MASS CLAIMS IN MARITIME LAW AND ALTERNATIVE METHODS OF DISPUTE RESOLUTION

Σελ. 1

Introduction

1.1. Introductory Remarks

While two-party concerns continue to dominate law and society, much has changed in recent years, both in terms of the types of injuries suffered and the ability to obtain legal relief. Industrial and technological advances have created situations where similar injuries can arise on a massive scale. Sometimes the catalyst is a single, one-time event, while at other times the damage accrues over a period of time, even though the injury arises from a single causal factor or scenario.

Legal systems have developed a variety of means of addressing these sorts of mass harms. In this context, the best-known and oldest type of large-scale judicial proceeding is the U.S. class action. Class procedures have been also adopted in a number of other countries from both the civil and common law family. Some states have also developed a variety of non-class procedures under the general term of “collective redress”.

In the past, large-scale disputes were mainly if not exclusively limited to the domestic arena. However, the forces of globalization have resulted in a dramat

ic increase in the number and diversity of large-scale cross border claims. This can create a variety of problems and complications which are more apparent when the legal systems use highly different approaches to class and collective redress; however, problems can also arise even in disputes involving very similar legal systems.

Yet, litigation is not the only way to resolve widespread legal harm. In the last decades we have witnessed a tremendous increase in the resort to arbitration and several other Alternative Methods of Dispute Resolution (hereinafter ADR) devices for reaching a fair and rapid solution to mass disputes arising in civil and commercial matters. While most of these proceedings have been seated in the United States, several other countries, like Canada, Colombia, Portugal, Spain, the Netherlands and Germany have also contemplated the use of arbitration as means of resolving large-scale legal disputes. Mass claims have also been asserted in the context of treaty-based investment arbitration.

Focusing on arbitration, the widespread recourse to this device as the way to solve present or future disputes has been accompanied in practice by an enormous increase worldwide in the number of Arbitration Centers and by an unprecedented number of new national Arbitration Acts, many of them endorsing the UNCITRAL Model Law on International Commercial Arbitration, of 1985.

International maritime industry comes out as one of these areas in which the recourse to arbitration has enjoyed a traditional and far-reaching character. Shipping has been one of the strongest supporters of arbitration for as long as one can

meaningfully find records. There seems to be a natural attraction and a relation of trust between maritime transactions and international arbitration. The floating nature of shipping matters works excellently with the informal and not very national law dependent system that arbitration offers. This bias has increased in recent years due both to the highly complex nature of the maritime industry and to the costs and delays that referring disputes to public courts encompass.

However, arbitration clauses are not included anymore only in contracts between equals. We see with increasing frequency arbitration clauses included in standardized contracts like the ones of consumers. This is the case also in maritime industry, where exclusive arbitration clauses in passengers’ tickets and crewmembers’ employment contracts are a common phenomenon recently. The example of the cruise industry shows a trend which may become a mainstream in the near future.

In the above framework, the appearance of large-scale cross border claims, as a result of a globalized economy, as well as novel devices for their resolution affect primarily the maritime industry, since most of the international trade and activities are carried out by sea. Given also that maritime casualties tend to take nowadays the form of massive catastrophes, the international maritime community should be alerted to deal with mass and often divergent claims in a rather quick and efficient way.

1.2. Research Question

In an effort to strike a balance between (procedural) efficiency and (procedural) fairness, this book discusses whether a group of people, suffering damage due to a maritime casualty, can defend their rights collectively before an arbitral tribunal, taking into consideration that collective mechanisms eliminate the disparity in economic power and facilitate the undisputable right of individuals to effective judicial protection.

Therefore, starting from the premise that collective action is the most appropriate way to deal with mass harms, the current research aims to answer whether arbitration - as an alternative to state courts dispute resolution - can provide access to justice and sufficient redress to a group of claimants affected by a maritime casualty.

The above main research question is divided throughout the chapters into two sub-questions:

a) Is arbitration a legally permissible dispute resolution method for the handling of mass claims in the aftermath of a maritime casualty either these claims are contract or tort based?

b) What are the benefits and added value, if any, of arbitration in dealing with mass claims in the field of maritime casualties?

This study refers extensively to the permissible circumstances in which parties to a dispute can be required to use arbitration and it attempts to answer how legitimate is its use when the governing instruments remain silent regarding large-scale dispute resolution techniques. Legal, policy and procedural factors are taken into consideration. It also deals with the complex issue of whether private methods of dispute resolution are suitable to provide solutions to disputes falling within the scope of public interest litigation.

