Supreme Court Provides Welcome Guidance On Collective Proceedings As CAT And Court Of Appeal At Odds

The CAT and Court of Appeal judgments

In 2019, two separate collective proceedings were brought before the Competition Appeal Tribunal (CAT) by proposed class representatives, Mr Evans and Mr O’Higgins, following a European Commission decision finding collusion among bank employees that affected certain foreign exchange transactions (AT.40135 FOREX, Three Way Banana Split, 16 May 2019). As with the vast majority of other collective proceedings brought to date, the proposed rival class representatives sought to pursue the claims on an opt-out basis. In its judgment in March 2022, the CAT refused certification but allowed the proposed class representatives to seek certification on an opt-in basis after amending their applications, indicating that it would be more likely to certify the action brought by Mr Evans, which it marginally preferred over the competing claim pursued by Mr O’Higgins (1336/7/7/19 Mr Phillip Evans v Barclays Bank PLC and Others, 31 March 2022, CAT 16).

The key reason for the CAT’s decision to refuse certification on an opt-out basis was that it did not consider either of the claims to be sufficiently strong, which, in its view, was supported by the fact that a number of corporates with potentially sizeable claims had not expressed interest in them.

In 2023, the Court of Appeal overturned the CAT’s judgment, lending strong support to opt-out collective proceedings throughout its judgment (9 November 2023, EWCA Civ 876). The defendant banks then appealed to the Supreme Court, which overturned the Court of Appeal’s judgment in late 2025, and in doing so made several crucial statements about the collective proceedings regime (18 December 2025, UKSC 48).

The Supreme Court’s judgment

Opt-in versus opt-out: claim strength is a relevant factor

The Supreme Court made clear in Merricks that the CAT does not conduct a mini trial at certification (Mastercard Incorporated and others v Walter Hugh Merricks CBE, 11 December 2020, UKSC 51). However, in Evans it clarified that this does not mean that the CAT should not take into account the relative strength of the proposed action when deciding whether to grant a collective proceedings order (CPO) and whether the claim should proceed on an opt-out or opt-in basis. Pursuant to CAT Rule 79(3)(a), merits are a key factor that will inform the CAT’s decision to grant a CPO on an opt-out basis if a proposed action is strong, or opt-in if it is not (if a CPO should be granted at all). That assessment is for the CAT alone to undertake, and the Court of Appeal cannot revisit it unless the CAT committed an error of law.

The Supreme Court explained that opt-out collective proceedings place class representatives in an advantageous position, enabling them to seek larger damages awards on behalf of entire classes of potentially affected members. The risk of a very large damages award will naturally result in any defendant seriously considering settlement, even if it believes it has a strong defence. The Supreme Court considered that for this reason – and because the CAT is required to manage proceedings at proportionate cost – a CPO on an opt-in basis should be the starting point; it should only be granted on an opt-out basis where the CAT considers it appropriate to do so.

Assessment of practicability of opt-in collective proceedings

CAT Rule 79(3)(b) requires an objective assessment of whether opt‑in proceedings are practicable. For example, where claims lie primarily with an identifiable group of corporates, proceedings should, in principle, proceed on an opt-in basis.

Further, where available evidence suggests there is weak interest in the claim from class members, that is a factor that will weigh against opt-out proceedings, even if it relates only to a small proportion of a proposed class as it did in Evans. Granting a CPO on an opt-out basis simply to salvage such claims would be inappropriate.

Considerations concerning access to justice and deterrence

The Supreme Court disagreed with the Court of Appeal’s view that there is a presumption in favour of opt-out proceedings that is necessitated by access to justice. Such a blanket presumption would result in an undue imbalance between the rights of class members and those of defendants. Accordingly, the CAT is required to balance those opposing interests, taking into account the composition of a proposed class, including any segment(s) for whom opt-in proceedings would not be practicable.

Similarly, while deterrence is a policy objective of collective proceedings, it is not relevant to whether a claim should proceed on an opt‑out or opt‑in basis. Deterrence cannot be deployed to encourage unmeritorious actions.

The CAT should afford limited weight to prior decisions of regulators addressed to third parties

The rule from Hollington v Hewthorn essentially means that a finding by one decision maker cannot bind another decision maker, who should undertake their own assessment (Hollington v Hewthorn [1943] KB 587). In Evans, the Supreme Court held that the effect of this is that a decision from a regulator addressed to a third party cannot constitute admissible evidence before the CAT as evidence of the facts found. The rationale is that it would be fundamentally unfair to submit a party to findings made by a regulator if they were not involved in the regulatory process and did not have the opportunity to contest the findings.

The road ahead

In Evans, the Supreme Court provided guidance on the distinction between opt-in and opt-out proceedings. In future disputes over certification, proposed defendants are likely to seek to persuade the CAT that there are factors favouring a CPO on an opt-in basis, if one should be granted at all – whereas the existing trend of class representatives pursuing primarily opt-out proceedings is unlikely to change given the prospect of potentially larger damages and procedural advantages. Indeed, the first CPO since Evans has been granted on an opt-out basis (1640/7/7/24 Vicki Shotbolt Class Representative v Valve Corporation, 26 January 2026, CAT 4), and further opt-out CPO applications have been announced – such as the proposed collective proceedings led by Mark McLaren against housebuilders, Jeremy Newman against Rightmove and the Bed and Breakfast Association against Booking.com.

With further collective proceedings pending certification, the coming months and years will show whether the opt-in mechanism grows in significance. If it does, it might form part of litigation funders’ decisions as to whether to fund proposed collective proceedings.

In relation to regulatory decisions, it will be interesting to observe the CAT’s assessment of the weight to be accorded to such decisions in light of the court’s findings in Evans, particularly where such decisions relate to similar conduct but not the same parties.

The authors thank Zachary Sefton, a trainee solicitor at Arnold & Porter Kaye Scholer (UK) LLP, for his contribution to this publication.

Originally published by Global Competition Review.

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