Court concluded, among other things, that the Competition Appeal Tribunal (CAT) had given undue weight to its opinion that the case was not appropriate for aggregate damages. According to the court, the CAT ought to have used a "relative" appropriateness test, which takes into account each procedure's viability as an alternative. It was also decided that the difficulty of precisely calculating and assigning specific losses was insufficient grounds for rejecting certification.

It was therefore decided to send the application for a Certificate of Public Convenience and Necessity (CPO) back to the Competent Authority Tribunal (CAT) for additional review. The CAT provisionally allowed the CPO's issuance after the reevaluation procedure. The Competition Appeal Tribunal (CAT) has been able to introduce more collective proceedings because to decisions made by both the Supreme Court and the CAT. This involves a number of cases that were postponed in order to progress with the Mastercard lawsuit. Regarding the establishment of CPOs, three distinct claims of abuse of dominance have been brought. These accusations concern "boundary fares" for rail and contain two related complaints. There are still a few claims that need to be certified.

• Joint Claims by Multiple claimants

Mass actions can be instigated using a range of procedural methods that extend beyond the realm of competitive activities. One such approach entails the utilisation of a singular claim form by each claimant in order to consolidate their respective claims. Under the Civil Procedure Rules (CPR), it is permissible for many claimants to collectively file a single claim against one or more defendants using a singular claim form, provided that the claims in question can be effectively addressed within the same legal proceedings. In many cases, a unified legal team is appointed to advocate for the claimants, and it is imperative to ensure the absence of any conflicts of interest within this team.

Furthermore, the inclusion of parties in ongoing legal proceedings can occur with the approval of the court under two circumstances: firstly, when the court deems it necessary to add the new party to effectively address all the matters in contention within the ongoing proceedings, and secondly, when the court deems it necessary to add the new party to effectively address a dispute that involves both the new party and the existing parties.

However, these routes lack practical utility. The claimant or their legal representatives may lack awareness of all potential claimants involved in a mass action, so rendering it unfeasible to incorporate or integrate them inside a singular claim. Moreover, within such processes, individuals making claims face the potential consequence of assuming whole financial responsibility for the entirety of the defendant's costs, as opposed to only bearing their equitable portion, in the event that their claim is unsuccessful.

• Representative Action

According to the Civil Procedure Rules (CPR), in cases when many claimants share "identical interests in a claim," it is permissible for one or more of the claimants to initiate or proceed with the claim on behalf of the other claimants who share the same interest. In the absence of a court ruling to the contrary, any decision or directive rendered in a representative lawsuit carries legal weight for all individuals being represented, irrespective of their involvement in the legal proceedings. However, the enforcement of such a directive against or by a non-party requires explicit permission from the court.

4.5 Notable Class Action Cases

• The 1998 Tobacco Master Settlement Agreement

There is unequivocal certainty on the largest class action settlement in history. The 1998 Tobacco Master Settlement Agreement holds the distinction of being the largest civil litigation settlement in the history of the United States. With a staggering value of USD 246 billion, it seems improbable that this record will be surpassed in the near future.

The lawsuit was initiated by almost 40 states in the United States against all the prominent tobacco corporations. The individual who initially presented a legal assertion was Mike Moore, the attorney general of the state of Mississippi. Historically, legal actions initiated by individuals who smoke and their respective families have predominantly resulted in unfavourable outcomes, as courts have consistently maintained that the plaintiffs made a conscious decision to engage in smoking. However, Moore (1994) claimed that his state should be exempt from bearing the financial burden associated with smoking-related illnesses.

The aforementioned event resulted in the 1998 settlement, wherein the tobacco industry consented to disburse billions of dollars over a span of 25 years. These funds were designated for utilisation by US states in initiatives pertaining to smoking-related matters.

• Dutch Fortis Bank settlement

A group action settlement in the amount of EUR1.3 billion was approved by the Amsterdam Court of Appeal in 2018 on behalf of shareholders of the Benelux financial services business Fortis, which was forced to break itself up as a result of the financial crisis that occurred in 2008.

The case and the litigation that surrounded it were both extremely difficult to understand. It may not be the fifth-largest of all time, but it is the biggest to date in Europe, which demonstrates that high value shareholder litigation has a home in the jurisdictions of European countries.

• The Enron securities fraud

The Enron fraud of 2001 was the first significant fraud of the 21st century, and it was also responsible for the downfall of accounting powerhouse Arthur Andersen, who was the company's auditor.

The oil trading company, which was at the time one of the most successful businesses in the United States, had been concealing tens of billions of dollars' worth of debt off of its balance sheet. As soon as it became public knowledge, the business fell apart. After that, there was a wave of shareholder and regulatory litigation, as well as a significant criminal probe. A shareholder class action lawsuit against the corporation was settled in 2008, and it was accepted by a judge in Houston. The lawsuit claimed that the company had deceived investors right before it went bankrupt.

4.6 Current trends and challenges

• Bringing Claims

Collective measures for breaking competition law can only be started by people who have a good reason to do so, like representative organisations (like trade groups, professional associations, or consumer associations) or people who might want to file a claim on their own. The class leader needs to get approval from the CAT before they can start the process.

• Assembling a Class

A class proceedings order (CPO) will only be issued if the court determines that: (i) it is fair and reasonable for the representative to act on behalf of the class members; and (ii) the claim in question meets the requirements for collective action.

• Process of settling Case

The collective resolution of class action claims is a viable option within the framework of the collective actions system established by the Competition Appeal Tribunal (CAT). The application of distinct procedures is contingent upon whether the proceedings are conducted under an opt-in or opt-out framework, as well as the temporal aspect of the proposed settlement.

