Procedurei Types of action availableDifferent mechanisms
Under Belgian Law, until 2018, only groups of consumers represented by non-profit organisations or public bodies were allowed to bring an action for collective redress, which must be brought against an enterprise and must concern an alleged violation of specifically enumerated Belgian and European laws.
Following an evaluation of the collective redress system at the national level, the Fipronil crisis in the EU and the recommendations in this sense of the EU institutions, the Belgian government decided to extend the scope of the collective action under Belgian law. Notably, since June 2018, actions for collective redress can also be instituted by SMEs represented by non-profit organisations or public bodies as described in the law. In this context, SMEs are defined (in accordance with EU Recommendation 2003/361/EC on SMEs) as enterprises that employ fewer than 250 persons and that have an annual turnover not exceeding €50 million, or an annual balance sheet total not exceeding €43 million, or both. This extension is applicable to all cases introduced after 1 June 2018, provided that the alleged breach occurred after 1 September 2014.
An action for collective redress can only be admissible if it appears more effective than an individual action of ordinary law (Article XVII.36(3), Code of Economic Law). The elements that can be taken into consideration by the judge when examining this admissibility requirement are:
- the potential size of the group;
- the existence of individual damage that can be sufficiently related to the collective damage;
- the complexity and legal efficiency of the action for collective redress;
- the legal certainty of the group of consumers or SMEs;
- efficient consumer protection;
- the smooth functioning of the judiciary; and
- the amount of damage suffered by each individual consumer/SME cannot be a decisive element in the consideration.
In a decision of 17 March 2016 (Case 41/2016), the Belgian Constitutional Court emphasised that it cannot be simply assumed for every instance of damage with a collective character that the action for collective redress will necessarily be more effective than an individual action of ordinary law. It needs to be assessed by the judge on a case-by-case basis whether this is so, based on different criteria (such as those listed above).
Collective actions are based on Article 701 of the Belgian Judicial Code, which stipulates that different actions between two or more parties can be brought by one single writ, if the actions are related. Actions can be dealt with as 'related' cases, if they are so closely connected that it is desirable to consider and rule on them together, in order to avoid conflicting solutions if the claims were adjudicated on separately (Article 30, Belgian Judicial Code). Even after the initiation of the proceedings, related cases that are pending before the same judge, can be compiled, on request or ex officio (Article 856, Belgian Judicial Code).
Action for collective redress can only be commenced for alleged violations by an enterprise of its contractual obligations or of specifically enumerated Belgian and European Rules (Article XVII.36(1) and Article XVII.37, Code of Economic Law). These rules have in common that they all contribute to the protection of consumers. This list includes provisions from the sections of the Code relating to competition law, price developments, market practices, consumer protection, payment and credit services, safety of products and services, intellectual property and electronic economy. There are also special pieces of legislation regarding privacy protection, electronic signatures, insurance, health, professional liability, banking and finance, tour operators, passenger transport, energy and product liability, among others.
In short, the action for collective redress can only be used for alleged violations of consumer protection provisions within these pieces of legislation.
On 6 June 2017, following the recommendations of the EU institutions, the scope of the class action regime was extended to include infringements of EU competition law (Articles 101 and 102 Treaty on the Functioning of the European Union, including the ban on cartels and abuses of dominant positions).
In the decision of 17 March 2016, the Belgian Constitutional Court held that it is legitimate to limit the scope of these laws. The court referred to the legislator's purpose to reserve the proceedings to consumer law, an area of law in which many cases of limited individual damage ('small claims') occur. In the view of the court, the legislator struck the right balance between all interests at stake. These are, on one hand, the interests of the victims of collective damage and of the enterprises, and on the other, the concern to increase the access to justice for such damage while guaranteeing the smooth implementation of these new proceedings in the judicial system (which are, therefore, better introduced gradually).
Collective actions arise in all areas. However, they are most commonly used in competition claims, and in environmental and financial services disputes.
Actions of collective interest can only be commenced for alleged violations of rights specified in the relevant special legislation.ii Limitation periods
The Belgian Civil Code sets limitation periods (Article 2262 bis). The limitation periods vary depending on the nature of the action. The main terms of limitation are the following.
- Claims in tort are time-barred five years after the day on which the claimant in tort is aware of the damage and of the identity of the person liable for this damage, and in any event 20 years and one day after the date on which the fact, action or negligence that caused the damage occurred.
