Amazon CPO Applications | Funding Arrangements And Costs Control In Collective Proceedings

HAMMOND V AMAZON.COM, INC. & OTHERS AND STEPHAN V AMAZON.COM, INC. & OTHERS [2025] CAT 42

In Hammond & Stephan v Amazon.com Inc [2025] CAT 42, the Competition Appeal Tribunal established new standards for costs oversight in collective proceedings whilst approving litigation funding arrangements subject to specific conditions. The Tribunal addressed four key costs issues: (1) Independent costs scrutiny – finding that proposed class representatives lacked adequate mechanisms to review legal invoices independently of funders, the Tribunal required Professor Stephan to appoint costs lawyers for monthly oversight and Mr Hammond to instruct a costs draftsman for quarterly review, establishing this as standard practice following Bulk Mail Claim Ltd v International Distribution Services [2025] CAT 19; (2) Funder remuneration assessment – whilst declining to reject Mr Hammond’s potentially “excessive” funding structure (including a 15% annual Commitment Fee on £16.9m committed funds) at certification stage, the Tribunal reserved detailed scrutiny for settlement or judgment, endorsing the deferred assessment approach from Gutman v Apple Inc [2025] EWCA Civ 459 and Merricks v Mastercard [2025] CAT 28; (3) Funding adequacy – approving Professor Stephan’s £5-20 million Elliott group guarantee and Mr Hammond’s £16.7 million FourWorld arrangement (against a £19.8 million discounted budget), with £15 million ATE insurance deemed sufficient for adverse costs; and (4) Documentation requirements – establishing that proposed class representatives must evidence steps taken to secure appropriate LFA terms and publish agreements with minimal redactions. The judgment signals enhanced Tribunal scrutiny of costs arrangements whilst maintaining the principle that collective proceedings require adequate funding to proceed effectively.

…The Tribunal at certification wishes to be satisfied that the PCR has made proper efforts to secure favourable funding terms… The fact that we do not reject the funder’s remuneration at this stage as excessive should not be taken as in any way an indication that we approve the specified Funder’s Fee. We do find that it could potentially result in an exceptionally high return. As regards the Commitment Fee element, we cannot accept FourWorld’s justification that it is unable to earn any return on the total of £16.9 million… We have determined only that the question of whether the total Funder’s Fee is unreasonable is for more detailed consideration at another time.

Citations

Merricks v Mastercard Inc [2025] CAT 28 The Competition Appeal Tribunal may reduce a funder’s contractual return if the outcome of the litigation delivers only limited benefits to the class, ensuring a fair distribution of proceeds and preventing disproportionate rewards. Gutmann v Apple Inc [2025] EWCA Civ 459 The Tribunal retains discretion at the conclusion of proceedings to scrutinise and limit a funder’s contractual return to protect the interests of the class. Gormsen v Meta Platforms Inc [2024] CAT 11 Excessive funder returns included in litigation funding agreements may justify refusal of certification where they undermine the integrity of the proceedings or the fairness of the proposed arrangements. Riefa v Apple Inc [2025] CAT 5, [2025] Bus LR 417 A proposed class representative’s failure to understand or adequately evaluate the terms of a litigation funding agreement can warrant rejection of a collective proceedings order on grounds of unsuitability. Alex Neill v Sony [2023] CAT 73 Calculation of funder returns on the basis of committed funds rather than damages recovered is permissible, provided the Tribunal retains the power to assess fairness at the conclusion of proceedings. BVS Claims Limited v Bittylicious Ltd & Ors [2024] CAT 48 Litigation funding agreements which provide funder remuneration based on committed capital are compatible with the collective proceedings regime so long as ultimate oversight remains with the Tribunal. Bulk Mail Claim Ltd v International Distribution Services PLC [2025] CAT 19 Collective proceedings representatives should have access to independent costs advice to ensure effective monitoring of legal fees and protect the class from excessive or unreasonable charges. Le Patourel v BT Group PLC [2022] EWCA Civ 593, [2023] 1 All ER (Comm) 667 Assessment of whether collective proceedings should be opt-in or opt-out requires a broad, practical judgment that weighs proportionality, efficiency, and the nature of the claims, not merely the theoretical ability to manage opt-in proceedings. MOL (Europe Africa) Ltd v Mark McLaren Class Representative Ltd [2022] EWCA Civ 1701, [2023] Bus LR 318 The class definition for collective proceedings can include individuals who may not themselves have suffered loss, provided the class is identifiable and the aggregate damages methodology addresses common issues of harm. Lloyd v Google Inc [2021] UKSC 50, [2022] AC 1217 Collective litigation is appropriate where widespread but individually modest losses make individual claims impracticable and aggregate proceedings offer a viable enforcement mechanism. Merricks v Mastercard Inc [2020] UKSC 51, [2021] 3 All ER 285 The Competition Appeal Tribunal need only be satisfied that the methodology for assessing aggregate damages is credible and offers a realistic prospect of establishing loss to justify certification. UK Trucks Claim Ltd v Stellantis NV & Ors [2023] EWCA Civ 875, [2024] 1 All ER (Comm) 543 Where opposing interests exist within the proposed class, such as over the degree of pass-on, the resulting internal conflict may preclude certification unless resolved through separate representation.

