As reported in last year's newsletter the European Commission published a Recommendation on 11 June 2013 acknowledging that, while many Member States had collective redress procedures or planned to introduce such mechanisms, the Commission encouraged all Member States to adopt some form of collective redress by no later than 11 June 2015. The Commission explained in MEMO/13/530that such mechanisms improve access to justice for citizens and for companies, but recommended that Member States use procedural safeguards so as to minimise the risk of abuse or the rise of a US-style claims culture. The recommended safeguards include not permitting contingency fees, prohibiting recovery of punitive damages and using an opt in rather than opt out structure.
The response from Member States, as summarised below and in last year's article, has been varied but does indicate a willingness to expand collective action rights for consumers across the EU. The Commission has committed to reassess the position in 2017 and has stated that it is prepared to issue a Directive requiring Member States to act if it remains dissatisfied with the scope of recovery available. In this article we highlight developments from 2014.
Latest Responses from the Member States:
England and Wales
Plans were afoot to introduce an opt-out collective model for use in competition damage cases prior to the publication of the Recommendation. This model is contained in schedule 8 of the Consumer Rights Bill, which had its third reading in the House of Lords on 8 December 2014. Draft rules on collective proceedings and collective settlements were published by the Competition Appeal Tribunal in March 2014 and can be found here.
England and Wales also has existing rules that allow group litigation in other circumstances. There remain no proposals to widen or adapt these rules for rights of action that are not related to competition law damage.
A form of class action exists in the Netherlands. An association (vereniging) or foundation (stichting) may start a collective action provided that: (i) the action serves to represent the similar interests of others; and (ii) it represent those interests pursuant to its articles of association. Both requirements are easy to satisfy. A draft legislative proposal was published in July 2014 with a view to introducing a more formal mechanism for collective proceedings but the timeframe for implementation is not yet clear.
There is also a statutory mechanism by which multiple damages claims can be settled collectively, so providing a process that circumvents a host of individual damages actions by securing settlement between the defendant and an association or foundation that represents the interests of each of the individual claimants. Group members may opt out of this process and are then free to start or continue an individual action.
The Green Party initiated an inquiry in the German Parliament on 10 June 2014 in response to the Recommendation. This inquiry will evaluate whether changes to existing collective redress mechanisms (for example the Capital Investors' Model Proceeding Law) are necessary. The German Parliament has sought views from other EU member states, German associations and lobbyists' organisations including the German Federal Bar Association (Bundesrechtsanwaltskammer).
The French Parliament adopted a new consumer law on 17 March 2014 that includes a new opt in collective action procedure. Collective actions can be brought by fifteen authorised national consumer associations under this law in respect of harm caused in connection with a sale of goods, a provision of services, or an infringement to competition law. Compensation for physical injuries is excluded. Consumers within the scope of any claim have two to six months to opt-in and claim any damages awarded by the French courts.
Other forms of collective redress are also available in France, including representative actions in the fields of consumer, finance and environmental law and under Article 421-1 of the French Consumer.
There are some continuing developments in this area and reassessment of existing procedures by some Member States. However, there is still no sign of a sea change or move towards US-style class actions in the EU. The Commission does not propose to review the matter until 2017 and so it remains to be seen whether any formal legislative step requiring the implementation of collective redress mechanisms might follow.