- Most other claims are time-barred after 10 years (for example, contractual liability).
Specific rules, given below, are provided in the Code of Economic Law regarding action for collective redress.
- The term of limitation of SMEs' or consumers' individual actions that have exercised their 'opt-out' option is suspended from the date of publication of the decision on the admissibility of the action for collective redress in the Belgian Official Gazette until the date SMEs or consumers inform the court registry of their option (Article XVII.63, Section 1, Code of Economic Law).
- If the action for collective redress ends because there is no representative for the SMEs or consumers, the term of limitation for the SMEs' or consumers' individual actions that are members of the group is suspended from the date of publication in the Belgian Official Gazette of the decision on the admissibility of the action for collective redress until the date the end of the action is ascertained (Article XVII.63, Section 2, the Code of Economic Law).
- The term of limitation of SMEs or consumers' individual actions that have been excluded from the action is suspended from the date of publication of the decision on the admissibility of the action for collective redress in the Belgian Official Gazette until the date the SMEs or consumers are informed by the court registry that they are not members of the group (Article XVII.63, Section 3, Code of Economic Law).
The 'class' represented by the group representative in an action for collective redress is a group of consumers or SMEs that personally suffered damage as a consequence of a common cause (notably, a violation of one of the rules mentioned above).
The group of consumers or SMEs that can benefit from the compensation that would be awarded by the court can be composed by means of an 'opt-in' or 'opt-out' system.
Under an opt-in system, only the consumers or SMEs that have suffered the collective harm and have expressly notified the registry of their intention to belong to the group will potentially be considered as members.
Under an opt-out system, all consumers or SMEs that have suffered the collective harm and have not expressly notified the registry of their intention not to belong to the group (after having had knowledge of the existence of the action) will potentially belong to the group.
Once the action has been initiated, the judge chooses between an opt-in or opt-out system in the decision on admissibility, which then applies to the consumers or SMEs of the group having their habitual residence or main establishment in Belgium (Article XVII.38, Section 1(1) and Article XVII.43, Section 2(3), Code of Economic Law).
However, the opt-in system is mandatory in two cases (Articles XVII.38, Sections 1(2) and 1/1(2) and XVII.43, Section 2(3), Code of Economic Law):
- for consumers who do not have their habitual residence, or for SMEs that do not have their main establishment, in Belgium; and
- if the action aims for restoration of physical or moral collective damage.
The judge chooses between both systems based on the following elements:
- the facts and arguments submitted by the parties;
- the interest of both the consumers or SMEs and the market;
- the type and the size of the damage suffered; and
- the number of potential victims.
The decision on the admissibility of the class action initiated by Test Achats against the airline Thomas Cook was the first decision on the admissibility of a class action in Belgium. The court held that, in deciding which system applies in a particular case, it must first be assessed how the consumers' interests can be best protected in the specific case.
According to the court, when consumers are aware that they have become a victim of damage and when they can easily get an idea of their rights, the interest of the individual victims in being part of the group is sufficiently protected by the opt-in system, which requires an active effort of the victims.
The court further held that, by contrast, the consumers' interests are best protected by the opt-out system in cases where compensation of the damage is not so obvious and where consumers are not necessarily aware of the damage they have suffered, or when their rights are less clear.
These findings were confirmed in the decision on admissibility in the action initiated against Proximus. In that decision, the court specified that the fact that consumers are informed about their rights through the press or their group representative (Test Achats) does not imply that the interests of individual victims should be less protected and is not decisive in the assessment of whether consumers can be aware of their rights. This view was confirmed in the decision on admissibility in the Dieselgate case. In this case, the court decided that the application of the opt-out system was justified for the reason that the alleged material wrongdoing did not have any visible damage consequences for the consumer, so that the court was dealing with 'unconscious' consumers, in which case a higher level of protection is required.
In the view of the legislator, the opt-out system is most appropriate in cases where the amount of the damages is limited. However, this reasoning has not always been applied in practice by the courts.
As regards the type of damage suffered, the Court of Appeal, deciding on appeal on the admissibility of the action against Proximus, has chosen for the opt-in system for the reason that the alleged damage required an individual assessment of the personal situation of each consumer (the existence of damage and causal link to the alleged infringement had to be proven (and decided upon) for each consumer individually).