In cases where a Consumer Protection Order (CPO) has already been granted, the approval of the Competition Appeal Tribunal (CAT) is required for a collective settlement to be legally binding. In order to seek resolution of the ongoing legal procedures, it is necessary for both the defendant and the class representative to collaboratively submit an application to the Competition Appeal Tribunal (CAT). When deciding whether to grant authorization for the settlement, the Competition Appeal Tribunal (CAT) will assess the fairness and reasonableness of the settlement terms. This assessment will take into account various factors, including the size of the class affected by the settlement, the specific amount and conditions of the settlement, the probability of a larger amount being awarded if the case were to proceed to trial, and the anticipated expenses and duration of a trial. When evaluating this matter, the Court of Appeals for Taxation (CAT) may consider the opinions presented by the experts of both parties, legal representatives, and any individual member of the class involved. The inclusion of parties outside of the United Kingdom in the settlement is contingent upon their voluntary participation in the legal procedures.

In the event that aggregate damages are granted, the Court of Appeal will provide instructions about the allocation of the total amount and the appropriate timing for class members to assert their entitlement. In cases where there remain unallocated damages, the Court of Appeal may instruct that these damages be utilised to cover the legal expenses of the representative, and barring any such allocation, they are typically allocated to charitable organisations. In the case of Le Patourel v BT, the Court of Appeal determined that the Competition Appeal Tribunal (CAT) possesses the authority to allocate damages in a manner that optimises the recovery and compensation for the affected class.The user did not provide any text to rewrite. In this context, it would be deemed acceptable to allocate credit to the accounts of BT consumers.

When submitting an application for collective settlement, it is necessary to provide a detailed explanation of the defendant's proposed payment plan for the settlement sums and the intended distribution method. Additionally, the application should outline the procedure for represented individuals to assert their entitlement to the settlement. In contrast to verdicts for damages, unclaimed settlement amounts have the potential to be returned to the defendant, subject to approval by the Competition Appeal Tribunal (CAT). To date, there have been no resolutions achieved in claims related to CPO (Chief Privacy Officer), thus leaving the operational efficacy of the system yet to be observed.

Chapter 5: Class Action Lawsuits in India

5.1 Overview of the Indian legal system

Inheriting judicial precedents from the British colonial era, the Indian judicial system adheres to the common law system. The Supreme Court of India, High Courts, and subordinate courts at the district, municipal, and village levels constitute the Indian judicial system.

• Hierarchy of Court

 The Indian judicial system is structured into multiple tiers to facilitate decentralisation and effectively handle legal issues at the local level. The fundamental framework is as follows:

1. The Supreme Court, established on January 28th, 1950, serves as the highest judicial authority in the nation. The institution in question serves as the supreme court of appeal, with jurisdiction over both initial cases and appeals of decisions made by lower courts. The composition of the Supreme Court consists of the Chief Justice of India and an additional 25 members. The constitutional provisions encompassed within Articles 124-147 of the Indian Constitution delineate the jurisdiction and powers vested in the Supreme Court.

2. High Courts serve as the apex judicial authority within the jurisdiction of a particular state. Article 214 delineates the jurisdiction and powers vested in the High Courts. India is home to a total of 25 High Courts. The High Courts possess the authority to exercise jurisdiction over civil or criminal cases alone in instances where the subordinate courts within the respective state lack the competence to adjudicate upon such matters. The jurisdiction of High Courts extends to the consideration of appeals originating from lower courts. The appointment of High Court justices in India is carried out by the President, who consults with the Chief Justice of India, the Chief Justice of the respective High Court, and the Governor of the State.

3. District Courts are established by the State Governments of India to cater to the legal needs of each district or a cluster of districts, taking into consideration factors such as caseload and population density. The District Courts operate under the direct jurisdiction of the High Courts and are legally obligated to adhere to the rulings and decisions made by the High Courts.

• Binding value of Judicial Precedents

Given that India operates under a common law system, it is imperative to note that precedents established by superior courts, including the Supreme Court and High Courts, carry binding authority over subordinate and lower courts. Consequently, subordinate courts are obligated to adhere to these rulings and consider them as legally enforceable. Precedents hold significant legal authority inside the Indian legal system. The hierarchical structure of courts establishes the relative authority and jurisdiction of each court within the legal system.

a) The decisions rendered by the Supreme Court of India possess a binding effect on all subordinate courts within the country. The Supreme Court possesses the authority to exercise independent judgement and is not obligated to adhere to the rulings of High Courts, lesser courts, or other judicial bodies.

b) The rulings rendered by a High Court possess a legally obligatory nature for all subordinate courts operating within its jurisdiction, provided that they do not contradict decisions made by the Supreme Court. However, these rulings only carry persuasive weight for courts situated beyond the High Court's jurisdiction. If there is a discrepancy between the decisions made by the High Court and those made by a comparable panel, the issue is escalated to a superior panel.

c) Lower courts within a particular jurisdiction are obligated to adhere to the rulings and judgements rendered by superior courts within the same jurisdiction. Decisions rendered by High Courts of other states possess solely persuasive authority.

• Public Interest Litigation

Public Interest Litigation has emerged as a potent mechanism for promoting social justice within the Indian context. Public Interest Litigation in India has been extensively employed to promote the interests of underprivileged and marginalised populations, drawing inspiration from the American tradition of Social Action Litigation. The fundamental principle governing the initiation of legal proceedings in a court of law is known as locus standi, which requires the party to establish a substantial relationship or demonstrate specific harm in order to be eligible to participate in the litigation. In Public Interest Litigation (PIL), the aforementioned norm is significantly eased, allowing any Indian citizen to initiate legal proceedings in order to seek redress for a violation of Fundamental Rights. Public Interest Litigations (PILs) serve as a valuable mechanism for advancing animal protection efforts, as they enable animal rights organisations and advocates to initiate PILs before the Supreme Court, thereby providing a platform for the marginalised and voiceless members of the animal kingdom.

5.2 Key legal provisions related to Class Action

Since the implementation of Section 245 of the Companies Act, 2013 ("Act") on June 1, 2016, the question of class action cases in respect to company law in India has been a matter of substantial controversy. Section 245 of the Act allows persons who are members or depositors of a corporation to band together and file a lawsuit against the company, its directors, auditors, or advisors. This action is brought on behalf of all members or depositors in the established class and is heard by the National Company Law Tribunal (NCLT).

