Royal Bank of Scotland faced Class Action from UK investors in US Courts. The Royal Bank of Scotland, and perhaps numerous members of Scotland’s legal profession (even those such as the current Dean of Faculty, Richard Keen QC), can, as the Herald newspaper reported earlier this week, breathe a sigh of relief as the Class Action case which was raised by UK investors in the American courts, failed after a New York district judge threw out the main claims of the action, which were based around the bank’s semi-nationalisation in 2008. After taking into account a similar ruling in the Supreme Court in June, relating to National Australia Bank, this week’s decision in New York effectively means UK ordinary shareholders cannot pursue claims against RBS in the US courts.
The Class Action suit raised in the US, involved a number of investors who had acquired shares in the bank between 1 March 2007 and 19 January 2009, during which time their value dropped 98% amid fears over the bank’s potential exposure to sub-prime lending losses which crippled many banks across the globe. A number of those involved in bringing the suit participated in RBS’s £12bn rights issue just months before the bank was effectively nationalised. The RBS of course, welcomed the collapse of the case, and said it would defend the remaining claims vigorously” although given the state of the UK’s justice system when it comes to Class Actions (otherwise known as Multi-Party actions) the RBS or indeed any other institution which in any other country might find itself a target of a Class Action wont need to worry too much …
Class Actions, as most readers will be well aware, are largely non existent in UK Courts or the Scottish justice system, the latter where reforms which take place south of the border can take up to 40 years to cross the green hills of the Scottish Borders to reach Scotland’s supreme court, the Court of Session in Edinburgh. Indeed, with the pace of change so slow in Scotland, one may almost be forgiven for thinking big business and vested interests have a greater say, and representation in the justice system and how it is gummed up to prevent access to justice, than ordinary members of the public who mostly fund the courts system through taxes.
It is true the Scottish Government have ‘proposed’ the introduction of Class Actions to Scotland in their response to the Lord Justice Clerk, Lord Gill’s Civil Courts Review. However, as I reported in early November 2010, the Scottish Government’s ‘proposal’ may well take years to implement, and in the current climate of consumers ever eager to take on the banks and other powerful or influential institutions and even, professions, it wouldn't come as much of a surprise for any introduction of Class Actions to come after the old trick of ‘time bar’ would ensure any further litigation against such fine upstanding financial institutions which have crippled the entire country and affected everyone would not be able to proceed.
My earlier coverage on the issue of Class Actions can be viewed here : Class Actions for Scotland ? - The story so far
While the Scottish Government, the legal profession and other vested interests play with the idea of introducing Class Actions to Scotland’s Courts, let us remind ourselves of at least one MSP’s views on the issue, those of Shirley Anne Somerville (SNP), who spoke in the Scottish Parliament’s debate on Lord Gill’s Civil Courts Review in October 2009.
Shirley Anne Somerville speaks on Class Actions & Lord Gill Civil Courts Review (Click image to view video)