Precedent setting group litigation order

We acted for a major European motor manufacturer involved in a Group Litigation Order (GLO) against the Inland Revenue in a claim known as the ACT Group Litigation. This was the first GLO made by the Chancery Division of the High Court.

GLOs are group actions involving common issues of law and fact, and are designed to avoid multiplicity of court proceedings and save legal costs. In the US class actions of this type, particularly group claims by investors, are common.

The ACT Group Litigation involved the payment by companies of advance corporation tax. This tax has now been abolished and was deemed discriminatory by the European Court of Justice because UK companies were entilted to elect to defer paying the tax but a UK subsidiary company with its parent company overseas was not entitled to make this election. Therefore many European based companies, which had subsidiaries in the UK, could not defer paying this tax and save money.

One of the important aspects of this case involved clarifying the scope of a restitution claim. In a judgment of the High Court in July 2008, it was determined that a claim form and the issues under the GLO had to be read together when considering whether a valid claim for mistake had been made. This decision is likely to strengthen the growth of group actions in the UK.

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