Following that, the National Company Law Tribunal Rules, 2016 ("Rules") were officially issued to provide greater clarity about the process of starting such legal actions, as detailed in Rule 84. Nonetheless, the lack of clear criteria for eligibility to initiate these proceedings, the absence of a comprehensive definition of what qualifies as "prejudicial to the interests of the company, its members, or depositors," and the lack of a distinct distinction between the right to initiate action under Section 245 in comparison to actions for oppression or mismanagement under Sections 241, 242, and 244 of the Act, have led to signatories signing.

Overlaps between Sections 241 (Oppression and/ or mismanagement) and 245 (Class Action)

Section 245 of the Act states that a lawsuit may be filed on behalf of a group of members or depositors who have been harmed by the administration or conduct of a company's operations if it is being done in a way that is harmful to the interests of the company, its members, or depositors.

The Act's Section 241 lays out requirements for filing a lawsuit related to mismanagement and/or oppression. These requirements cover circumstances in which the business's operations have been or are being carried out in a way that is harmful to the interests of the general public, oppressive of the complainant or other members, or destructive to the company itself. An offended member or members may register a complaint in such circumstances.

The beneficiaries of both legal actions—a class action suit and an action for oppression or mismanagement—are what primarily set the two clauses apart from one another. The appropriate parties who have been impacted file a case against the directors to protect their rights and interests in the event that it involves oppression or mismanagement. On the other hand, in a class action lawsuit, the required member(s) or depositor(s) may file a petition on behalf of a group of similarly affected member(s) or depositor(s) as a result of the directors' acts.

Thus, upon approving a class action petition, the National Company Law Tribunal (NCLT) decides the makeup of the class. As a result, unless they have specifically elected to be excluded through the required opt-out process specified in the Rules, all persons or businesses that meet the requirements to be class members or depositors are automatically included in the case.

It is also important to note that Section 245 of the Act gives a member or depositor the right to sue auditors, the audit company, experts, advisors, or consultants if they are found to have engaged in fraudulent activity. By doing this, the "privity of contract" is circumvented, allowing members and depositors to sue other parties for services rendered on the firm's behalf.

5.3 Class Action Suit in Other Laws

Although class action lawsuits against firms have been relatively rare, there has been a gradual increase in such cases over the past several years. These lawsuits are filed under section 12(1)(c) of the Consumer Protection Act, 1986 ("COPRA"). The provisions outlined in Section 37 of the Companies Act, in conjunction with Sections 34-36, provide the legal framework for the initiation of securities class action lawsuits pertaining to instances of misleading representations, as well as the inclusion or absence of any material information within a prospectus. According to Section 53N (4) of the Competition Act, 2002, the possibility of pursuing class action is contingent upon obtaining the approval of the National Company Law Appellate Tribunal (NCLAT). So far, there have been no instances of securities or competition class action actions being filed. The recently enacted Goods and Services Tax of 2017 also lacks any provision for class action.

When there is a lack of explicit legislation pertaining to class action, individuals can seek recourse through the provision of Order 1, Rule 8 of the Civil Procedure Code, 1908, which permits the initiation of 'representative cases'. This cure can be considered as a general solution applicable to a collective group of individuals who share a common interest and are experiencing distress.

The recent announcement regarding the establishment of thresholds for initiating class action lawsuits under the Act has paved the way for increased use of this legal mechanism as a preferred means of dealing with instances of oppression, mismanagement, or general misconduct perpetrated by various entities. This strategy has various advantages, including the elimination of repeated hearings, financial savings, a reduction in the amount of proceedings, and a reduction in the time required to reach a result. Significantly, minority investors can now have confidence in the comprehensive protection of their interests through the use of class action, which is made possible by the Act's flexible standards for beginning legal action. The question now is whether the government will address and close the remaining gaps in the class action law in due time.

5.4 Prominent Class Action Case

Jignesh Shah v. National Stock Exchange Ltd

A class action lawsuit was initiated by a consortium of investors against the National Stock Exchange, with the primary claim being the accusation of market manipulation. The National Company Law Tribunal (NCLT) rendered a verdict in favour of the investors, thereby issuing an order for the exchange to provide compensation for the damages incurred. These instances exemplify the prospective efficacy of class action lawsuits in ensuring corporate accountability and safeguarding individual rights. Nevertheless, it is crucial to acknowledge that class action lawsuits can be intricate and require a significant amount of time, so it is advisable to consult with a competent company secretary or professional for guidance. The regulations pertaining to class action litigation are designed to enhance accountability and transparency within corporate operations.

5.5 Current trends and challenges

• Confusing Legislation

 Financial companies are protected from class action lawsuit applicability, per Section 245 of the law. Since banks play a big role in an economy, it's vital to remember that shareholders are frequently not allowed to file a class action lawsuit against a bank. Consumers are entitled to file a lawsuit under consumer law, but bank investors are not entitled to the same protection under corporate law.

Furthermore, it should be mentioned that Section 20(A) of the Securities and Exchange Board of India (SEBI) Act, 1992 may provide certain difficulties because it limits the capacity to use representative suits to bring legal action before a civil court. The aforementioned clause limits the civil court's ability to rule on any matter that comes under the Securities and Exchange Board of India's (SEBI) regulatory purview. The aforementioned reasoning served as one of the grounds for giving the National Company Law Tribunal (NCLT) the authority to hear class action cases involving securities and company law. However, no class action cases have been heard by the National Company Law Tribunal (NCLT) as of yet.

While the Investor Awareness and Protection Fund does offer support for class action lawsuits, there are a number of inherent difficulties because the fund is managed by the government. In situations when the government has vested interests in the company, as a stakeholder or in another way, it is improbable that this fund will take legal action. One cannot ignore the political factors involved in getting official assent.

• Finance and Contingency Fees

The vast majority of class actions in the United States are financed by external entities. The adoption of third-party finance in India remains limited.

