Thank you for sharing!

Your article was successfully shared with the contacts you provided.
The trend toward the globalization of U.S. business continues to accelerate and has given rise to a need for coordinated, global legal services. As a result, law firms generally, and U.S. law firms in particular, have also become more international in their outlook. Many U.S. firms have offices throughout Europe, whether it be in London (the traditional gateway to Europe), Paris, Geneva, Frankfurt, or further afield. These firms have been increasingly emphasizing litigation and dispute resolution. This development, in turn, has resulted in signs of an expansion of the U.S. “litigation culture” into Europe. DUTCH CLASS ACTIONS One of the most pronounced elements of the U.S. litigation culture is the class action. As one of the first such steps in Europe, the Dutch Parliament is changing the way class actions are litigated in the Netherlands and moving toward the U.S. system. The Parliament has expanded the scope of class actions to make settlement in a representative action binding on all class members who do not opt out. There are also developments in France. In an effort to strengthen consumers’ rights, President Jacques Chirac recently introduced proposals to modify French law so that consumer groups and associations could bring class actions. Both the Dutch and French changes appear to be part of a broader European shift toward an American-inspired litigation model. Changes include a growing plaintiffs bar and an increased desire by Europeans to partake in class actions targeted at financial, mass tort, consumer, and products liability litigation. Recent cases involving Ahold, Parmalat, and Royal Dutch/Shell certainly provide ample incentive for securities class-action-style litigation in Europe. Ironically, the United States has faced recent efforts to restrict class actions. Some European companies, however, actually see the benefits of not having to defend multiple actions arising from the same or a similar set of facts, and associated savings in costs and legal fees. Take, for example, a recent case in Germany involving Deutsche Telekom, which includes 2,100 claims filed by 754 law firms. The Deutsche Telekom case is likely to take up to 15 years to adjudicate, because German law requires judgment to be given in each individual case. In reaction, the German government has now introduced a bill in Parliament that would allow courts to use test cases to resolve such litigation. Other countries may follow a similar route. Of course, it could take some time before U.S.-style litigation gains a permanent foothold in Europe. The culture of litigation is not nearly as ingrained in Europe as it is in the United States. In fact, going to court remains the exception rather than the rule in civil disputes. For the time being, the procedural structures necessary for class actions involving large numbers of plaintiffs remain underdeveloped in Europe. Even where such structures exist, they are rarely fully deployed. For instance, English procedural law acknowledges the concept of a group action, essentially in the form of a consolidation of similar individual cases, but English courts have taken a conservative view of class actions, and have, for example, dismissed an attempt to use the group action procedure to advance U.S.-style tobacco litigation. Litigation costs also remain an effective deterrent to speculative litigation: Court fees throughout Europe are comparatively high. In addition, rules about costs also differ from those in America. The loser generally pays the winner’s costs. Furthermore, with some limited exceptions, contingent fees, which have driven mass tort and class action litigation in the United States, are forbidden in Europe. Lawyers, therefore, cannot generally take cases on contingency, and losers must pay their own lawyers’ fees as well as those of their opponents. So far, the traditional European framework for litigation has, therefore, resisted developing powerful U.S.-style plaintiffs litigation practices. But with the trend toward global law firms, U.S. lawyers are looking for ways to bring their expertise to Europe. In handling class actions effectively, they will have a clear head start over the European bar, which will potentially provide U.S. practices (both from the plaintiffs and defense bar) with a significant economic advantage. Indeed, many U.S. firms have started to educate their European clients about the class action process in anticipation of things to come. One of the areas that may well be at the forefront of further developments of a U.S.-style litigation culture is competition enforcement by the victims of alleged antitrust violations. Traditionally, Europeans have punished corporate misconduct with regulatory action, rather than through private remedies. But as the European Commission and national authorities look for ways to deal with the growing enforcement workload, civil actions may well take a more prominent role. For instance, the recent modernization of EC competition law has resulted in a shift toward encouraging private actions for damages related to violations of competition law in national courts and, in particular, in the area of price fixing. The European competition-law landscape is changing and is continuing to evolve, with private damages claims on the rise. NO DISCOVERY, NO JURIES It is, of course, possible that there will be a significant increase in private enforcement actions due to the substantive, procedural, cultural, and economic obstacles that remain. For one thing, EU member states do not permit U.S.-style discovery (with the exception of a limited version in England). Also, Europe still lacks, and is generally opposed to, juries in civil trials. And finally, the absence of contingency fees and treble damages means that many claims simply make no economic sense to pursue and enforce. Plaintiffs will only be able to recover compensatory damages for the actual losses suffered. What, then, about other forms of dispute resolution? Interestingly, the debate regarding the shift toward the U.S. litigation culture originated in the field of arbitration. As more U.S. companies participated in international commercial arbitration, more U.S. lawyers and arbitrators then brought in more exposure to U.S. litigation procedures, including discovery and document production, party-appointed experts, party witnesses, counsel’s cross-examination of witnesses, and an increased reliance on oral hearings rather than on the written procedures that came out of the Continental legal tradition. Indeed, some European observers are concerned that the arrival of U.S. lawyers means that arbitration will turn into a form of offshore U.S. litigation, and that discovery, depositions, challenges to arbitrators, simultaneous litigation proceedings, and other tactical maneuvers will become commonplace in international arbitration. Some even say that U.S. lawyers will be tempted to perform to a nonexistent jury at arbitration hearings. They fear that arbitration will no longer be faster, cheaper, and more flexible than litigation. In reality, though, many U.S. firms active in the international arbitration arena already have decades of experience with the process. Arbitral tribunals have long ago learned to bridge the divide between parties from different countries and different legal systems by adopting the “best of both worlds” approach to procedural issues. The flexibility of arbitration has always permitted the blending of procedural techniques to suit the requirements and expectations of the parties. Furthermore, many international arbitration institutions continue to work on the harmonization of procedures. The resulting development of international arbitration may, in the end, strengthen arbitration and produce better and fairer awards. Intellectual property is another area in which there are indications of U.S. litigation culture moving into Europe, with regard to both patent and trademark enforcement. Laws concerning where and whether actions can be brought for certain types of infringement vary from country to country. U.S. firms are teaming up with their foreign offices or other firms in Europe to engage in global enforcement of families of patents. U.S.-style strategy and approaches often become an integral part of these actions. Trademark enforcement has had a true global dimension for the past several years as companies depend upon branding to market their products effectively and as the need to combat the influx of counterfeit products has increased. Trademark practitioners in Europe have begun to adopt the U.S. model of taking more-direct corrective action as well as proceeding with infringement or counterfeit seizure actions in the courts. IT’S A SMALL WORLD So is European litigation and dispute resolution being Americanized? The world of litigation is certainly becoming smaller, and its global dimension continues to grow. While the internationalization of arbitration is already a fact of life, talk of U.S.-style litigation overrunning Europe may be premature for now. Nevertheless, the international business climate and the European Union legal system continue to evolve. The EC has already realized that it will be increasingly difficult for authorities to police and punish corporate misconduct, and it has identified private enforcement action as a way forward. The result will be an increasing privatization of competition-law claims, and other areas of law, such as securities and product liability, are bound to provide further stimulus for the development of class actions. After all, most trends from America eventually make it to Europe. But, as we know, they’ll certainly be adapted to suit European culture and flair. Mark Wegener is chairman of Howrey’s global litigation practice group, based in Washington, D.C. Peter Fitzpatrick heads Howrey’s litigation practice in London.

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.