Also, the study discusses the level of uniformity in the treatment of these issues through the reference to different fora from both the Civil and Common Law jurisdictions. The research attempts to provide possible explanations through the comparative analysis of the statutory provisions and the case law of selected jurisdictions; it also attempts to give an answer to the question whether the approach of one or more of the selected jurisdictions, in one or more issues, should be given an international application. In this respect, the research provides suggestions as to how existing limitations regarding the use of arbitration in resolving mass claims could be diminished, but also, how very liberal approaches to the issue should receive a stricter treatment.

The research applies the above questions to both contract-based and tort-based claims through the examination of two typical categories of large-scale disputes arising in the aftermath of a maritime casualty, namely, shippassenger claims and ship oil pollution claims. The research takes into account the particularities of each category and the legal remedies available and applicable to them so far.

1.3. Defining Mass Claims

The term “mass claims” is not defined in literature. It is usually used in order to describe claims that arise when a large number of people suffer damages resulting from the same historic event.

In the investment arbitration field, the term ‘mass proceedings’ and “mass arbitration” was used for the first time by the majority in Abaclat and Others v. The Argentine Republic (hereafter Abaclat) as a label of convenience to denote ‘the high number of claimants appearing together as one mass’, although the majority also noted that there was no ‘uniform terminology concerning the various kinds of proceedings involving a high number of parties’.Some questioned this characterization, noting that a mass claim in the traditional sense involves a high number of claims decided individually whereas in Abaclat the claims were to be decided as one.

Further to Abaclat, two more ICSID arbitral tribunals dealt with the issue of mass claims under the same facts; Faced with 90 (as opposed to 60,000 in the Abaclat case) unrelated claimants, the majority in Ambiente Ufficio S.p.A. and Others v. The Argentine Republic (hereafter Ambiente) used the term ‘multi-party proceeding’, which it contrasted with a ‘mass claim’ that it considered was characterized by the need ‘for modifications or adaptations of the procedural arrangements to guarantee the manageability or fairness of the case’ because of ‘the sheer number of claimants’ involved. In Giovanni Alemanni and Others v. The Argentine Republic (hereafter Alemanni) the tribunal also did not consider 74 claimants as befitting ‘the descriptor “mass”’, but refused to engage in a ‘battle of terminologies’, underscoring that these terms had no recognized meaning in international law and even lacked uniform understanding in national courts.

The principal distinctive feature of mass claims is obviously the high number of claims involved. However, there appears to be no critical threshold number marking the transition from “claims” to “mass claims”. The minimum number of claims required mainly depends on the complexity and similarity of claims.

In this respect, the EU Recommendation of 11 June 2013, introducing the concept of collective redress in the European Union, defines the “mass harm situation” as a situation where two or more natural or legal persons claim to have suffered harm causing damage resulting from the same illegal activity of one or

more natural or legal persons. The same numerical threshold is used in the definition of “collective redress:

(i) a legal mechanism that ensures a possibility to claim cessation of illegal behaviour collectively by two or more natural or legal persons or by an entity entitled to bring a representative action (injunctive collective redress);

(ii) a legal mechanism that ensures a possibility to claim compensation collectively by two or more natural or legal persons claiming to have been harmed in a mass harm situation or by an entity entitled to bring a representative action (compensatory collective redress);

Irrespective of the number of claims involved, the concept of mass claims requires that the issues raised by the claims are sufficiently similar so that it is more efficient to adjudicate the claims in a single claims process than in a series of individual proceedings. In a mass claims situation, all claims arise out of one basic set of facts. This implies that practically all of the claims arise at around the same time and are very similar in terms of the legal and factual issues that they raise. This does not mean however that all questions of law or fact need to be common. Often, there will be a pattern of harmful conduct, consisting of separate but related incidents rather than one particular harmful event. Such a pattern might have affected various claimants in different ways, leaving considerable scope for individual issues to arise in mass claims.

As nicely pointed out by Eloïse Obadia, “rather than a question of terminology, it is a question of consent, more specifically the respondent’s consent facing multiple claimants”.

In this study, the term “mass claim” is used in order to describe claims which arise when a number of people, either contractually bound to the shipowner or not, suffer damages resulting from the same historic event, in our case from a maritime casualty or a maritime adventure whether on board the ship or ashore. Therefore, the claims examined arise either simultaneously or at around the same time and present very similar legal and factual issues without however being identical. In relation to the number of claims involved, the research adopts for convenience purposes the threshold set by the Recommendation and con

siders mass claims any claims brought collectively by two or more natural or legal persons claiming to have been harmed in a maritime casualty or adventure. Therefore, individual accidents fall outside the scope of this work.

