UK - The UK government will not introduce class-action legislation, as it would open the floodgates for lawsuits against Royal Bank of Scotland (RBS), a leading pensions lawyer has argued.
Speaking to IPE, Dominic Auld of Labaton Sucharow said that while he believed there was interest among UK institutional investors for class-action laws similar to those in the US, the UK government was unlikely to support any such legislation.
"The current government has no interest in making it easier to sue RBS because they are the current owner of RBS," he said, referring to the 83% stake the UK holds in the institution following a bailout during the height of the financial crisis.
"RBS is a poster child for 'can you bring a lawsuit like this in the UK?'" he added.
Auld noted that a recent court ruling, Morrison vs. National Australia Bank, had limited the reach of US securities laws, as it asserted only shares traded on US exchanges could be taken into consideration in any class-action suit.
Because the ruling was applied retroactively, it had resulted in a number of cases against both RBS and BP being dismissed.
He said that a number of US law firms had been in touch with UK lawyers, attempting to find consensus on how the class-action system could be replicated in the UK.
"The UK has made some noises about legislative changes that would bring them closer to the US system for prosecuting class actions and prosecuting in the securities arena - but it hasn't moved there," he said.
He said the reason institutional investors sued in the US was that, under current laws, no costs were incurred by them, as it worked on the basis of 'no win, no fee', meaning a pension fund taking action in court was unexposed to any downside risk.
Auld also argued that some funds were increasingly seeing lawsuits as part of their governance tools and noted that a number of the people in charge of litigation - where there was not a separate department - were often the heads of environmental, social and governance departments.
Speaking of the Ontario Teachers' Pension Plan, at CAD107.5bn (€82bn) one of the largest pension funds in Canada, he said: "They want to be publicly perceived as the kind of activist investor that will take you to court if they have to."