The class action lawsuit by two UK pension funds against Royal Bank of Scotland launched in a US court last March could be testified in Britain following new plans from the plaintiffs’ law firm.

Coughlin Stoia Geller Rudman and Robbins, the Californian firm that is representing the Merseyside and North Yorkshire council schemes in claims of misleading information from the bank, revealed in a confidential client communication reported by Responsible-Investor.com that only domestic investors could sue RBS in the US.

US attorneys are working with Cherie Blair, Q.C. wife of former UK Prime Minister, Tony Blair, about transferring the lawsuit to the High Court in London.

The funds maintain that they were misled as to the exposure of the bank to sub-prime mortgages, causing significant losses to scheme members when the bank was bailed out by the UK government in October 2008. The bank is currently 70% owned by the taxpayer.

Moving the case to British shores could prove a landmark for the UK legal system. Class actions – whereby a group of plaintiffs collectively bring a claim to court for common injury of the same defendant – are predominantly US phenomena, with traditionally no legal facility in the UK.

However, the Queen’s speech last month relaxed rules to allow UK investors to claim from financial institutions.

The two funds are joined in the lawsuit – otherwise know as a ‘representative action’ -  by MN Services, a Dutch pension fund investment firm, and more pension schemes are said to be considering joining the action.

In May a US judge dismissed the case on the grounds that plaintiffs would have had to have bought shares in RBS on the New York Stock Exchange, and instead gave class action status to a similar claim against the bank by the Massachusetts Pension Reserves Investment Management Board and Mississippi Public Employees’ Retirement System.

Coughlin is best known for having secured USD7 billion in compensation for investors mis-represented in the Enron scandal. It has confirmed that a class action might be possible to launch in the UK, and that all plaintiffs will have control of their individual participation.