1.4. A Cross-sectoral Research

There are three fundamental theoretical pillars underpinning this research; the concept of collective redress (group litigation), the dispute resolution in maritime and the theoretical framework for (International) Arbitration including public policy concerns.

1.4.1. Collective redress (group litigation)

When one looks at the group litigation situation in modern common law and civil law systems, one discovers a huge amount of data, in addition to a number of problems, discussions, and trends of development. In the 1960s, the landscape of group litigation was almost completely bare, with the only significant example being the U.S. class action regulated by Rule 23 of the Federal Rules of Civil Procedure. This situation has changed over the years and is now much more interesting, but also much more complicated. At first, most mass disputes seemed to be confined within national borders, resulting in the resolution of mass disputes on a national level. However, the global increase in cross-border trade and financial transactions - further fueled within Europe by the formation of both the European Union and the European Economic and Monetary Union, as well as the use of modern telecommunications technologies such as the internet - has led to the increase of cross-border mass disputes.

This overall increase in cross-border mass disputes has given rise to new legal issues. The standard dispute resolution mechanisms are based on a two-party conflict, whereas a defendant in a collective redress procedure is not confronted with a single claimant but either with a representative entity representing the interests of a group of claimants, or with a formal joinder of plaintiffs or a group of individual plaintiffs. This has raised various fundamental questions.

This radical departure from simple two-party disputes has also raised questions for cross-border mass disputes since the rules of private international law are based on the notion of a two-party conflict and are not designed for cases involving numerous claimants. So, in what way could the private international law rules be applied in cross-border mass disputes? As there are various grounds on which a court can assume jurisdiction in a two-party conflict, what rule can and/

or should be used to assume jurisdiction in a collective redress procedure? And is there any difference between the way the rules on private international law apply to the various collective redress mechanisms? Besides questions regarding the rules on which a court bases its jurisdiction, the European rules that deal with the recognition and enforcement of judgments also give rise to new issues.

1.4.2. Dispute Resolution in Maritime

Shipping and the maritime offshore industry are probably the most international businesses in the world. There are hardly any cases that would not affect parties in more than one country, and the operation of ships and facilities at sea can affect very different interests in a wide variety of relationships, such as economic rights, the interest in a safe and clean environment or the interest in life and health.

Shipping is, in absolute terms, a very safe business. Given the number of maritime transports effectuated every day and given the number of vessels currently at sea, the absolute number of accidents is very small. Still, the maritime enterprise is a large-scale business and unforeseen incidents can cause disastrous damages, affecting the wide range of interests in a geographically large area.

It is obvious that parties directly involved in a shipment will have contractual relationships with each other, providing for means of compensation in the case of an accident. In general, it is rather easy to assess the value of the interests at stake in these contractual cases, according to the cost of the shipment, the value of a vessel or its cargo, and, at the end of the day, according to the price that the parties themselves have agreed on. Limitation of liability within transport agreements is of course also an important issue here, and there are many international conventions dealing with this matter. Still, liability and compensation in these contractual agreements are questions that arise between parties who are aware of their undertaking and of the risks involved.

Maritime accidents can, however, also have important consequences beyond the interests of parties contractually bound to the maritime enterprise. The most important head of damage in this respect is of course the compensation for environmental pollution, for damage done to the interests of States and coastal communities that are only affected by a maritime accident because of a rather fortuitous geographical link. Still, the damage caused to their interests, the costs of dealing with the pollution and the ensuing economic losses, can be many times higher than the value of a given shipment or the vessel as a whole.

These relationships, which have been caused by an unforeseen event and thus link parties by virtue of an actual incident, are rather hard to administer and to adjudicate where they take place at sea. The oceans present a part of the plan

et where State powers are restricted in many ways and therefore various jurisdictional concerns are raised.

One issue is that State jurisdiction may be reduced by virtue of public international law, the law of the sea setting out State sovereignty and States’ sovereign rights according to a carefully drafted system of maritime zones. On the other hand, the exercise of State jurisdiction at sea, even if there are legitimate sovereign rights, may be difficult for practical reasons, as activities at sea are still hard to survey and State jurisdiction even harder to enforce.

The main issue however in case of large-scale maritime accidents is that they generate disputes with multiple foreign links. These cross-border disputes are often hard to be administered since there may not be a single court that has jurisdiction over all the interested parties neither a court that can easily assert its power over all these individuals.

