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Collective action clause meaning
What does Collective action clause mean?
A collective action clause is a contractual term in bond or note documentation that lets a specified supermajority of holders agree amendments which then bind all holders, including dissenters. It is a market expression rather than a concept defined by statute or case law, and is used across international capital markets.
Under English-law and Irish-law governed bonds (including sovereign and corporate issues), CACs typically sit in the trust deed/agency agreement or indenture and operate through noteholder meetings or written resolutions. They set voting thresholds (commonly 75% or two‑thirds by principal amount) and define the scope of amendable terms, which can include payment dates, interest, covenants, waivers and events of default. Modern sovereign bonds may include aggregation features allowing amendments across multiple series (two‑limb or single‑limb CACs), helping to manage holdout creditors.
Usage and effect are broadly consistent across England & Wales, Scotland, Northern Ireland and Ireland, subject to the specific drafting and governing law of the instrument. CACs facilitate orderly restructurings and reduce litigation risk. They are distinct from statutory processes (such as schemes of arrangement or restructuring plans) and from “majority lender” provisions in syndicated loan agreements, which achieve similar outcomes in the loan market.
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NEWS
UK Competition Appeal Tribunal grants CPO for £1bn app developer collective proceedings against Google Play, subject to funding agreement amendments in light of PACCAR
The Competition Appeal Tribunal has allowed Barry Rodger, a Strathclyde University law professor in Scotland, to advance his case, notwithstanding the tech giant’s objections to the arrangement he has reached with a litigation funder. Delivering an oral ruling at the close of the hearing, Judge Stephen Morris confirmed the claim may proceed, provided the funding agreement is revised in certain respects. The tribunal withheld fuller particulars of those revisions, indicating that written reasons will follow in due course. After considering the oral submissions, the written materials, and the representations of the proposed class representative and the proposed defendants, namely the various Google entities, the tribunal decided to certify the proceedings subject to specified points, Judge Morris explained. He then identified the particular clause within the funding contract that would be changed. This ruling follows Rodger’s application inviting the tribunal to make a collective proceedings order in the same matter herein...
07 March
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View the related Practice Notes about Collective action clause
PRACTICE NOTES
2024 key appellate judgments and forthcoming Supreme Court appeals—England and Wales (archived)
ARCHIVED : This archived Practice Note compiles major dispute resolution (DR) appeals and notable appellate rulings in general civil litigation in England and Wales from 2024 to date. It also highlights key forthcoming appeal matters (to support horizon scanning) together with reported judgments delivered in the Supreme Court, Court of Appeal, Competition Appeal Tribunal, Judicial Committee of the Privy Council (the Privy Council), Court of Justice of the European Union (Court of Justice), and the European Court of Human Rights (ECtHR). Links are provided to the judgment and any bespoke News Analysis to aid understanding of the principles engaged and the impact of the decisions. It is not maintained and is offered for background use only. For details of key DR appeals from 2025 to date, see Practice Note: Dispute resolution: key appeal cases—2025 [Archived]. This Practice Note has two parts intended to help dispute resolution practitioners remain informed about developments in case law affecting their practice, or civil litigation procedure more generally: selected forthcoming...
21 May
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