The number of potential victims and the size of the group are not irrelevant, but in themselves are not decisive to determine the applicable system. In the action against Thomas Cook, the low number of potential victims was one of the reasons that the opt-in system was chosen. In the action against Proximus, the high number of potential victims resulted in the choice for the opt-out system in the decision on admissibility in first instance (on appeal, however, the opt-in system was chosen). Also in the Dieselgate case, the high number of potential victims was the second decisive element for the court to apply the opt-out system.Potential claimant
Standing in actions for collective redress is governed by Article XVII.36 and Articles XVII.38 to 40 of the Code of Economic Law.
Actions for collective redress can only be brought on behalf of a group of consumers or SMEs that have been personally harmed by the alleged violation of an enterprise.
The action can only be brought by a representative of this group of consumers or SMEs. Where both consumers and SMEs decide to act in the same cause, the two groups will have to be represented separately.
Article XVII.39 of the Code of Economic Law identifies, exhaustively, the potential bodies that can act as group representative.
The following bodies can act as group representative of a group of consumers:
- A consumer protection organisation with legal personality, represented in the Council for Consumption or recognised by the Minister of Economy.
- A non-profit organisation with legal personality recognised by the Minister of Economy, of which the objective is directly related to the collective damage suffered by the group.
- The Ombudsman's office for consumers, but only for representing the group in the stage of negotiation of an agreement of collective redress.
- A representative body recognised by a Member State of the European Union or the European Economic Area to act as a representative and meeting the conditions of point 4 of Recommendation 2013/396/EU on common principles for injunctive and compensatory collective redress mechanisms in the Member States concerning violations of rights granted under Union Law.
Under the Recommendation, these bodies must be designated by the Member States on the basis of clearly defined conditions of eligibility, which must include at least the following requirements:
- the entity must have a non-profit making character;
- there must be a direct relationship between the main objectives of the entity and the rights granted under EU law that are claimed to have been violated; and
- the entity must have sufficient capacity in terms of financial resources, human resources and legal expertise to represent multiple claimants acting in their best interest.
The following bodies can act as group representative of a group of SMEs:
- An interprofessional organisation with legal personality that defends the interests of SMEs, represented in the High Council for the Self-Employed and the SME or recognised by the Minister of Economy.
- A non-profit organisation with legal personality recognised by the Minister of Economy, whose corporate purpose is directly related to the collective damage suffered by the group.
- A representative body recognised by a Member State of the European Union or the European Economic Area to act as a representative and meeting the conditions of point 4 of Recommendation 2013/396/EU on common principles for injunctive and compensatory collective redress mechanisms in the Member States concerning violations of rights granted under Union Law (see above about the minimum requirements).
Natural persons cannot act as a group representative, nor can commercial companies, trade unions or law firms. By limiting the pool of potential group representatives to certain categories of claimants selected on the basis of the interest they defend or the corporate goal they pursue, the legislator aims to avoid abusive or frivolous actions for collective redress.
In addition to the formal requirements set out above, the group representative must also be deemed 'suitable' for this purpose by the judge. This criterion has been introduced for three main reasons:
- ensuring that the group members are soundly represented considering that, without having granted any mandate or proxy to the group representative, they will, however, be bound by the decision obtained by the latter;
- protecting defendants by avoiding frivolous actions; and
- if several candidates apply, enabling selection by the judge of the most suitable representative, excluding the principle of 'first come, first served'.
Lastly, the group representative must meet the above requirements during the entire procedure. If these are no longer met in the course of the proceedings, a new group representative is appointed by the judge. If no new group representative meeting the requirements can be found, the procedure is closed by the judge (Article XVII.40, Code of Economic Law).Professional claimants
Only consumers and SMEs can be represented in an action for collective redress.
Professional commercial claimants cannot buy consumers' claims in exchange for a share of the proceeds of the action.Funding
Third-party funding of action for collective redress is not prohibited. However, this type of funding is of limited interest owing to the legal provisions concerning the distribution of compensation among the consumers or SMEs.
The Code of Economic Law provides that a court-appointed administrator must pay compensation to members of the group under the court's supervision. Therefore, a third-party funder cannot take a share of any proceeds of the action unless it concludes an agreement with the group members before the distribution of the compensation, which is unlikely. If a consumer uses third-party funding, it will not give the third-party funder standing to participate in the proceedings. However, given the potential influence of the third-party funding on the action for collective redress, its existence must be disclosed in the application initiating proceedings for the judge to rule on its adequacy (as for the group representative).