Concerns over the financial side of these occurrences have consistently been present. Each state has specific regulations on court costs and stamp duty, similar to the legislation in Delhi, which stipulates that the plaintiff is required to pay an initial 4% of the entire amount of claims. The majority of class action cases would be deemed impracticable as a consequence. When examining a class-action case involving the financial losses incurred by a substantial number of individuals, perhaps numbering in the millions, as a result of groundwater contamination caused by pollution, the associated expenses could be of significant magnitude.

The process of initiating legal proceedings against respondents with substantial financial resources can be protracted, sometimes spanning many years. Moreover, the financial burden associated with engaging solicitors and additional support personnel is expected to be substantial. Which entity or individual will be willing to provide the funds in advance without making any commitments in exchange?

Consider a hypothetical scenario where a prominent multinational firm has discharged hazardous substances into the terrestrial environment, hence posing a significant risk to the well-being of all those residing in the adjacent localities. In what manner can the individuals belonging to the lower socio-economic class initiate legal proceedings against the multinational corporation in order to seek compensation for their unpaid salaries and any additional harm incurred? In the United States, the aggregate amount has the potential to reach millions of dollars. In the context of India, it is imperative that the situation meets the expected standards. Would the plaintiffs be required to pay a substantial court fee in advance to initiate a class action lawsuit? If individuals are lacking the necessary resources, what alternative options are available to them? 

One of the primary problems associated with class actions in India revolves around the challenges related to contingency fees. The presence of vested interests among solicitors, which is absent in India, has led to the emergence of class actions as a distinct industry in the United States. The Indian Bar Council explicitly prohibits such arrangements.

• No Writ Petition

The lack of writ petitions filed by various shareholders in the Satyam crisis serves as a notable illustration. The Indian judiciary has displayed limited support for the utilisation of writ petitions as a means to pursue class action lawsuits against private firms. Midas Touch Investors initiated legal proceedings by filing a writ with the Supreme Court; however, their case was subsequently dismissed due to the presence of ambiguities within their applications. This appears to be the sole documented instance of such action being taken.

5.6 What can be done? 

• Fast Courts

When examining the current duration of legal proceedings and the excessive workload faced by the National Company Law Tribunal (NCLT), it becomes imperative to develop a more efficient approach for managing class-action lawsuits. In instances when there is potential for a class action lawsuit to negatively impact a brand's reputation, the corporation may contemplate the desirability of engaging in protracted litigation or opting for private arbitration, a practise that has gained traction in Western jurisdictions.

The protracted duration of class action proceedings, spanning many years for resolution and maybe decades for multiple appeals, poses significant challenges for investment in such lawsuits, rendering it an economically unviable prospect.

• Awarding Costs

The practise of awarding expenses in lawsuit proceedings in India has been infrequent. The notion of loser pays has the potential to serve as a deterrent against misconduct perpetrated by huge organisations. Nevertheless, it is worth noting that the Indian judicial system generally tends to grant relatively low fees, and the implementation of Section 245(8) serves as a safeguard against baseless lawsuits by imposing a maximum limit of Rs 1 Lakh. However, this amount is deemed to be disproportionately little, particularly in cases when a class consisting of 100 individuals is established to initiate legal proceedings. This factor alone constitutes a significant rationale for the lack of financial viability in pursuing these legal challenges.

• Funding by Third Party

Third-party funding refers to the utilisation of non-recourse funding provided by external entities to cover legal expenses and associated expenditures in order to pursue litigation. This practise can be advantageous for the litigating party, as it increases the likelihood of obtaining substantial claims. In return for their financial support, the third-party funders expect to get a predetermined return on their investment as stipulated in the contractual agreement. The emergence of TPF investors expressing interest in financing restructuring claims suggests that the era of TPF arrangements has arrived in India. The legal framework in India recognises Third-Party Funding as a viable mechanism, which has the potential to address the financial challenges associated with financing substantial class action claims against major corporations. Nevertheless, it is worth noting that a comprehensive legal framework for third party funding is still absent, and the legitimacy of such arrangements is being challenged in various ongoing court cases.

• Alternative for Contingency Fee

Conditional fee arrangements, often known as damages based agreements, have emerged as a product of the Common Law legal system. These agreements delineate the terms and conditions under which the lawyer's remuneration is contingent upon the outcome of the case. The regulation of their activities is subject to the widely recognised Jackson reforms. Nevertheless, the practise of lawyers collecting contingency fees is prohibited in India. There is a necessity to bring about a transformation in the public interest, wherein class action lawsuits in India are rendered genuinely feasible.

The Bar Council of India has thus far rejected this crucial measure in the pursuit of ensuring access to justice. However, the growing popularity of class action litigation in India has the potential to significantly augment the workload for legal professionals, hence generating substantial employment prospects for aspiring young lawyers. This assertion is not merely a fanciful notion, but it is supported by the empirical evidence observed in developed economies such as the United States.

The concept of awarding is a practise that recognises and acknowledges individuals or entities for their exceptional

Chapter 6: Challenges and Controversies

6.1 Jurisdictional issues

Class actions in the United States have developed into a viable option that can compete with both the self-regulation of businesses and the control exercised by the government. Because it is impossible to ensure complete and total compliance on the part of all industry players, self regulation might not be as effective as it could be. In addition, intervention by the government requires the use of public funds, and it is possible that the issue of non compliance may not be resolved in every situation. The text provided by the user does not include any material that needs to be rewritten in an academic manner.It is the purpose of the introduction of a class action clause in the Act to serve the goal of empowering shareholders and maybe developing an efficient means for holding corporations accountable, in a manner that is comparable to the practises that are observed in the United States and the United Kingdom.

In order to protect the interests of shareholders as well as corporations that are parties to class action litigation, the Ministry of Corporate Affairs has instituted a number of protective measures. In order to safeguard against the filing of baseless and malicious lawsuits and to provide protection for businesses, the government has enacted measures such as refining the definition of a class, introducing the "loser pays" principle, and granting the court discretionary powers to determine the admissibility of claims in all instances. These measures include the introduction of the "loser pays" principle, which states that the party that loses must pay the costs of the lawsuit.

