This week the Law Society Gazette published an update in the Smyth v British Airways PLC & Anor case, highlighting the recent High Court decision to reject the £319 million group claim against British Airways and easyJet after Mr Justice Davison observed a “lack of transparency regarding [the claimant Claire Smyth]’s motivation, funding and suitability”.
This is yet another case that shines a light on the dangers of some group action claims and the urgent need for greater scrutiny of the financial motives driving some litigation.
The case at hand
In a case that started in 2022, Claire Smyth sought to sue British Airways (BA) and easyJet over a BA flight cancellation, potentially representing up to 23 million passengers who had yet to receive compensation for delayed flights across both airlines. In a hearing in July this year, it emerged that Smyth received funding for the case from her employer, with the two standing to gain 24% of any recovered compensation—potentially up to £70 million.
[Mr Justice] Davison subsequently set out that he did not accept Smyth’s motivation “lies in a desire to secure redress for consumers. She has had no prior involvement in such activities”.
This claim is a sobering reminder of why we need more transparency and safeguards for consumers.
Many cases going through the courts today are being brought for financial gain rather than legitimate grievances. The High Court ruling should serve as a wake-up call that the courts are not a venue for financial speculation but are meant to be places where genuine, merited disputes are resolved.
The need for transparency and reform
One of the key issues raised by this case is the total lack of transparency in litigation funding. Currently, litigation funders are self-regulated, with only 15 out of the approximately 70+ funders opting to join, and negligible consequences for breaking its code of conduct. This lack of transparency can lead to situations where the true motivations behind a lawsuit are obscured, making it difficult for judges and opposing parties to assess the validity of a claim.
At Fair Civil Justice, we continue to call for greater transparency in litigation funding to ensure funding provides access to justice for those who genuinely need it. There should be requirements on litigation funders to provide transparency on their involvement, including their financial stake, source of funding and the terms of their agreement with the claimants.
As the Court rightly noted, both British Airways and easyJet already provide free alternative dispute resolution (ADR) mechanisms for direct compensation for delayed flights. ADR options like this should always be explored as a first step, as they provide effective and efficient redress for consumers and relieve the burden on the courts.
FCJ firmly believes that ADR is an integral part of the civil justice system. Costly litigation should only be the last port of call for consumers.
Preserving the principles of the legal system
In summary, the High Court’s judgment in Smyth v British Airways PLC & Anor is a step in the right direction to protect the integrity of the legal system. By refusing to entertain a case that was clearly driven by financial motives rather than by a genuine grievance, the Court has sent a strong message that these type of claims will not be tolerated.
Fair Civil Justice hopes this ruling prompts a broader conversation about the risks of litigation funding in the UK justice system. Litigation funding must be made more transparent, with stringent safeguards in place to prevent abuse, discourage the pursuit of unfounded claims and prioritise justice over profit.
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Comment
The Times: “Class Actions and The Row over Litigation Funders”
Ensuring Justice over Profit
This week the Law Society Gazette published an update in the Smyth v British Airways PLC & Anor case, highlighting the recent High Court decision to reject the £319 million group claim against British Airways and easyJet after Mr Justice Davison observed a “lack of transparency regarding [the claimant Claire Smyth]’s motivation, funding and suitability”.
This is yet another case that shines a light on the dangers of some group action claims and the urgent need for greater scrutiny of the financial motives driving some litigation.
The case at hand
In a case that started in 2022, Claire Smyth sought to sue British Airways (BA) and easyJet over a BA flight cancellation, potentially representing up to 23 million passengers who had yet to receive compensation for delayed flights across both airlines. In a hearing in July this year, it emerged that Smyth received funding for the case from her employer, with the two standing to gain 24% of any recovered compensation—potentially up to £70 million.
[Mr Justice] Davison subsequently set out that he did not accept Smyth’s motivation “lies in a desire to secure redress for consumers. She has had no prior involvement in such activities”.
This claim is a sobering reminder of why we need more transparency and safeguards for consumers.
Many cases going through the courts today are being brought for financial gain rather than legitimate grievances. The High Court ruling should serve as a wake-up call that the courts are not a venue for financial speculation but are meant to be places where genuine, merited disputes are resolved.
The need for transparency and reform
One of the key issues raised by this case is the total lack of transparency in litigation funding. Currently, litigation funders are self-regulated, with only 15 out of the approximately 70+ funders opting to join, and negligible consequences for breaking its code of conduct. This lack of transparency can lead to situations where the true motivations behind a lawsuit are obscured, making it difficult for judges and opposing parties to assess the validity of a claim.
At Fair Civil Justice, we continue to call for greater transparency in litigation funding to ensure funding provides access to justice for those who genuinely need it. There should be requirements on litigation funders to provide transparency on their involvement, including their financial stake, source of funding and the terms of their agreement with the claimants.
As the Court rightly noted, both British Airways and easyJet already provide free alternative dispute resolution (ADR) mechanisms for direct compensation for delayed flights. ADR options like this should always be explored as a first step, as they provide effective and efficient redress for consumers and relieve the burden on the courts.
FCJ firmly believes that ADR is an integral part of the civil justice system. Costly litigation should only be the last port of call for consumers.
Preserving the principles of the legal system
In summary, the High Court’s judgment in Smyth v British Airways PLC & Anor is a step in the right direction to protect the integrity of the legal system. By refusing to entertain a case that was clearly driven by financial motives rather than by a genuine grievance, the Court has sent a strong message that these type of claims will not be tolerated.
Fair Civil Justice hopes this ruling prompts a broader conversation about the risks of litigation funding in the UK justice system. Litigation funding must be made more transparent, with stringent safeguards in place to prevent abuse, discourage the pursuit of unfounded claims and prioritise justice over profit.
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All the latest case studies, findings and updates.
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