Goal Group’s analysis of its class actions knowledge base predicts that by 2020 annual securities class action settlements in Europe will reach $3.29 billion.
Goal Group’s analysis of its class actions knowledge base predicts that by 2020 annual securities class action settlements in Europe will reach $3.29 billion. Class action legislation in Nordic countries has progressed since the late 1980s when Per Henrik Lindblom published a major book, Class Actions in Consumer Objectives, on class actions in which he stated that there were “no decisive barriers to a Swedish adoption”.
Its publication is said to have prompted the first policy meeting for all Nordic countries in which it was generally agreed to pursue class action legislation. In January 2003, Sweden introduced securities class actions legislation and Finnish, Norwegian and Danish class action legislation took effect in 2008.
Nordic lawmakers have typically been interested in legislative behaviour in other Nordic countries, but where Sweden, Norway and Denmark have taken their lead from the US by introducing similar style class actions, Finland has been more cautious. Sweden, Norway and Denmark do not limit the scope of their class actions and therefore permit securities class actions with no attorney limits.
Finland, however, does not allow for securities class actions and limits the scope of its legislation to consumer protection and environmental cases brought by a Consumer Ombudsman. It is believed that Finland differs because laws are prepared in ministries where working groups discuss the political details before a formal law proposal is submitted to the parliament for review.
When discussing the political details, empirical data from other countries was not consulted but the theoretical speculations and submissions from selected interest groups were. This influenced the areas that class actions would be extended to in Finland, and ignored the example of Sweden, which, at that time, had not processed any environmental class actions.
With such a long standing history of securities class actions, it is quite possible that Sweden could become a centre for the prosecution of securities class action cases in the Nordic region. However, there are some limitations at present as Sweden currently adopts the ‘loser pays’ system whereby members of the class are at risk of paying the defendant’s costs should the lawsuit fail.
This, combined with the ‘opt-in’ mechanism, may deter the use of class actions. The situation is similar in Norway and Denmark, but Norway and Denmark have an ‘opt-out’ policy available in the case of small claims.
In recent years, responsibility for class action identification and participation has increasingly been written into the contracts of fund managers and custodians that have a fiduciary duty to ensure that their clients participate in securities class actions that aim to recoup some of their investment losses. Awareness of class action legislation globally, as well as in the Nordics, is also important so as not to miss out on any rightful reimbursement from investments in non-domiciled stock.
A Goal Group study forecasts that by the end of the decade, $2.02 billion of investors’ rightful returns will be left unclaimed each year. Therefore, while it has been suggested that adopting an ‘opt-out’ provision in general could encourage increased uptake of class actions, there is no excuse for failing to monitor and participate in class actions internationally as there are a number of services commercially available that minimise the complexity and cost of this activity.