In addition, the government has taken steps to protect the interests of those who have been wronged by allowing the continuation of individual claims and the freedom to opt out of the process. In addition, the availability of incentives, such as funding for the lawsuit from the Investor Education Fund, and the authority of the court to provide various forms of compensation, further enhances the protection of the shareholders' interests in the company.

It is good that the legislature has shown a commitment to support the interests of small shareholders, which constitutes a positive development. Even while the use of class action provisions under the Companies Act of 2013 has been relatively limited in contrast to its western equivalent, it is also commendable that the legislature has shown a commitment to promote the interests of small shareholders. This idea has been given an even stronger footing as a result of a recent revision that was made to the National Company Law Tribunal Rules, 2016, which went into effect on May 8th, 2019. A change was made to the prerequisites for launching class action proceedings under Section 245 as part of the National Company Law Tribunal (Second Amendment) Rules, 2019, which came into effect on January 1, 2019. As a result of this adjustment, the minimum number of applicants required to file such claims was decreased to either one hundred individuals or five percent of the total membership of the company. This change applied to both corporations with and without share capital.The text provided by the user does not include any material that needs to be rewritten in an academic manner. It is anticipated that this revision will make it easier for shareholders to begin legal action pursuant to Section 245, as well as enhance clarity regarding the process. In the past, it's possible that the demanding and rigorous conditions dissuaded or stopped people from taking such actions. As a consequence of this, it is predicted that the number of lawsuits brought in accordance with Section 245 would increase. This particular provision has been relatively under-explored up to this point.

6.2 Debate on the role of lawyers and litigation funding

Do the risk-mitigating benefits associated with claim investing extend to class action litigation? This subject has not yet been thoroughly examined by commentators, as it is widely believed that the acquisition of a share in a class action case by financiers is an implausible scenario. Investment financiers assert that they have deliberately refrained from expressing any inclination towards providing financial support for class action lawsuits in the United States. Undoubtedly, one of the motivations for this approach is to mitigate potential political controversy. Class actions, in and of themselves, are inherently contentious, and the integration of this new financing method would undoubtedly exacerbate the already existing challenges. However, this might also be attributed to the perceived challenges associated with assembling the necessary financial arrangements in class action lawsuits. In the context of these transactions, investors acquire a proportionate share in a plaintiff's financial recuperation, whereby the investor establishes a contractual agreement directly with the plaintiff. Therefore, in the context of a class action lawsuit, the investor would be required to locate and establish individual agreements with each member of the class in order to obtain a portion of the collective compensation awarded to the class. Undoubtedly, this task presents considerable challenges and is widely regarded as being inherently unfeasible.

Conversely, this practise is observed in various other nations. In the Australian context, investors seeking to finance courses related to securities fraud engage in a process whereby they identify shareholders and individually enrol them for participation. What are the consequences if all individuals are not successfully enrolled? The class action lawsuit progresses only with the stockholders who have participated. In the United States, financiers have the ability to engage in this practise as well; however, it is accompanied with a significant cost. Specifically, this practise transforms our opt-out class action system into an opt-in framework, as only those class members who actively choose to participate in the financing agreement remain part of the class. Although this phenomenon has garnered interest from investors in Australia, it has not garnered the same level of interest from financiers in the United States.

What is the role and significance of a class action lawyer? Is it not possible for the financier to acquire a stake in the lawyer's portion of the recovery obtained by the class, thereby indirectly acquiring a stake in the class's recovery? In the United States, it is common for class action lawyers to receive a 25% share of any class recovery they successfully obtain. In light of this, one may wonder why the financier cannot acquire half of that share, resulting in a 12.5% stake in the case. The issue at hand does not pertain to practical considerations, but rather to ethical considerations. Specifically, legal professionals are prohibited from sharing their remuneration with those who are not licenced to practise law.

However, it has been observed that lawyers are still able to engage in this practise by transforming fee-splitting agreements into graduated, nonrecourse loans or by establishing firm-wide, revenue-sharing contracts. First, let us consider the concept of a graded, nonrecourse loan. In a typical nonrecourse loan agreement, the borrower is not obligated to make any payments in the event of an unsuccessful litigation, while being required to repay a multiplied amount of the loan in the event of a favourable outcome in the lawsuit. It is customary for such contractual agreements to necessitate the borrower's repayment of increased multiples in proportion to the duration of the lawsuit's resolution. However, what if the contract implemented a graduated system for determining the multipliers based on the amount of money recovered in the lawsuit, rather than the length of time the lawsuit lasted? For instance, if the plaintiff recovered one million dollars or less, the multiplier could be set at 1.5x. If the plaintiff recovered between one and two million dollars, the multiplier could be set at 2x. Finally, if the plaintiff recovered an amount exceeding two million dollars, the multiplier could be set at 3x. The proposed arrangement resembles a contractual agreement in which the lender would be entitled to a portion of the funds recovered126. As the number of divisions increases, the similarity between the two contracts would become more pronounced. However, if the aforementioned process proves to be very intricate, there exists a simpler method to circumvent the ethical regulation. It is worth noting that lenders frequently possess the authority to reclaim a portion of a lawyer's fees from their overall collection of cases, commonly referred to as the firm-wide gross revenues. It is important to highlight that this practise is permissible, despite the prohibition of such actions on an individual case basis. Hence, it is unsurprising that a court, which is widely renowned for receiving numerous class action filings, has recently implemented a standing order mandating the identification of any individual or organisation that is providing financial support for the pursuit of a claim or counterclaim in a class action lawsuit.

Consequently, other iterations of the recently introduced finance mechanism are already being implemented in class action lawsuits. However, is it possible for the alterations to be eliminated, allowing investors to directly acquire a stake in the class's recuperation without forfeiting the benefits of the opt-out class action mechanism? It is plausible that they possess the capability to do so. From my perspective, there exists a mechanism that can be utilised to compel individuals within a class to make financial payments to financiers, even in the absence of their explicit consent. This mechanism aligns with the approach employed to enforce payments to class action lawyers, despite the absence of consent, and is known as the doctrine of unjust enrichment.