Track allocation housing disrepair CPR 46.13 settlement sum costs restriction SCCO

MRO fee markup cap 25% detailed assessment personal injury Senior Courts Costs Office

Security for costs refused CPR 25.27 very high probability success excessive estimate King's Bench

IPEC scale costs transfer Patents Court PD 30 para 9.2 costs caps Court of Appeal

Costs budget variation CPR 3.15A promptness significant development unfair prejudice Chancery Division

Costs budgeting inter partes proportionality high hourly rates AI disclosure Patents Court CPR 3E

Beneficiary personal liability section 71(3) Solicitors Act 1974 indemnity costs VAT self-supply SCCO

Summary assessment indemnity costs unless order payment on account disclosure default Chancery Division

Provisional assessment set aside CPR 3.1(7) points of dispute filing duty PD 47 para 14.3 SCCO

Fixed recoverable costs police claims CPR 26.9(10)(e) intentional tort exemption

Key Points

A proposed class representative in collective proceedings must demonstrate a process for independent assessment and control of solicitors’ costs, typically by engaging a costs specialist to scrutinise interim legal invoices in large-scale litigation. [45, 56]
The Tribunal will scrutinise litigation funding agreements to ensure that the costs provisions do not compromise the independence of the class representative, particularly provisions affecting settlement, termination, and control of legal expenditure. [42, 43, 54, 55]
The Tribunal expects the class representative to provide a clear explanation of efforts undertaken to negotiate appropriate and proportionate litigation funding arrangements, including the rationale and process for the agreed structure of funder remuneration. [67]
Funder returns stipulated in litigation funding agreements will be subject to Tribunal approval at the conclusion of proceedings, whether after trial or settlement, and the Tribunal retains discretion to reduce the funder’s return if it considers the agreed amount to be excessive. [64, 66]
Payment of funders’ fees from the proceeds of collective proceedings will be scrutinised to ensure that distribution to the class is not inappropriately subordinated; any priority to funder returns must be expressly subject to Tribunal oversight and approval. [68]

"The revised LFA was formally entered into on 5 May 2025… Mr Hammond’s ‘provisional litigation plan budget’ is just over £19.8 million… On that basis, we are satisfied that Mr Hammond has a sufficient level of funding in place under the revised LFA… As in the Stephan Action, we were concerned that there should be effective control of costs… [but] we find this satisfactory in meeting our concern."

