European countries clearly are moving toward legal regimes that permit class action litigation but still are struggling with implementation problems, a panel of legal experts said.

Panelists speaking this month at the annual meeting of the International Assn. of Defense Counsel in Barcelona, Spain, noted several problems and legal dilemmas courts, regulators and lawmakers face.

Italy began allowing class action litigation at the beginning of 2010, said Cinzia Altomare, manager of global casualty facultative at General Re Corp. in Milan. But the new regime has problems, such as its extreme complexity and a lack of a clear definition of what constitutes a class, so there has been little usage thus far, she said. Also, the list of groups eligible for class certification does not include investors, she said.

“Does it mean that investors are not admitted for class action in Italy? Nobody really knows,” she said. “It seems the courts in the end will decide what to do. But in the meanwhile, it's a matter of muddy waters.”

Rachael Mulheron, a professor of law at Queen Mary, University of London, who studied collective action for the U.K. government, said legislation that would have established opt-out class action litigation for claims in the financial services sector was about 10 days away from passage this year before parliamentary elections and the change in the United Kingdom's government doomed it, she said.

“It was really that close,” she said. “We may be without any sort of opt-out redress for another four years...We're in a very frustrating position.”

Ms. Mulheron said her study identified reasons why an opt-out regime was needed, including the difficulties of the existing opt-in regime, under which sometimes hundreds of thousands of claims must be filed separately; areas where government regulators can impose fines for wrongdoing but cannot secure compensation for victims; and the difficulties of English investors participating as a sub-class in a class action suit in the United States.

Under the proposed legislation, plaintiffs in opt-out collective action cases would have been subjected to a more stringent merits test than solitary claimants, she said.

“We decided that English judges would be more comfortable if there was a tougher gate to get through,” she said.

Given the movement toward more class action litigation in Europe, insurers should re-evaluate their policy limits; pay attention to whether defense costs are included in limits, which varies by country; and prepare for new and larger claims, Ms. Altomare said. She said insurers are concerned about the prospect of U.S.-style litigation emigrating to Europe.

“We base our financial strength, which enables us to pay claims for our clients, on a (cost) projection of experienced cases, and it is impossible to project and fund claims of that kind of size,” she said, referring to some of the most expensive class action cases in the U.S. “How much would a policy cost? Nobody would pay us premiums to fund the cases.”