The attorneys responsible for initiating and litigating class action lawsuits provide benefits for the members of the class that are commensurate with the amount recovered in such class actions. According to this principle, it is considered inequitable for the class to receive these benefits without compensating the attorneys for their role in their creation. This legal principle is occasionally referred to as the "common benefit" theory. This doctrine does not impose any restrictions on its application solely to endeavours undertaken by lawyers that generate advantages for others. In fact, its initial application can be traced back to endeavours undertaken by one of multiple beneficiaries of a trust with the aim of enhancing the assets held within the trust. Consequently, the remaining beneficiaries of the trust were obligated to contribute their equitable portion towards these endeavours. If third-party financiers also offer assistance to the class, it is reasonable to expect that the class should compensate for the received help. In the event of a settlement or verdict in a class action lawsuit, it is possible for the court to allocate a portion of the judgement to the financiers, similar to the current practise of awarding a share to the attorneys involved. It has been observed that Canadian courts have already embraced this strategy in order to facilitate the provision of financial resources in class action lawsuits, while Australian courts are currently contemplating its adoption. There is no apparent justification for its infeasibility within the United States, either.

What are the potential practical implications of implementing these ideas within the context of the United States? There are two potential approaches that could be effective. Initially, it is plausible for a financial entity to present itself before the court at the commencement of a legal proceeding, presumably with the endorsement of the class representatives or class counsel. The purpose of this appearance would be to request the court's authorization to cover the litigation expenses associated with the case, provide upfront compensation to the class, or potentially both, in exchange for a certain percentage of any potential recovery. While it may be atypical to establish such an agreement prior to the conclusion of the case, courts have already done so in the context of solicitors' fees. Therefore, there is no inherent impediment preventing a similar arrangement from being made for a financier. Indeed, the practise of setting fees has not only been seen, but scholars argue that the most effective approach is to establish fees at the initiation of the case. This principle also applies to third - party financing. An even more preferable approach would involve conducting an auction to secure money, or alternatively, auctioning off the whole set of claims held by the class at the commencement of the legal proceedings.

Furthermore, it is plausible for the court to remunerate the funder upon the conclusion of a legal proceeding, similar to the current compensation structure for class action attorneys. In this particular situation, it is possible for the financier to negotiate an agreement with either the class representative or the lawyer at the inception of the case. This agreement would involve the financier covering the litigation expenses incurred throughout the case, such as the fees charged by class counsel on an hourly basis, as well as costs related to expert witnesses and similar expenses. In return for this financial support, the class representative or lawyer would provide their backing to the financier at the conclusion of the case. This support would involve making a request to the court to allocate the common-benefit award, which would typically be awarded to the lawyer, to the financier instead. The financier's decision to delay obtaining information on the court's willingness to compensate them for the class's recovery until the conclusion of the case has inherent risks. However, it is worth noting that class action lawyers often assume similar risks and continue to initiate class action lawsuits. While the potential impact of the back-end scenario on financing costs may be significant, it should not render financing unattainable.

Therefore, it is my belief that the implementation of new finance mechanisms is already evident in our ongoing class action cases, and has the potential to further proliferate in the coming times. In light of this, it is pertinent to inquire whether the aforementioned risk balancing attributes of the novel financing method, as outlined in the preceding section, can also be observed in class action lawsuits. If not, it may be advisable to refrain from pursuing any further expansion of the additional finance into those particular instances.

From a critical perspective, it is challenging to discern any potential advantages in granting the plaintiffs involved in class action cases the ability to get risk funding. According to Professor Molot, it has been observed that the majority of class actions consist primarily, if not entirely, of individuals who have a minimal financial interest in the litigation. In other words, class members generally do not exhibit risk aversion when it comes to the relatively little damages that class actions often aim to address. The existence of class action lawsuits is primarily motivated by the need to consolidate individual claims that are too insignificant to be pursued alone, hence creating a more feasible legal mechanism. If the primary advantage of the new funding is to equalise the risk profile between the plaintiff and defendant sides, then there is no corresponding advantage to be gained by class members through financing. Nevertheless, as previously mentioned, the funding can also occur (and is presently doing to some extent) through the class action attorney. In class action proceedings, it might be argued that lawyers hold a significant stake as the primary parties in interest, exerting substantial influence on settlement decisions and determining the settlement amounts. If the objective is to address the potential influence of risk aversion on settlements, it may be more appropriate to direct our attention towards the lawyer rather than the class member in class action proceedings. If class action lawyers settle cases at a lower amount than warranted due to imbalances in risk, it results in inadequate compensation for class members and insufficient deterrence for defendants. This parallels the concerns around risk imbalances in individual cases, which affect both plaintiffs and defendants. In contrast to individuals comprising a class, class action attorneys exhibit risk-averse behaviour. Given the substantial investment of time and financial resources in class action lawsuits, even prominent law firms with extensive case portfolios do not adopt a risk-neutral stance when handling their most significant cases. Therefore, it appears that third-party funding has the potential to be effective in class action cases, as financiers have the option to purchase a portion or the entirety of lawyers' interests. Indeed, it is accurate to assert that claim investment has the potential to worsen risk imbalances in class action litigation, rather than mitigate them. This phenomenon occurs due to the use of the class action mechanism, which results in an elevated level of risk for the defendant. In the event that a class action lawsuit proceeds to trial, it is plausible for a solitary jury to adjudicate an extensive number of claims, potentially reaching into the thousands or even millions. This circumstance presents a plausible outcome for the defendant's most unfavourable situation, when they would lose all of their cases, with a likelihood that may be comparable to the probability of losing any one case. Due to this rationale, class action attorneys may exhibit a lower degree of aversion to risk compared to defendants following the certification of a class. The inclusion of claim investment on the plaintiff side may potentially exacerbate the existing risk asymmetry, rather than ameliorating it.

