Banking & financial disputes

The Tesco shareholder action: will it go all the way to trial?

The Tesco group shareholder action is due to go to trial at the High Court in October 2020. The trial is eagerly anticipated but it remains to be seen whether it will go ahead. Jonny Mitchell and Janine Alexander give their thoughts.


The Tesco group shareholder action is due to go to trial at the High Court in October 2020. Tesco shareholders are using the cause of action under Section 90A FSMA 2000 to seek to recover their loss in relation to Tesco’s false accountancy scandal in 2014. No claim under Section 90A FSMA 2000 has yet been to trial, and the trial is eagerly awaited by many lawyers and investors, who hope that a judgment in these proceedings (even at first instance) could bring some clarity to the current uncertainties in the law around Section 90A FSMA 2000.

However, a recent interim decision in the proceedings has confirmed that one of the two Claimant groups has now settled with Tesco on confidential terms. It remains to be seen whether the other Claimant group will also reach settlement in the coming months, making a trial of the matter unnecessary.

The recent decision concerned two applications, which both related to the disclosure and witness evidence required from the Claimants on the issues of reliance and causation. Group actions can be attractive to investors because of the economies of scale that they can provide and because they potentially represent an opportunity to share in a financial recovery from a defendant, whilst not having to contribute very much individually to the litigation in terms of cost and management time. This decision highlights however that claimants need to be careful to think through their case on reliance and causation thoroughly and that individual claimants need to be prepared to back this case up with adequate disclosure and witness evidence. Tesco is clearly fighting hard on these issues in these proceedings, forcing claimants to undertake more work on these issues than they were perhaps expecting. We can expect defendants in similar group actions in the future to do likewise.

Investors may wish to consider seeking independent legal advice on these issues prior to joining a group action, to ensure that they obtain a clear understanding of how much cost and management time is likely to be involved from them as an individual claimant before they commit. As the law on Section 90A FSMA 2000 is still developing, there remains considerable uncertainty as to the scope of the evidence and disclosure necessary on the key issues of reliance and causation. Investors should ensure that they think through carefully at the outset the risks of these aspects of the proceedings developing into a more intensive and extensive exercise than anticipated, and that they allocate these risks between the legal team, the funder and the claimant in a way that is acceptable to them.


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Janine Alexander