Class action growth outside of the US is now increasing rapidly. The ruling of the Morrison v National Australia Bank case in 2010 resulted in the US Supreme Court prohibiting f-cubed actions from taking place within the US.
Class action growth outside of the US is now increasing rapidly. The ruling of the Morrison v National Australia Bank case in 2010 resulted in the US Supreme Court prohibiting f-cubed actions from taking place within the US. This means that a non-US shareholder, suing a non-US company, whose stock was purchased on a non-US exchange, is no longer able to bring their case in the US courts. Legislatures across the world have rapidly been developing legislation in response to a demand for securities class actions to be processed in alternative locations.
The US was long at the forefront of processing securities class actions but now legislatures such as Australia, the Netherlands and Canada are firmly asserting their ability to handle such cases. In South America, the picture is mixed and varies from country to country. Many countries currently do not allow class actions and prompt citizens to pursue claims in the US courts. Alternatively, some jurisdictions are actively encouraging claimants to litigate through their local courts as opposed to in the US.
Brazil, Argentina, Chile, Colombia and Mexico, have now adopted legislation that enables class actions and other forms of aggregate litigation. The new laws vary greatly by country, and range from the inclusion of a few provisions in a given statute to the comprehensive overhaul of several laws.
South America’s largest country, Brazil, has been at the forefront of the movement to promote class actions in the region and has extended the predominant consumer class action focus to include, as Patricia Helena Marta, a litigation partner of TozziniFreire Advogados, elaborates, “the environment, consumers, cultural patrimony, economic/antitrust rights and other so-called diffuse, collective, and homogeneous individual interests.” Residents from other jurisdictions can file claims in Brazil as long as they are able to guarantee the payment of court costs and legal fees payable should they lose the claim.
It is important to note that the Brazilian class actions system differs from US class action procedures. For example, there are no opt-in or opt-out mechanisms. It has been argued that the individuals, whose rights are protected and litigated under the Brazilian class action system, often do not become aware of the filing of the lawsuit. Public notice of the existence of the class action is made by a publication in an official newspaper.
International investors are able to bring securities class actions in Brazil. Goal Group’s analysis of its class actions knowledge base predicts that by 2020, annual securities class action settlements in South and Central America will reach $620 million. With its legislation already in place, Brazil will likely account for a decent proportion the predictive settlement figure. A class actions trial in Brazil usually takes from about two to six years and can be a complex process, but the great settlement rewards should not be overlooked. In addition, there are now specialist service providers that can automate the complex process of class action participation across international legislatures at a relatively low cost. The pressure of the process can be dramatically eased by such support.
