Consumer Act no. 2014-344 dated 17 March 2014, popularly called the “Hamon Law”, published in the Official Journal on 18 March 2014, has introduced a group action through §L. 423-1 et seq. of the French Consumer Code.
Pursuant to the new §L. 423-1, the French-style class action is defined as an action brought “[…] before a civil court so as to obtain redress for the individual losses sustained by consumers in a similar or identical situation and having for the same cause a breach by one or more professionals of their legal or contractual obligations: 1) Upon the sale of goods or provision of services; or 2) When such losses result from anticompetitive practices […]”.
The scope of application of this new action is thus narrow, since it only concerns consumer law and competition law, even if referring to all related “legal or contractual obligations” applicable to professionals.
Additionally, the victim concerned must necessarily be a consumer, who is defined as “[…] any natural person acting for purposes that fall outside the scope of his or her commercial, industrial, trade or professional activity” (new preliminary section of the Consumer Code). Legal persons are thus excluded from the benefit of this action.
It will be observed that this new §L. 423-25 of the Consumer Code deems to be unwritten “[a]ny clause having for its purpose or effect to prevent a consumer from participating in a group action”, so as to protect the rights of individual consumers.
This action may only be brought by “[a] consumer defence association that is representative on a national level and accredited pursuant to §L. 411-1 […]” (§L. 423-1 of the Consumer Code).
The new sections of the Consumer Code dedicated to class actions provide a clear definition of the 3-phase process entailed. Such actions are of the exclusive jurisdiction of the civil courts (Tribunaux de grande instance) (new §L. 211-15 of the Judicial Organisation Code):
- 1st phase: Decision on the liability of the professional(s): In a same decision, the court will rule on the liability of the professional, define the class of consumers towards whom the professional’s liability is incurred, the criteria to be used in identifying them and the deadline to join the action, order appropriate public notices to inform consumers who may belong to the class and determine the potentially compensable claims (new §L. 423-4 and L. 423-5 of the Consumer Code), it being understood that such claims may only pertain to financial losses, which excludes any physical and/or moral loss (§L. 423-1 of the Consumer Code).
- 2nd phase: Formation of the class: Individuals must explicitly join the action (opt-in system). This approach is hardly surprising bearing in mind that the Conseil Constitutionnelhad suggested that the opt-out system, which requires deliberate action to withdraw from the class, would be contrary to the constitutional principle of freedom of choice (Cons. Const., 25 July 1989, decision no. 89-257 DC). Membership of the class entails a power of attorney to the benefit of the association bringing the claim to seek damages (new §L. 423-5 of the Consumer Code) but does not impede a victim from seeking damages for the non-financial losses excluded from the class action (new §L. 423-22 of the Consumer Code).
- 3rd phase: Effective compensation to consumers: based on the final decision on the professional’s liability, the professional held liable must individually compensate the consumers who took part in the class action for their material loss. This action does not seek damages for collective loss but redress for the sum of individual losses sustained by the consumers. The conditions, limits and time periods for such payment are set in the decision (new §L. 423-11 of the Consumer Code). The court initially referred to and having ruled on the liability of the professional remains competent to resolve any difficulty that may arise in connection with the payment to be made to consumers (new §L. 423-11 of the Consumer Code).
Clearly, the Hamon law does not introduce a full-blown French version of the U.S.-style class action but a specific action under consumer law.
Nonetheless, by making sanctions for consumer law violations more effective, it will increase the risk of legal action being taken against professionals in many sectors to obtain compensation for financial loss on the basis of violations of their legal or contractual obligations. This is especially the case in the area of defective product liability.