Indeed, it is worth noting that defendants currently possess the means to mitigate this risk through the utilisation of liability insurance. However, in the event that the potential negative outcome is of significant magnitude, surpassing the financial capacity of corporations to get liability insurance, it is plausible that even affluent firms would be inclined to offer a risk premium in order to circumvent the need for litigation. From my perspective, alternative strategies exist to address the trial risk associated with class actions, rather than diminishing the role of third-party financing. One such approach involves discontinuing the practise of allowing a single jury to determine the outcome of the entire class action lawsuit. I have advocated for the utilisation of sampling as a means to address class action trials due to the aforementioned rationale. According to Professor Molot's formulation, it is possible that a procedural problem can be effectively resolved using a procedural approach.

However, it should be noted that the desirability of claim investing in class action cases is not necessarily guaranteed. Certain analysts have recognised the presence of societal costs linked to the practise of claim investment. In order to thoroughly evaluate the merits of investing in class actions, it is necessary to consider the potential expenses associated with such endeavours. The subsequent paragraphs strive to provide a concise assessment of these costs. One commonly expressed concern regarding claim investing pertains to its potential to engender an increase in litigation. This phenomenon could have negative implications as the escalation of litigation leads to higher expenses associated with engaging in various activities within our society. However, if the provision of financial resources results in an increase in litigation, it appears to be the case solely due to the fact that the current lack of financial resources for plaintiffs has resulted in a limited number of filed lawsuits, as I have already elucidated. Hence, this might be regarded as a benefit rather than a cost of investing in claims. Similarly, there is concern that the adoption of claim investing may result in prolonged litigation, leading to increased utilisation of resources by both the parties involved and the judicial system. While there is disagreement among researchers, it is worth considering that if this theory is indeed accurate, it may be due to the fact that in a world without claim investing, parties involved in legal battles may be compelled to reach settlements prematurely due to limited resources or a low tolerance for risk.

There has been scholarly worry on the potential increase in agency costs associated with claim investing. This concern arises from the presence of two agents, namely the lawyer and the investor, who may possess interests that deviate from those of the litigant.This perspective is also challenged by other scholars. However, assuming its validity, it appears that the issue can be resolved through contractual means. It is reasonable to question why a lender would not design a financing contract that aligns the lawyer's incentives as nearly as feasible with its own. While it is acknowledged that claim investing does not completely eliminate the current lawyer-client agency expenses in class action litigation, there is no apparent justification for it to worsen these costs.

There is concern among scholars on the potential for the new finance to introduce bias in the selection of litigated cases. Certain researchers have observed that funders face challenges in generating profits from lawsuits that just pursue injunctive relief. Consequently, these financiers tend to avoid providing funding for such cases. There is concern among some individuals that financiers may exhibit a stronger inclination towards low-probability cases, given the disparities in risk tolerance between funders and litigants are most pronounced in such instances. From an empirical standpoint, it is plausible that these academics' assertions hold true (although alternative scholars argue that investors are more likely to fund instances with higher quality rather than those with lower merit). However, I struggle to perceive these issues as being categorised under the notion of "costs." In my perspective, it appears that finance alone contributes to the litigation process by facilitating the pursuit of additional claims, without impeding the litigation of injunctive or high-probability cases. The one issue that can be raised in this context, in my opinion, pertains to the allocation of court resources. It can be argued that litigating cases that will be funded may not be the most efficient utilisation of these resources, perhaps diverting them from higher-priority matters. This objection appears to be valid primarily in situations with low probabilities. Furthermore, even if the provision of funding results in an increase in such circumstances, the associated costs seem to be negligible when compared to the aforementioned benefits of financing.

Based on the aforementioned rationales, I find the argument against claim investing to be comparatively less compelling than the argument in favour of it, even within the context of class actions.

6.3 Public perception and criticisms

1. When it comes to a subset of third-party litigation financing known as investor acquisition of portions of lawsuits from plaintiffs, the United States has observed tremendous growth in this area in recent years. Numerous scholars are of the opinion that the implementation of this unique form of funding serves to align the risk tolerance of both plaintiffs and defendants, so enabling the resolution of legal disputes in a manner that is closely aligned with the goals of the legislation that is being enforced. This view is supported by the fact that the introduction of this novel type of funding works to align the risk tolerance of both plaintiffs and defendants. In this paper, we investigate the extent to which the risk-balancing rules that are linked with claim investing are applicable in class action cases. As a result of the widespread consensus among academics that the purchase of parts of class action lawsuits by financiers in the United States is regarded as highly improbable, the topic at hand has not been thoroughly investigated within the context of academic discourse. On the other hand, I show that not only are these investments infeasible and unethical, but that they are also already existent in the existing environment where they would have a negative impact. As a result, it is extremely important to consider whether or not the investments provide comparable social benefits, as was demonstrated in earlier instances. It has been argued that in class action cases, class members often do not require a risk transfer mechanism due to the relatively minor losses they have sustained, but that their legal representatives do require such a method. This is due to the fact that class members typically do not need such a mechanism. Although it is impossible to state with absolute certainty that investing in claims will always result in positive social outcomes in class actions, the social costs that are known to be linked with claim investing appear to be very modest when compared to the positive outcomes that have been observed so far.

2. There is a good chance that a situation similar to the one described above is occurring right now in the United States, with investors purchasing individual claims from class actions. In addition, any remaining hurdles, whether they be practical or ethical, that are currently preventing progress are expected to be removed in the not-too-distant future. As a result, it is important to investigate whether or not investing in a claim gives the same risk-mitigating advantages in class action litigation as it does in other types of legal processes. It may be argued that the necessity of lawyers representing plaintiffs is the primary force behind the usage of risk transfer mechanisms in the process of litigation, rather than the plaintiffs themselves. The current investigation does not conclusively show whether or not the new method of financing class actions is generally desirable from a social point of view. When contrasted with the social benefits that have been uncovered so far, the social costs that have been recognised as being connected with this funding are rather low.

Chapter 7: Conclusion

7.1 Summary of key findings

1. An immediate advantage is derived from the consolidation of several cases into a single case, hence reducing the court's workload. This reduces the probability of other instances of a comparable sort inundating the already overwhelmed legal system. A limited cohort of individuals possessing financial resources or the capacity to procure finances holds the potential to administer justice to other individuals who may find themselves in a position of disadvantage due to the absence of requisite means or temporal availability to pursue legal recourse. Organisations exhibit reluctance in asserting their defence in such legal proceedings due to the potential adverse consequences it may have on their corporate reputation. The preference is to promptly address such occurrences in order to minimise the impact on their public image. Nevertheless, the advantage for the accused parties lies in the fact that they are only need to contend with a solitary instance.

