We use cookies to give you the best online experience. By using our website you agree to our use of cookies in accordance with our cookie policy. Learn more here.Close Me
The economic downturn has led to an increase in speculation of
likely investor and shareholder action. Whilst this may be true for
the US, what about in England and Wales or wider Europe? There have
been calls for the introduction of a class action system but what
form if any will it take? US commentators warn of the impact their
class action system has on US industry not to mention the insurance
market. Similarly, since 1 October 2007 there has been concern that
the Companies Act 2006 will open up the floodgates to shareholder
derivative claims in England and Wales. What are the trends?
In November 2007 the European Union Commissioner responsible for
consumer policy announced plans to explore an EU wide strategy for
collective redress and enforcement. She made it clear that a US
system was not on her agenda. In November 2008 the European
Commission announced the publication of a Green Paper on consumer
collective redress. 1 March 2009 is the deadline for comments on
the Green Paper. In England and Wales the Civil Justice Council
responsible for advising the Lord Chancellor on the modernisation
of the law has called for reform of the group litigation model. Its
recommendations published in December 2008 include: expanding the
number of bodies with the statutory power to bring class actions;
making the judiciary the gate keeper of the procedure; permitting
claims to be brought on an opt out basis; and, changing the law to
permit the award of aggregate damages.
Many consider that any system introducing class actions will
have the effect of increasing claims, which will in turn impact
upon the insurance market. There are however, considerable hurdles
that will need to be overcome to implement a class action system,
whether similar to that in the US or not. In Europe for example
there are potentially significant changes required to legal systems
which currently differ considerably. Given the importance of this
to the insurance market it will be important to monitor the debate
and any action taken as a result whether by the European Commission
or the Lord Chancellor.
When the provisions as to director's duties and shareholder
derivative actions set out in the Companies Act 2006 (the Act) took
effect on 1 October 2007 there was a fear that the floodgates would
open on claims against directors. So far the safeguards in the Act
for shareholder claims appear to be working, principally due to the
strict approach adopted by the courts. If, as many suggest, there
is to be an increase in investor and shareholder litigation in the
next year or so it will be interesting to monitor the courts'
approach to shareholder derivative claims. This will be of
particular interest to D&O insurers.
These issues will be debated at the C5 16th D&O Liability
Insurance conference on 24-25 March. HFW's Costas Frangeskides
will be on the panel and other members of our D&O team will be
in attendance.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
The English Court of Appeal has considered for the first time in Ted Baker Plc v Axa Insurance UK Plc [2017] EWCA Civ that there are circumstances in which insurance companies will be under a duty to...
Insurers and reinsurers require clarity soon on whether passporting rights, or a workable equivalent, will remain in place in relation to cross-border policies after Brexit, or...
In a useful judgment for insurers, the Court of Appeal has again considered the issue of apportioning claims for compensation when there are multiple extrinsic causes...
The FCA has issued its long awaited consultation paper in relation to the extension of the senior managers and certification regimes to the wider financial services sector.
The FCA has at last rolled out its proposals on the extension of the senior manager regime to the wider financial services sector, which will include FCA regulated insurance intermediaries.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
