As globalization results in the spread of American products, ideas, and services around the world, it is also resulting in the proliferation of U.S.-style class actions.
Outside of the United States, many countries have adopted or are considering the adoption of practices that incentivize frivolous lawsuits, such as opt-out class actions, contingency fees, and unregulated third party litigation funding, bringing U.S.-style litigation abuses to foreign shores.
The “export” of U.S. practices abroad along with the “import” of foreign cases into U.S. courts – increases lawsuit abuse internationally. These trends are a significant concern for businesses around the world.
Over the past 15 years, there has been a sharp rise in lawsuits brought against American companies, as well as foreign companies with a substantial U.S. presence, that are premised on alleged personal or environmental injuries occurring abroad. These cases raise the question of whether U.S. courts should be the venue for cases concerning conduct occurring outside the territory of the United States. They have also been characterized by controversial and abusive tactics by plaintiffs and their lawyers.
The United States has the costliest legal system in the world, but we may not hold that record for much longer. To date, countries such as Canada, the UK, France, Germany, Italy, Poland, the Netherlands, Israel, Japan, South Korea, Hong Kong, Australia, Brazil, Chile, Argentina, and Mexico - to name a few - have all considered or already allow some form of class actions. In addition, the European Commission is also considering other forms of collective redress in several of its legislative proposals.
While foreign civil justice systems are not identical to the U.S. system, they can nevertheless create opportunities for similar abuses, such as settlements that provide substantial compensation to lawyers, while failing to provide much benefit to consumers.