1.4.3. The Theoretical Framework for International Arbitration

Arbitration is a dispute resolution mechanism in which parties agree to have their dispute resolved by a private third-party decision-maker, rather than through litigation in public courts. The parties agree in advance that the decision-maker’s ruling will be binding on them, rather than merely advisory.

Although arbitration is often described as a form of alternative dispute resolution, and it does indeed provide an alternative to court litigation, arbitration’s current success has resulted substantially from the support it has received from governments and courts. Consequently, while one of arbitration’s primary benefits is the freedom that it gives to parties to resolve their dispute in a manner different than that adopted in national courts, it must be remembered that arbitration is nonetheless heavily dependent on both national legal systems and national courts.

Arbitrators act within three layers of formal, rule-based constraints. First, the agreement of the parties determines the scope of the tribunal’s jurisdiction. It is obvious that arbitrations can only exist with the will of the parties, so the consensual theory - the theory that the culture of International Arbitration derives its force entirely from the parties’ choice, also called “the transnational approach” - cannot be ignored.

The rules of procedure constitute the second layer of constraints. Failure to abide by these rules can result in annulment of the award. Besides, a major arbitrators’ duty relates to procedural fairness, a notion that incorporates several elements, notably the responsibility to hear before deciding; the obligation to respect the contours of arbitral jurisdiction and the observation of the general duty of impartiality and independence. Another important obligation lies in an aspiration towards efficiency, to promote the optimum administration of justice. To the extent possible, the good arbitrator will seek to measure accuracy and fairness so as to arrive at a counterpoise that reduces the prospect of undue cost and delay.

Applicable national laws constitute the third layer of formal constraints on arbitral authority. Generally, the tribunal is bound by any mandatory provisions of law of the seat of arbitration; however, tribunals must also consider the public policy laws of other states where enforcement of the award is likely to be sought. Regarding this layer two more theories of International Arbitration may apply; the often called ‘jurisdictional theory’ and the ‘multilocal’ theory’. The former one emphasizes the fact that an international arbitration must take place somewhere, and therefore can only exist to the extent that a single national legal order - that of the jurisdiction that is the seat of the arbitration - permits it to exist. The later one sees arbitration as deriving not from a single order - that of the seat of arbitration - but rather from all the legal orders that are willing, under certain conditions, to recognize the effectiveness of arbitration and the award. Implicit in this theory is the recognition of the independent authority of the arbitrator, disconnected from national legal orders, choosing from amongst conflicting national rules and non-national principles, in both procedure and substance.

While the above framework remains in place, the increasing use of arbitration clauses in standard-form contracts has encouraged the debate about the poten

tial incorporation of collective actions into arbitration. Many have spoken out against the recognition of the possibility to file collective actions in arbitration, arguing that these actions do not comply with the principles characterizing this institution, especially its quickness, its informality, its voluntary nature and its flexibility. It cannot be obviated, however, that this practice is being successful in other parts of the world (especially in the United States) and, therefore, its feasibility and implementation should not be rejected. In fact, the EU bodies urge the Member States to consider the possibility to settle collective disputes by out-of-court proceedings.

The present study is a continuous interplay among the above concepts with the ultimate goal to provide a viable answer to the research question(s).

1.5. Research Methods

1.5.1. Legal Positive Analysis

The main methodology applicable to the research is the classical doctrinal approach. Legal-positive research is conducted to conceptualize the meaning of the main terms, such as mass claims, mass torts, class actions, collective redress, arbitration, arbitrability, arbitration agreement, consent, public policy, (consequential) loss, environmental damage, civil liability. In such a process both primary and secondary sources of law are used. Therefore, Conventions, Guidelines, Institutional Arbitration Rules, national laws, case law, literature, commentaries and the travaux préparatoires of the Conventions are studied and analyzed in order to provide better arguments for the claims of the research.

1.5.2. Comparative Analysis

While international treaties and principles undoubtedly apply, the topic discussed is primarily national law dependent. Therefore, the main analysis is made through the examination of particular national laws (mainly rules of a procedural nature). The jurisdictions chosen for that purpose are four, i.e. United States of America (USA), United Kingdom, France and Greece, thereby belonging to Common and Civil Law families;

For the conduct of this research, the United States jurisdiction is the “significant” legal system (benchmark). US law has long been recognized as one of the most friendly and familiar with methods of collective actions - in the form

of the unique worldwide phenomenon of class actions - and the use of alternative methods of dispute resolution - with a great emphasis on arbitration - thus turning United States into one of the main destinations for the resolution of large-scale disputes. Moreover, the recent US case law on class action waivers in consumer and employment agreements and the relevant debate generated therefrom as well as a series of court decisions compelling arbitration in seafarers’ injury claims are very pertinent to our analysis.

