Class action against card firms boosted by court judgment

The Court of Appeal rejected a challenge to litigation funding agreements between lawyers, ‘class representatives’ and funders of class action lawsuits last week in a boost to collective proceedings against Mastercard and Visa on behalf of UK travel businesses.

The UK Competition Appeal Tribunal (CAT) gave the go-ahead last August to proceedings against Mastercard and Visa for repayment of fees on commercial card payments – specifically the multilateral interchange fees (MIFs) set by Mastercard and Visa on transactions since June 2016.

Lawyers estimate more than £4 billion is owed to UK travel, hospitality and retail companies.

More: Class action against Visa and Mastercard gets go-ahead

The Court of Appeal ruled on appeals by Visa, Mastercard, Sony and Apple against CAT rulings on collective proceedings between November 2023 and March 2024, which challenged the enforceability of ‘litigation funding agreements’ (LFAs). They argued such LFAs should be categorised as damages-based agreements (DBAs) and deemed unenforceable.

However, the Appeal Court judges noted: “Given the entire landscape of collective proceedings in the CAT is one where third‑party litigation funding of claims is required, and . . . the proceeds are the source of the funder’s return, the appellants’ argument [would produce] the absurd result that funding under LFAs would become practically impossible.”

They ruled: “The Court will not interpret a statute to produce an absurd result unless clearly constrained by the words [of] Parliament.”

The judges also dismissed the argument that an LFA creates a “perverse incentive for lawyers and funders to focus on the largest cases”, concluding: “There is simply no evidence to support the contention. The argument is without merit. These appeals must all be dismissed.”

Jeremy Robinson, competition litigation partner at law firm Harcus Parker who is acting on behalf of class representatives in the proceedings against Visa and Mastercard, welcomed the Appeal Court’s “very clear decision”.

He noted: “This judgment safeguards access to justice in collective proceedings, ensuring important cases – such as those challenging Mastercard and Visa’s unlawful card fees – can continue.”

The action against Mastercard and Visa is fully funded, insured and free to join owing to the funding arrangements. Large businesses, with turnovers of £100 million or more, had to register to join the proceedings by February, but smaller businesses are automatically included unless they opt out.

• For more details, visit commercialcardclaim.co.uk