Key Findings In The Case

Professor Stephan was required by the Tribunal to put in place independent scrutiny of his solicitors’ legal invoices due to the scale and duration of the litigation; he satisfied this by appointing a costs specialist to produce regular oversight reports and assist in determining whether queries or adjustments were needed to invoices submitted to the funder [45–46].
Mr Hammond was similarly required by the Tribunal to engage a costs draftsman to review his legal team’s interim invoices on at least a quarterly basis, ensuring they were reasonable from the perspective of a paying client and enabling him to challenge costs appropriately if necessary [56].
The Tribunal held that litigation funders are not in a position to independently safeguard the class’s interest in the quantum of legal fees, as funding costs are typically reimbursable from any award; therefore, the primary responsibility lies with the class representative, whose control must be supported by professional costs expertise [45, 56].
The Tribunal accepted that Mr Hammond’s funder’s entitlement to a fixed return, supplemented by a 15% annual “Commitment Fee” based on committed funds, posed potential risks of overcompensation; however, it emphasised that all such funder returns remain subject to Tribunal scrutiny and approval at the conclusion of the proceedings, particularly on settlement or damages distribution [59–64, 66–67].
The Tribunal required amendment of the relevant litigation funding agreement clause to ensure that any priority of funder recovery over class distribution was expressly conditional on an application to, and approval by, the Tribunal; this amendment introduced a two-stage safeguard, including a necessity that the application be appropriate in the circumstances and subject to judicial approval [68].

"Accordingly, there are two stages: (a) such an application shall be made only when it is “appropriate in all the circumstances” having regard to the matters specified…; and (b) the Tribunal will in any event determine whether to accede to such an application. We consider that this appropriately protects the interests of the class."

The Competition Appeal Tribunal’s recent decision to grant collective proceedings orders in two substantial Amazon cases provides valuable guidance on several key costs issues affecting collective proceedings. The judgment establishes important principles for funding arrangements, costs oversight, and funder remuneration whilst addressing practical concerns about costs control in complex multi-million pound litigation.

Background | Two Major Collective Actions

The Tribunal considered applications for CPOs by Robert Hammond (representing consumers) and Professor Andreas Stephan (representing retailers/merchants), both alleging abuse of dominant position by Amazon companies. Both actions followed successful carriage disputes and involved substantial funding arrangements with commercial third-party funders.

The cases raised several costs-related challenges that required determination before the CPOs could be granted under the authorisation condition in section 47B of the Competition Act 1998.

The Costs Issues Before the Court

The Tribunal was required to assess whether the funding arrangements in both cases were adequate and appropriate for collective proceedings purposes. This involved examining several interconnected costs considerations:

First, whether the litigation funding agreements (LFAs) provided sufficient funding levels and appropriate control mechanisms. Professor Stephan had funding of up to £32.9 million guaranteed by Elliott group entities, whilst Mr Hammond had just under £16.7 million from FourWorld Global Opportunities Fund Ltd.

Second, whether adequate mechanisms existed for scrutinising and controlling legal costs during proceedings. The Tribunal expressed particular concern that neither proposed class representative appeared to have sufficient independent support for reviewing lawyers’ invoices.

Third, in Mr Hammond’s case specifically, whether the funder’s remuneration structure was excessive. Following the Supreme Court’s PACCAR decision, the LFA had been amended from percentage-based to fixed fee remuneration, but this resulted in a complex fee structure that Amazon challenged as potentially “wildly excessive.”

Fourth, whether adverse costs cover was adequate, though Amazon did not challenge the sufficiency of either the £15 million ATE insurance in Hammond’s case or the guarantee arrangements in Stephan’s case.

The Parties’ Positions on Costs

Amazon’s primary costs-related objection focused on Mr Hammond’s funding arrangements. Amazon argued that the funder’s return was “excessive” and in several scenarios “wildly excessive” and “indefensibly high,” relying on the Tribunal’s observations in Gormsen v Meta that funding arrangements with sufficiently extreme provisions could warrant refusal to certify.

Amazon particularly criticised the “Commitment Fee” element of 15% per annum on committed funds of £16.9 million, arguing it was inappropriate to calculate returns on committed rather than drawn-down funds, which inflated the funder’s return.

Amazon also suggested that Mr Hammond’s agreement to such arrangements demonstrated unsuitability to represent the class’s interests, drawing parallels with Riefa v Apple where certification was refused due to the proposed class representative’s lack of understanding of their LFA.