No public funding is available for actions for collective redress.
The Code of Economic Law does not provide for the compensation or remuneration of the group representative. As a matter of principle, the action for collective redress cannot be a way for the group representative to make profits. The group representative is only entitled to the reimbursement of the costs and fees incurred in relation to the proceedings, as well as of the legal 'procedural indemnity' (that is, the lump sum that must be paid by the losing party to the winning party; see subsection iv).
Consequently, the group representative's financial capacity is one of the central criteria for the certification of the action for collective redress, specifically the assessment of its adequacy.
There are no other funding options available.
It is very likely that the lack of a funding regime will affect the attractiveness and frequency of actions for collective redress in Belgium since group representatives must have adequate financial capacity to undertake such actions on behalf of consumers or SMEs, without any remuneration and with limited recovery of their lawyer fees.
However, financial benefits that indirectly result from class actions have increased the attractiveness of initiating such actions for one group representative (Test Achats) already.
As indicated, seven out of the eight class actions initiated so far have been initiated by Test Achats, the main Belgian consumer protection organisation. Although class actions cannot be initiated for profit and the class actions initiated by Test Achats can be joined by consumers without payment, it appears that class actions have become an important source of income for the organisation. By launching actions for collective redress, on the one hand, and activities relating to collective purchase of products and services, on the other hand, the organisation has reached 2.4 million consumers in recent years, which has resulted in 60,000 new paid member subscriptions and in an increased use of its service platform.
Therefore, despite the lack of a funding regime, indirect financial benefits resulting from class actions can raise the attractiveness of class actions and can financially enable group representatives to initiate subsequent class actions.iv Procedural rulesTimetabling
Under the Code of Economic Law, the action for collective redress comprises four phases:
- Admissibility phase (two months after the filing). However, it appears that this legal deadline is not applied in practice. In the class actions initiated so far, taking into account the importance of the admissibility phase and the rights of defence (of the defendant in particular), a procedural timetable was set with deadlines for the parties to exchange briefs regarding the admissibility of the class action, followed by oral pleadings concerning this aspect only. Since this timetable has always been (and is usually likely to be) spread over several months, the decision on the admissibility is generally not rendered within two months of the filing of the class action.
- Compulsory negotiation phase (three to six months after the judgment on the admissibility).
- Litigation phase. This involves:
- proceedings on the merits;
- exchange of briefs;
- oral pleadings held before the court; and
- judgment rendered by the court.
At the very beginning of the proceedings on the merits, the court or the parties must set a procedural timetable to determine the deadlines for filing the parties' briefs with the court and the date of the oral pleadings. Parties are entitled to request jointly the postponing of the case for an indefinite period.Certification and qualification
As mentioned, the first stage of action for collective redress is the admissibility phase (Articles XVII.42 to 44, Code of Economic Law). The purpose of the admissibility phase is threefold and aims at checking:
- whether the alleged breach suffered by consumers or SMEs falls within the scope of the action for collective redress (see subsection i);
- the status and adequacy of the representative (see subsection ii); and
- the efficiency of the action for collective redress compared to individual actions (see subsection i).
Under the first condition of admissibility, the court must examine whether the cause invoked may constitute a potential infringement of the legal provisions or contractual obligations invoked. As confirmed in the first admissibility decisions rendered, the claim may already be rejected at this stage if at first sight it appears to be manifestly unfounded, for example because no damage is likely to be sustained or because the possibility of the infringement is not proven to be likely.
In addition, if the defendant claims that the action for collective redress is without basis (that is, devoid of purpose) because all (potential) victims have already been compensated, the court is allowed (for procedural efficiency) to assess the accuracy of this statement in the admissibility phase, even though this touches upon the merits of the case.
The court confirmed this in the decision on the admissibility of the class action initiated by Test Achats against the airline Thomas Cook.
The court specified that it can establish that the proceedings are partially or entirely without basis (that is, devoid of purpose) if it is either:
- not disputed that all or some of the victims have been compensated; or
- manifestly clear at first sight (and therefore, it cannot be disputed) that full payment of the claim had been made.
The court indicated that in the admissibility phase the claimant cannot be obliged to demonstrate who has been compensated in full and to take a position concerning this issue, as this pertains to the merits of the case.