United Kingdom as traditional maritime player works as an antipode to the U.S. common law approach by stipulating the great differences within the common law family, both regarding the reluctance to widely adopt ADR collective redress methods and the interpretation of international maritime statutory provisions and concepts.

The activity of the French jurisdiction in the field of class actions, the debate on the arbitrability of environmental disputes, the amendments of the French Civil Code in relation to the arbitrability of the employment disputes and the country’s tradition and intense activity in the field of arbitration, both domestic and international, legitimize the choice of France as a suitable forum for this project too.

Finally, the case of Greece is very interesting for this particular study since, on the one hand, it has a very strong maritime tradition, being long time the first ship-owning country in the world, but, on the other hand, the use of arbitration is still limited in this jurisdiction, let alone the notion of collective forms of arbitration.

A main objective of this comparative study is to see whether the common elements found, through the similarities and differences of the annotated jurisdictions can provide solutions, on the one hand, as to how existing limitations regarding the use of arbitration in the particular categories of large-scale claims in certain jurisdictions could be diminished, on the other hand, how liberal ap

proaches should receive a stricter treatment. Towards this objective, a combination of macro and micro comparison techniques are used. More specifically, the national legislative framework and case law of the selected fora constitute the basic pillars of the comparative research. They are examined with the goal that a balance will be achieved between the general principles derived from the practice of arbitration, on the one hand, and the specific protected interests (e.g. those of weaker and third parties) on the other hand. The project’s international and comparative focus rests on the premise that the treatments of international arbitration in different national legal systems are not diverse, unrelated phenomena, but rather form a common corpus of international arbitration law which has global application and importance.

Conclusively, the legal-positive analysis in combination with a comparative study is considered the appropriate methodology to answer the research questions.

1.6. Relevance of the Research for Academia and for Society

Since the use of large-scale arbitration counts some decades, much has already been written regarding this device and the public policy concerns it creates. At the same time, large-scale dispute resolution, class and mass processes and mechanisms of collective redress have been already a field of research and commentary for some authors. Also, the areas of tort law and mass harm - including environmental mass harm - are specific fields in which there is considerable scholarship and literature. It appears though that there has not been much research on their interaction.

Specifically in the field of maritime law, even though there is plenty of material regarding maritime arbitration, this material deals almost exclusively with two-party contractual claims. Also, it seems that there has been little research in the area of collective redress for mass harm in maritime to date and therefore, a great need for further studies in this increasingly important area. For instance, in the field of marine pollution - a field which traditionally raises mass claims - despite the expressed concerns for the suitability and efficiency of the available dispute resolution mechanisms (i.e. national courts or pollution funds and corresponding claims facilities), nothing feasible has been actually proposed instead.

In this context, this research aims to provide the maritime community as well as all parties involved in or affected by the maritime activity with a useful and practical guide for the resolution of large-scale claims with the contribution of arbitration. Such research is undoubtedly relevant both to academia and society as it introduces and comments on the notions of mass claims and collective redress

in the field of maritime law while trying to give an overall answer on whether arbitration is capable of resolving mass contractual and/or tort maritime claims.

The spotlight of collective redress sets apart three different kinds of interests: private individual interests, collective interests and public interests. Therefore, the obvious challenge of this research was, by dealing with a number of innovative ideas and uncharted legal fields, to propose eventually a feasible and fair solution to the various and often opposing interests without falling into erroneous assumptions and simplistic conceptual equations for the sake of a homogenous solution.

1.7. Structure

This book, similarly with the initial research, is structured in three main parts and fifteen chapters.

Part A sets the general background to the research and the relevant theoretical framework. It consists of three chapters. Chapter One deals with the US origins of class action litigation and its main features as well as the notions of collective redress, representative and group actions in the European continent with reference also to specific jurisdictions. Chapter Two provides an outlook of arbitration as dispute resolution method capable of providing mass relief and refers to the concepts of class, mass and collective arbitration in the United States and Europe and the possible challenges they generate. Chapter Three recapitulates the main conclusions raised in the previous chapters and provides the research guidelines for the study of the specific categories of claims.

