On 9 October 2014, the Belgian Minister of Economy appointed an association – ASBL “Collectif Solidarité contre l’Exclusion : Emplois et Revenus pour tous” (M.B./B.S. 16 October 2014, p. 80618) – to act as a representative for consumer groups in collective redress actions within the energy sector.

The Act on collective redress action of 28 March 2014 (“Collective Redress Actions Act”) entered into force on 1 September 2014. It could become a reality very soon in the energy sector, with the appointing of an association to represent household energy consumers in such actions. In other words, it is time for stakeholders to take this new instrument into account.

1. Purpose of the collective redress action

The Collective Redress Actions Act enables a representative to claim compensation for losses suffered by a group of consumers. Besides the new association just authorized by the Minister of Economy, other consumer associations, members of the Belgian Consumers’ Council, were already entitled to act on consumers’ behalf.

2. Only for matters related to household consumers, including some instruments specific to the energy sector

The collective redress action can only be based on the breach by a company of either its contractual obligations, or some European regulations and Belgian Acts specifically referred to in the Collective Redress Actions Act (incl. their implementation decrees).

The Electricity Act (29 April 1999) and Gas Act (12 April 1965) are among the acts expressly referred to. Contracts of energy suppliers with household consumers also fall within the scope of the Collective Redress Actions Act.

It remains unknown but doubtful whether the sectoral agreement “the consumer in the liberalized electricity and gas markets” can be invoked in a collective redress action. The same applies to the question as to whether the relation between household consumers and their distribution system operator would fall within the scope of the Act.

3. An opt-in or an opt-out procedure

When a collective action is launched, the court will decide between an opt-in procedure, whereby consumers specifically opting into the action can benefit from it, or an opt-out procedure, whereby all consumers affected by the breach benefit from the action unless they specifically opt out of the group.

4. A three-phase procedure

Proceedings have to be raised before the Brussels courts, subject to appeal before the Brussels Court of Appeal, and will be composed of three phases:

  • admissibility: verification of the capacity of the representative and the efficiency of a collective redress action compared to normal judicial proceedings;
  • compulsory negotiations (between 3 and 6 months): binding if confirmed by the court;
  • pleadings before the courts (in the case of unsuccessful negotiations or negotiations not confirmed by the court).

5. Compensation that can be claimed

Compensation can be in kind (e.g. specific performance of a contractual guarantee) or by equivalent (i.e. monetary damages). In the latter case, damages can be global, for the entire group, or individualized. In any case, the full loss will be compensated and no punitive damages will be awarded. Damages will be distributed by a court-supervised administrator among those consumers that registered within the timeframe set out by the court after its decision.

6. Litigation costs

Just as under the general judicial rules in this respect, the losing party pays the indemnity for litigation costs, which partially covers the fees of the winning party’s lawyers plus the costs of the publicity measures provided for by the Act, and the costs of the administrator. No contingency fees or other fees will be deducted from the damages awarded to consumers.

7. Helping you to face a new risk

The Collective Redress Actions Act raises many issues. This is a fortiori the case for its implementation in the energy sector, taking into account the segmentation of the markets.

Liedekerke combines both procedural and sectoral expertise to defend energy stakeholders against collective redress actions.

Our Complex Litigation department is very familiar with the Collective Redress Actions Act (some of their members having been consulted as experts during the elaboration of the Act), whereas our Energy Law team is highly reputed for its in-depth knowledge of the sector.

Moreover, through the Lex Mundi Network as well as the Energy Law Group (www.energylawgroup.eu), Liedekerke has direct access to the experience of other jurisdictions that already use collective redress mechanisms.