Neither party initially addressed the Tribunal’s concerns about independent oversight of legal costs, but following prompting during the hearing, both proposed class representatives agreed to instruct independent costs specialists.

The Court’s Decision on Costs Issues

Independent Costs Oversight | New Standard Practice

The Tribunal held that independent scrutiny of legal costs should become standard practice in collective proceedings. The Tribunal stated it was “important for proposed class representatives to be in a position independently to subject claims for costs to proper scrutiny, as the funder’s interests were not identical to those of the class.”

The Tribunal referenced its recent observation in Bulk Mail Claim Ltd v International Distribution Services that measures may need to be put in place to ensure PCRs get costs specialist advice on legal fees.

Professor Stephan agreed to instruct independent costs lawyers to provide monthly oversight reports and assist in determining whether clarification or adjustment of invoices was required. Mr Hammond committed to instructing a costs draftsman to review interim invoices quarterly with “the level of scrutiny that a corporate client would apply.”

Funder Remuneration | Deferred Assessment Approach

On Mr Hammond’s funder remuneration, the Tribunal declined to reject it as excessive at the certification stage whilst emphasising this was not approval. The Tribunal found the fee structure could potentially result in an exceptionally high return and specifically rejected FourWorld’s justification for the Commitment Fee element.

However, the Tribunal held that clause 9.2 of the LFA, making payment “subject to an order of the [Tribunal] to the contrary,” meant the reasonableness of the total funder’s fee was a matter for more detailed consideration at a later stage.

The Tribunal endorsed the approach from the Federal Court of Australia in Money Max Int Pty Ltd v QBE Insurance Group Ltd that court approval of reasonable funding commission rates should be left to a later stage when more probative and complete information would be available, typically at settlement approval or damages distribution.

The Tribunal referenced the Court of Appeal’s judgment in Gutman v Apple, which emphasised the Tribunal’s discretion at the time of judgment, and the recent Merricks v Mastercard decision, which demonstrated exercise of that discretion to allow a funder considerably less than provided under an LFA where proceedings had a poor result.

Costs Documentation Requirements

The Tribunal established that proposed class representatives should address in evidence the steps taken to secure LFAs on appropriate terms as standard practice. Mr Hammond provided a detailed witness statement explaining the evolution of his LFA following PACCAR and the competing Hunter application.

The Tribunal also noted that LFAs should be posted on claim websites with only minimal redactions for confidentiality, stating “this should be standard practice for all opt-out proceedings.”

Implications for Costs Practice

This judgment establishes several important precedents for costs practice in collective proceedings:

Independent Costs Oversight: The requirement for independent costs specialists to assist proposed class representatives in scrutinising legal fees is now established as standard practice. This addresses the inherent conflict between funders’ interests (who are reimbursed from recoveries) and class interests.

Deferred Funder Remuneration Assessment: The Tribunal’s approach of deferring detailed scrutiny of potentially high funder returns until settlement or judgment provides greater certainty for the certification process whilst preserving ultimate control over excessive fees.

Evidential Requirements: Proposed class representatives must now provide evidence of steps taken to secure appropriate funding terms, and LFAs should be published with minimal redactions.

Costs Control Mechanisms: The judgment demonstrates the Tribunal’s willingness to impose specific conditions regarding costs oversight as part of the authorisation process.

Multiple Solicitor Arrangements: Where two firms work together, the Tribunal accepted this could be appropriate given complementary capabilities, but emphasised that costs assessment would need to scrutinise claims to ensure no unreasonable overlap.

The decision reflects the Tribunal’s developing approach to balancing the need for adequate funding of collective proceedings against protection of class interests from excessive costs and funder returns. The establishment of independent costs oversight as standard practice represents a significant development that will affect all future collective proceedings applications.

For costs practitioners, the judgment provides valuable guidance on the level of scrutiny expected in collective proceedings and confirms the Tribunal’s commitment to maintaining effective control over costs whilst enabling meritorious claims to proceed.

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