2. The United States serves as the focal point of the worldwide class action litigation movement. In 1998, a settlement was reached in the United States between tobacco corporations, namely Philip Morris and R.J. Reynolds, wherein they agreed to make payments totaling $206 billion over a span of 30 years. These funds were designated to address the costs associated with treating smoking related ailments. This settlement represents the largest agreement ever recorded on a global scale. Despite not meeting the technical criteria for a class action case, the severity of the punishment warrants its classification as such. In 2010, a comparable occurrence took place when BP was responsible for an oil disaster in the Gulf of Mexico. Furthermore, apart from the fines paid to several US agencies, BP also reached settlements for individual claims amounting to a substantial sum of 7.8 billion dollars.

3. In situations of this nature, the initial challenge lies in establishing the evidentiary basis for the alleged misconduct, specifically in terms of substantiating the extent of harm inflicted upon the affected parties as claimed in the legal action. Demonstrating an individual's culpability can often be a challenging endeavour. The primary litigant, who assumes the role of advocating for individuals experiencing injury, may not provide an accurate portrayal of the circumstances, potentially compromising the strength of the legal argument. Moreover, legal proceedings that include several parties have the potential to extend over a prolonged period of time.

7.2 Implications of the research

Through this research it’s to understand that why is class lawsuit Important? To understand its importance, certain examples and hypothecial situations are need to be used which are as follows:-

1. The existence of locus standi is required in the vast majority of situations before an individual can start legal proceedings or take legal action. The concept of locus standi refers to the legal standing that an individual must have in order to be permitted to file a lawsuit in a court of law.

2. In the hypothetical scenario in which both parties involved in an earlier incident have undergone an injury, it is postulated that one party occasionally engages in the act of publicly making defamatory words of the other party. This is done in an effort to smear the reputation of the other party. Is a person able to bring legal action against you if he chooses to do so? never in a million years. In spite of the fact that a cause of action does exist, his presence in this setting is not supported by any legal authority. As a consequence of this, it is frequently not possible for a single person to bring a legal action on behalf of a group of people. Nevertheless, class actions provide an exception to this rule.

3. When a group of people as a whole has been harmed, it is impossible to predict that each affected individual will separately commence separate legal actions. This is because class action lawsuits are filed in situations where it is more appropriate for the group to seek redress. The circumstance that was stated does not make any sense. In the event that such a requirement is implemented, the system would become unmanageable, which would result in a considerable number of individuals being exposed to unjust treatment due to their inability to afford legal representation and attend court proceedings. This would cause a significant number of people to be subjected to unjust treatment. As a consequence of this, the Act provides a selected representative with the right to begin legal procedures against the defendant on behalf of the entire class of plaintiffs.

4. In the context of India, one can find prominent examples of class actions in the areas of consumer law and corporate law. The Civil Procedure Code also has a provision that allows for representative litigation to take place.

5. Class actions have the potential to function as a significant vehicle to ensure that the people of India have access to justice. It has become a popular strategy for dealing with problems that have significant repercussions for the populations of countries like the United States.

6. The establishment of a class action process in India, which may give encouraging results, is still waiting and has not been adequately established as of yet. This is despite the fact that the method has the potential to provide promising outcomes. As a consequence of this, people who are looking forward to the possible advantages of class actions will have to be patient as the process of their implementation moves forward.

7. The United States of America has been subjected to a plethora of predicaments that have called for the commencement of legal proceedings involving the upper crust. Individuals, however, are likely to steer clear of participating in a class action lawsuit because of the prohibitively high costs associated with doing so. There are some strange occurrences within the system.

7.3 Contributions to the field

Prior research on the impact of legal actions on corporate defendants did not distinguish between class-action lawsuits and other types of lawsuits, despite the unique attributes associated with class-action lawsuits. Consequently, the aforementioned research were unable to ascertain a significant revelation that could have been attained with the segregation of the data. This research investigates class action litigation and evaluates the outcomes of class action lawsuits in comparison to non-class action cases filed over the period from 1990 to 1994. The results suggest that when non-class-action litigation is announced, the stock market tends to respond unfavourably to the stocks of defendants, although this reaction is confined to a narrower time period. This is evidenced by the observation that the temporal duration of the event window is comparatively shorter. In contrast, the reactions to the declaration of class-action lawsuits are generally more extensive in scope and tend to occur over an extended duration compared to other categories of events' timeframes. The findings of this study are aligned with prevailing perspectives on the impacts of class actions. Moreover, they shed light on several important considerations. Firstly, the study underscores the necessity for researchers to analyse the effects of class-action lawsuits using broader event-windows. Secondly, it elucidates the importance of devising distinct strategies to address various types of lawsuits, including non-class-action lawsuits and class-action lawsuits. Lastly, the study provides valuable insights into potential strategies that practitioners could employ to mitigate the detrimental consequences of class-action lawsuits.

7.4 Directions for future research

The trajectory of future class action litigation in India is dependent on the execution of essential revisions and clarifications to the present rules, which are currently confusing. This is because the rules are currently vague. In addition, the availability of enough financial resources for the purpose of financing such litigation is essential for the successful launch and continuation of such lawsuits. As was said before, the idea of a class-action lawsuit faces a number of substantial obstacles that make it difficult to implement. Alternately, it would have been the most highly wanted remedy for the persons who were unsatisfied inside an organisation if it had been implemented. In addition to this, class action lawsuits are an essential component in the process of enforcing the stringent application of corporate governance. If this strategy were put into operation, it would significantly cut down on the number of instances of misleading statements and fraudulent behaviour that occur in the business world. As a consequence of this, the urgent requirement in regard to these litigation is for the competent authorities to put appropriate measures into effect.