Class action lawsuits against multinational companies may not be viable in future because of the government’s misconceived reforms of the civil justice system.
Andy Slaughter MP (Labour, Hammersmith) is the shadow justice minister
The Guardian reported today that “class action” lawsuits against multinational companies would not be viable in future because of the government’s misconceived reforms of the civil justice system.
In their zeal to fix the mythical “compensation culture”, something even their own consultation (PDF) said was more a product of media and political rhetoric than fact, the Tory-led government is going to disenfranchise hundreds of thousands of the most vulnerable people in the world in their fight for justice.
The Guardian reports, the UN secretary general’s special representative for Business and Human Rights, John Ruggie, whose remit for the past few years was to look at how we can enhance accountability of large multinationals, has deep concerns about the “reforms”.
In the letter to Jonathan Djanogly, the justice minister, he says:
“I am (also) concerned by the potential impact that the proposed reforms may have on the position of legitimate claimants in civil actions alleging business-related human rights harms, particularly in cases involving large multinational companies.
“Three related aspects of the proposed reforms could, when implemented together, constitute a significant barrier to legitimate business-related human rights claims being brought before UK courts in situations where alternative sources of remedy are unavailable.”
In short, multinationals that poison, maim or kill will be off the hook. The Trafigura case, which was brought by Leigh Day & Co on behalf of 30,000 Ivorians and is a celebrated example of taking corporate wrongdoers to task, would never have happened under Clarke’s plans.
As Martyn Day says:
“We were facing Trafigura – one of the largest private companies in the world, worth many billions – and the costs in the case were astronomic. The expenses we had to pay out alone ran to many millions and we had a team of 50 lawyers working on the case. We simply could never have run the case if we did not have the prospect of obtaining the success fee from the defendants.
“There is no question but that our Ivorian clients would never have received justice if the proposed bill was in place at that time.”
This is what happened in the United States where the hyperbole of the right on the “compensation culture” led to tort reform that put huge procedural hurdles in the path of those seeking restitution for corporate malfeasance.
And it’s not just these human rights cases that wouldn’t proceed. Last week we exposed how HM Revenue and Customs (HMRC) is lobbying the Ministry of Justice on behalf of insolvency litigators, who sue dodgy directors on behalf of insolvent companies. They will not be able to practice under the planned reforms. Given HMRC is a major creditor for many insolvent firms, the plans will actually be a burden on the public purse!
It’s time for this Tory-led government to rethink their one-size-fits-all approach to remodelling the civil justice system that threatens to leave huge swathes of law impossible to enforce.Like this article? Sign up to Left Foot Forward's weekday email for the latest progressive news and comment - and support campaigning journalism by making a donation today.