Part B deals with contract-based ship passengers’ claims - with a focus on cruise passengers - capable of being qualified as “mass claims” and the legal remedies available to them. It consists of five chapters. Chapter Four makes a general introduction to the operative events of mass claims and to some major casualties, widely reported in the international community. Chapter Five analyses the international European and national legal frameworks which apply in ship passengers with a focus on the claims covered and the dispute resolution methods available for their adjudication. Chapter Six analyses the use of arbitration in the resolution of ship-passenger disputes connecting the whole analysis with the possibility of arbitration in consumer disputes. Chapter Seven deals with the use of large-scale arbitration in passengers’ claims and the considerations it entails, by comparing the different legal traditions and frameworks. A great focus is given to the class action waivers included in may cruise line passage tickets and their validity. Chapter Eight draws the main conclusions from the previous analysis, comments on the status and evolution of large-scale arbitration worldwide and evaluates arbitration in relation to the parties involved.

Part C deals with tort-based ship pollution claims capable of being qualified as “mass claims” and examines whether arbitration can provide a valid alternative to the exclusive jurisdiction of national courts from a procedural and policy point of view. It consists of five chapters. Chapter Nine makes the introduction to the subject by setting the definitions and delimitations. Chapter Ten analyses the international legal framework applicable to ship-source pollution with a focus on the types of claims covered and the available dispute resolution provisions. It also comments on the challenges faced by the IOPC Funds. Chapter Eleven analyses the US legal framework for ship-source pollution and the available mechanisms in case of mass pollution harm. The greatest part of the analysis deals with the processes activated in response to the Deepwater Horizon disaster of 2010 and their critique. Chapter Twelve explores the use of arbitration in the resolution of mass claims arisen in the aftermath of marine casualties by comparing its function with the one of litigation and by commenting on the specific issues of arbitrability, consent, due process and policy. Chapter Thirteen assesses the use of arbitration based on the conclusions from the previous analysis.

Part A

Mass Harm & Collective Redress Mechanisms

CHAPTER I: Class Action Litigation: Origin AND features

I.1. Class Actions: Brief historical background

Although class action lawsuits have been prominent in the news for only the past century or so, many people are surprised to learn that such actions have been part of the legal system for hundreds of years. While many class actions involve relatively minor disputes, some cases have had significant impacts on law and society.

The origins of the modern class action, or “group litigation,” lie in seventeenth century English chancery procedures devised to settle disputes between two groups: agrarian tenants and their landlords, and parishioners and their clergymen.

Early group actions were filed by or against cohesive communal groups to enforce or define a custom of the manor or parish. These examples of early group litigation shared a number of distinct characteristics. In the first place, they were filed on behalf of, or against, close-knit groups whose members had expressly consented to being represented in the case by a few of their number. The substantive rights at issue were, by definition, common to all members because of their status in their communities. Due to stare decisis, the effect of the judgment on members of the groups would likely have been the same as if the suits had been filed solely on behalf of the individual plaintiffs. Thus, the procedural device made little, if any, difference in the first class actions.

In the United States, the practice of group litigation was formalized in 1843 with the adoption of the Federal Equity Rule 48, which provided that “where the parties on either side are very numerous, and cannot, without manifest inconvenience and oppressive delays in the suit, be all brought before it, the

court in its discretion may dispense with making all of them parties, and may proceed in the suit, having sufficient parties before it to represent all the adverse interests of the plaintiffs and the defendants in the suit properly before it. But in such cases the decree shall be without prejudice to the rights and claims of all the absent parties.”

The first indication of a court recognizing its ability to collectively redress a class of people came in the landmark 1853 case of Smith v Swormstedt, where it was held that: Where the parties interested in the suit are numerous, their rights and liabilities are so subject to change and fluctuation by death or otherwise, that it would not be possible, without very great inconvenience, to make all of them parties, and would oftentimes prevent the prosecution of the suit to a hearing. For convenience, therefore, and to prevent a failure of justice, a court of equity permits a portion of the parties in interest to represent the entire body, and the decree binds all of them the same as if all were before the court. The legal and equitable rights and liabilities of all being before the court by representation, and especially where the subject-matter of the suit is common to all, there can be very little danger but that the interest of all will be properly protected and maintained.

In an effort to provide more uniformity in the conduct of collective redress cases, formal introduction of a class action mechanism took place in 1938, with the enactment of Rule 23 of the Federal Rules of Civil Procedure (FRCP). It then took nearly three decades for class action to be fully implemented into US civil procedure, with the 1966 issuing of the new version of Rule 23 by the US Supreme Court. Since then, class action has been fiercely criticized by a number of opponents, to the point of starting, in the 1970s, what has been described as a “holy war”.