In theory, the court must rule on the admissibility of the action for collective redress within two months of its filing with the court (however, see 'Timetabling', above). If the court considers the action for collective redress admissible, the judgment will authorise the group representative to act. The judgment must identify the group and any subcategories. It must also determine whether the group will be composed on an opt-in or opt-out basis, as well as determining how the option will be exercised.
The parties are entitled to lodge an appeal against the judgment on the admissibility of the action for collective redress.Minimum and maximum number of claimants
No minimum or maximum number of claimants is required for an action for collective redress to be brought and declared admissible. The only condition is the efficiency of the action for collective redress, which can only be admissible if it appears more effective than an individual action of ordinary law. As indicated, the (potential) number of the claimants is an important factor to be taken into consideration by the judge when examining the admissibility requirement (see subsection i).
An action for collective redress is more likely to be deemed more efficient than individual actions when a significant number of consumers is potentially affected by a common issue.
In the decision on the admissibility of the class action initiated by Test Achats against the airline Thomas Cook, the court indicated that, when the majority of the (potential) victims has already been compensated before the action was initiated and only a limited number of (potential) victims has not been compensated yet, the court can consider that collective redress is not more efficient and that the action is therefore inadmissible.
In this regard, the court specified that if some compensation was paid after the proceedings had been initiated, the action is inadmissible only in relation to the remaining (potential) victims who have not received compensation. However, it is still admissible in relation to the victims who have been compensated pending the proceedings. In relation to these victims, the proceedings will be without basis (that is, devoid of purpose) because once they are compensated, they will automatically lose their substantive right. Therefore, a decision on the admissibility becomes unnecessary.
If all (potential) victims are compensated pending the proceedings, the entire action for collective redress can be declared without basis (that is, devoid of purpose).v Damages and costsDamages
Under Belgian law, the basic principle is the full compensation of the actual damage suffered. The injured person must be reinstated into the position he or she would have been in if the injury had not been committed. To that extent, punitive damages are prohibited. Quantification of the actual loss suffered is calculated by the judge on the grounds of parties' submissions and, possibly, experts' reports.
There is no cap on the quantum that can be recovered either from a single defendant, or overall. As a matter of principle, each defendant is jointly and severally liable for the damage suffered unless the judge rules otherwise.
It is possible for a defendant to bring a separate action against other persons responsible for the conduct complained of to recover part of the damages he or she paid (that is, a contribution claim).
There are no special rules applicable to the payment of interest in the field of actions for collective redress. However, specific interest rates are potentially applicable depending on the area of law concerned by the action for collective redress. Post-judgment interest must be awarded from the date of the application initiating proceedings at a rate that is currently set (for 2019) at 2 per cent per annum.Costs
There is a 'loser pays' principle under Belgian law. The losing party will bear all the costs of the proceedings (filing fee, expert costs, translation costs, among others). The recoverable lawyer fees of the winning party are limited to the procedural indemnity. The amount of the procedural indemnity is set by law. Since 1 March 2011, the amount of the procedural indemnity is calculated as follows.
If the claim cannot be appraised in monetary terms, the basic amount of this indemnity is €1,440.
If the claim can be appraised in monetary terms, the basic indemnity will range between €180 and €18,000.
Under certain circumstances, the amounts set by law can be increased or decreased by the court.
If the case is settled, costs and fees are set out in the agreement concluded by the parties.vi SettlementSettlement rules
Under the Code of Economic Law, a compulsory negotiation phase that lasts between three and six months must take place immediately after the decision of the court on the admissibility of the action for collective redress (see subsection iii) (Articles XVII.45 to 51, Code of Economic Law). This compulsory stay of the proceedings is provided to allow parties to negotiate a potential collective settlement agreement within a specific time frame decided by the court.
At the end of this 'cooling-off' period, either the court endorses the settlement by making the agreement binding on the parties or the proceedings on the merits start.
Otherwise, if the parties reach an amicable settlement of the case 'out of court' before the decision on the merits, they can file an application with the court to enact the collective settlement agreement already entered into to make it binding on all group members.Separate settlements
The negotiation can cover all or part of the dispute. Therefore, where there is more than one defendant, they can settle separately. The settlement agreement will be endorsed by the court only with respect to them. The judge will remain seized of the action for collective redress with regard to the remaining defendants to rule on the merits.