Between ever-evolving corporate expectations around ESG, technology moving faster than legislation can keep up with and the aftermath of the Covid-19 pandemic continuing to trigger novel points of litigation, the disputes landscape in England and Wales is as fertile as ever.
In this article, Commercial Litigation partner Elaina Bailes and associate Aleks Valkov review four of the key areas of commercial and insurance litigation to watch in 2025.
The continued progress of securities litigation
Investor litigation in the UK is on the rise. The number of claims filed in English courts under Section 90, Section 90A, and Schedule 10A of the Financial Services and Markets Act 2000 (FSMA) has surged in recent years, partly linked to the growth of the litigation funding market making large group claims more viable.
The increased viability of claims corresponds with a rise in appetite for them: shareholders are increasingly willing to hold companies accountable for serious governance failures by suing for compensation for stock-drop losses. While there is currently a lack of final judgments to provide a ‘breadcrumb trail’ for other claimants to follow, most cases are resolved through confidential settlements before reaching trial. This means investors are guaranteed some degree of compensation.
As for individual cases of note, judgment is expected early in the year following the Court of Appeal hearing in December in Wirral Council v Indivior PLC/Reckitt Benckiser Group PLC. This is a must watch as the High Court’s decision was the first and only judgment on whether a representative action under CPR 19.8 could be used in securities claims brought pursuant to section 90 and section 90A/Schedule 10A (“s90A”) of the FSMA. The case engages key policy issues around the use of opt-in or opt-out regimes for group claims, and could change the securities litigation landscape in England and Wales significantly. An eventual final decision by the Supreme Court seems likely.
While most claims in the English courts are brought by institutional shareholders, the regime’s effectiveness in protecting ordinary retail investors remains under scrutiny. Allianz Funds Multi-Strategy Trust and Others v Barclays PLC was another groundbreaking litigation as it represented the first consideration of whether market/price reliance would satisfy the reliance requirement in section 90A/Schedule 10A. The judge’s recent decision on this case provides a disappointing conclusion for investors in UK markets, depriving otherwise eligible ‘automated’ investors from a means of redress via such claims. The case settled shortly afterwards.
ESG litigation
In tandem with the growth of securities group actions, a broader panoply of ESG-related lawsuits seeking to hold polluters to account for their emissions could be on the horizon. Globally there was a rise in ESG-related litigation over 2023 and 2024, although there were fewer high profile cases in the UK in 2024.
Looking from a global perspective, the Hague Court of Appeal potentially dealt a blow to the cause of environmental activist shareholders in November 2024 when it overturned a prior ruling that required the Shell group to cut its carbon dioxide emissions, including those from its own operations, third-party suppliers and even end-users, by 45% by 2030 compared to 2019 (the ‘absolute reduction obligation’). However, the case also confirmed a duty of care under Dutch law for companies to mitigate the effectiveness of climate change and reduce their CO2 omissions, which is significant for any company operating within Europe and could encourage future claims.
With the continuing gig economy, we also expect to see a continued interest in workers’ rights cases (akin to those brought by cab drivers against tech and transport companies) that fall both into the governance and social camps.
However, whether the Supreme Court’s decision in the landmark PACCAR case will have any long-term impact on the UK litigation funding market remains to be seen – ESG claims are often group claims that may be third party-funded.
The UK government and regulatory bodies have been placing more emphasis on ESG disclosures and compliance in recent years, at the same time as consumers call for more transparency and accountability for corporations. Companies are under pressure to meet these standards, and any failure to do so can lead to legal action.
Covid fraud claims on the rise
The pandemic created an environment ripe for fraudulent activities, both in terms of abuse of government funds and fraud within and against private companies. This surge in fraudulent claims is likely to lead to an increase in civil litigation as authorities and businesses seek to recover misappropriated funds.
As authorities continue to scrutinize the vast number of claims made during the pandemic, more instances of fraud are being uncovered. Additionally, new legislation aimed at cracking down on pandemic-related fraud is expected to enhance detection and enforcement efforts. Corporate fraud also often takes some time to uncover, and this may only happen after a company goes insolvent and directors are replaced by insolvency practitioners who investigate its affairs. The combination of these factors means that more fraudulent parties are likely to be identified and prosecuted, leading to a rise in claims.
Technology, cybersecurity and data breaches
In the previous year, we saw a number of high-profile claims relating to or involving the IT sector, including the now infamous bid by Dr Wright to prove that he is Bitcoin’s creator Satoshi Nakamoto. It seems that this trend will continue, including in the sphere of competition litigation.
The impact of AI in relation to both giving rise to disputes and being used to assist in disputes cannot be overstated. The Supreme Court has already determined that AI cannot be the owner of patent rights, but the Court is now due to consider important issues relating to the patentability of AI software as a whole. More importantly, generative AI could raise a whole raft of issues relating to professional indemnity insurance, policy wording, and general professional negligence. We are, however, optimistic and foresee significant changes in the way firms conduct litigation.
Cybersecurity, cyber resilience and data breaches can lead to potentially high-profile litigation, primarily driven by the need to address the financial, reputational, and regulatory impacts of such incidents. New technologies are in use in all business sectors, and the increasing frequency and sophistication of cyberattacks (at times using increasingly sophisticated AI) have made data breaches more common and severe.
Businesses may encounter contractual disputes with partners and clients. Many contracts include clauses that require parties to maintain certain cybersecurity standards. The CrowdStrike outage, which had ramifications of all kinds of businesses worldwide, is a great example of the impact such systems can have on businesses.
Litigation based on GDPR breaches continues to be a matter of concern for companies. A number of commentators have suggested that these will continue and that, considering the trend set in the US, it might also grow to affect directors rather than just the company itself.