In a judgment issued on 18 December 2025, the UK Supreme Court declined to allow class action proceedings against a number of big international banks to proceed on an “opt-out” basis.
In Evans v Barclays Bank, the UK Supreme Court unanimously found for the defendant banks and reinstated the UK Competition Appeal Tribunal’s (CAT) earlier refusal to allow the relevant claims to proceed as a class action on an opt‑out basis. In this article, we take a closer look at the case and its potential relevance to class actions in New Zealand.
Relevant background: opt-in versus opt-out
As relevant background, it is necessary to understand that there are two ways in which a class action proceeding (also referred to as a “collective” or “representative” proceeding) may be brought:
Opt-in proceedings are proceedings brought by an individual claimant on behalf of all people who share the same interest as that claimant (the class), but class members need to proactively elect to be part of the class (“opt-in”). If an otherwise eligible class member does not opt-in by a certain date, they are excluded from participation in the claim.
Opt-out proceedings are proceedings also brought by an individual claimant on behalf of class members who share the same interest as that claimant (the class), but class members are automatically included as part of the claim unless they take a positive step to remove themselves (“opt-out”).
Practically, opt-out proceedings allow for larger classes as they do not require any initial engagement from the class members. Litigation funders, who more often than not drive class action litigation, tend to prefer opt-out proceedings as, in general, a larger number of class members will equal a higher return.
The plaintiffs’ claim
The plaintiff sought to bring what is known as a ‘follow-on’ class action. That is, a claim that ‘follows on’ or ‘piggybacks’ from past regulatory investigations or enforcement actions. The plaintiff’s proposed claim followed on from the European Commission’s 2019 ‘Forex’ settlement decisions that found infringements by the defendant banks of EU competition laws in the “G10” spot foreign exchange market between 2007 and 2013.
The plaintiff sought to bring claims for losses caused by those infringements on an opt-out basis on behalf of those who transacted with the banks, and those who transacted with other financial institutions, during the infringement period. As a result, the proposed class included both large, sophisticated entities who suffered significant losses, and smaller entities or individuals who suffered more modest losses. The total claim was estimated to be worth up to £2.7 billion.
Lower courts’ decisions
The CAT Rules 2015 provide a statutory regime for the certification of competition class actions in the UK (which is the only sort of class action that can be brought in the UK). The Rules give the CAT broad discretion to certify actions on an opt-in or opt-out basis. Two specific factors are to be considered: (a) the strength of the proceeding; and (b) whether opt-in proceedings are practicable1.
The CAT, in its “important gatekeeper function”2, refused to certify the plaintiff’s proposed action on an opt-out basis.3 It considered there were significant issues with how causation could be established between the breach (as established in the European Commission decisions) and the loss the plaintiff alleged. That weakness was considered a powerful factor against opt-out orders, reinforced by the CAT deciding that opt-in proceedings were practicable in this case (despite the fact they would not be pursued).
The Court of Appeal overturned the CAT’s decision4. In doing so, it considered the CAT had erred in its assessment of the merits of the case (which should generally be a neutral factor in deciding whether proceedings should be opt-in or opt-out) and erred in its assessment that opt-in proceedings were practicable.
Supreme Court decision
The UK Supreme Court overturned the Court of Appeal’s findings and reinstated the CAT’s decision, agreeing with its assessment of the factors relevant to opt-in versus opt-out. Specifically:
Weakness of the plaintiff’s claim
- The Supreme Court acknowledged that while opt-out proceedings can achieve mass redress, they confer substantial legal and commercial advantages on claimants and carry the risk that defendants may be driven to settle unmeritorious claims by their sheer size and the heavy costs of defending them5.
- The weakness of the plaintiff’s claim was properly regarded by the CAT as a factor weighing strongly against opt-out proceedings, notwithstanding his claim was not so weak as to be struck out6.
Practicability of opt-in proceedings
- The CAT was entitled to find (as it did) that a group of sophisticated financial institutions with larger losses had a viable claim which could be brought by way of opt-in proceedings, even though those institutions did not show any interest in doing so7.
- Although it would not be practicable for the group of individuals and entities with smaller claims to pursue opt-in proceedings, the value of the claims was a tiny fraction of the aggregate claim and did not justify authorising opt-out proceedings for the entire combined class8.
Other policy considerations
- The Court of Appeal was wrong to suggest that facilitating the vindication of rights and deterring future wrongdoers are factors which point in favour of opt-out proceedings, at any rate without mentioning that those factors are counterbalanced by the need to safeguard the rights of defendants9.
- A comparison between the advantages and disadvantages for each side under each procedure is required in order to see if opt-out proceedings are justified10.
Impact for New Zealand
Unlike the UK, New Zealand does not have a statutory class actions regime. Rather, our courts assess if and how a class action is to proceed by reference to judgments in earlier cases. We discuss this in more detail in our class actions report published earlier this year (see here).
One particular area where our judge-made class action regime differs from the UK is that the UK statute is neutral as between opt-in and opt-out, whereas in New Zealand, the starting presumption is to go with the representative plaintiff’s preference unless there is good reason to depart from that11. As to that preference, the New Zealand Supreme Court has given encouragement to opt-out proceedings as a means to facilitate access to justice12.
Notwithstanding those differences, the UK Supreme Court’s decision is likely to be of relevance to New Zealand courts. That is particularly so given that New Zealand has only allowed opt-out class actions since 202013. As a result, our case law on “opt-out” is still being developed, and overseas cases are often influential.
The following is of particular note:
- First, the UK Supreme Court described the CAT as a “gatekeeper”, and here in New Zealand our High Court plays a similar role. Before class actions commence, our High Court must approve them on an opt-in or opt-out basis. Evans provides useful guidance, from the highest court of an influential jurisdiction, of the factors that ought to go to the Court’s discretion on this, including the merits of the proposed class action and the burden that large opt-out class actions pose on defendants.
- Second, the UK Supreme Court observed that access to justice is something that both claimants and defendants are entitled to14. In that context, it was relevant that the banks had already either paid substantial fines to the regulator or been granted immunity from fines in return for providing information and co-operating in a regulatory investigation.
- Finally, the UK Supreme Court has clearly signalled that opt-out will not always be appropriate. This is a shift from earlier judgments in the UK and may be noteworthy in jurisdictions where opt-outs are a recent phenomenon (such as New Zealand).
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1 Competition Appeal Tribunal Rules 2015, r 79(3).
2 Supreme Court judgment, above n 1, at [2].
3 Michael O’Higgins FX Class Representative Ltd v Barclays Bank [2022] CAT 16, [2022] Bus LR 1334.
4 Evans v Barclays Bank PLC [2023] EWCA Civ 876, [2024] 1 All ER (Comm) 573.
5 Supreme Court judgment, above n 1, at [88]-[96].
6 At [73]–[109].
7 At [112]-[136].
8 At [122]-[127].
9 At [138].
10 At [139]–[141].
11 Southern Response Earthquake Services Ltd v Ross [2020] NZSC 126, [2021] 1 NZLR 117 at [95].
12 At [102]-[103] and [108].
13 Above n 13
14 Supreme Court judgment, above n 1, at [140].
Disclaimer: This publication is necessarily brief and general in nature. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.
