On 11 June 2013, the EU Commission issued a recommendation on common principles for injunctive and compensatory collective redress mechanisms in the Member States concerning violations of rights granted under Union Law (2013/396/EU) (hereafter referred to as the "Recommendation").  The Recommendation provides that Member States' national collective redress systems should comply with the principles set forth in the said Recommendation by 26 July 2015 at the latest.  The Consumer Law published on 17 March 2014 introduced class actions in the French legal system.  Although the implementing decree has not been adopted yet, it appears that the French compensatory collective redress system is largely in line with the EU recommended framework on the essential features of class actions.

Standing

The Recommendation defines compensatory collective redress as a legal mechanism that ensures a possibility to claim compensation collectively by two or more natural or legal persons claiming to have been harmed in a mass harm situation or by an entity entitled to bring a representative action.  With respect to the core issue of legal standing to bring a collective action, the Recommendation makes a distinction between two types of collective redress mechanism.  On the one hand, a class action may be a group or collective action where the action can be brought jointly by those who claim to have suffered a loss, whilst on the other hand, it can be a representative action.  In the latter scenario, the Recommendation provides that the legal standing to bring the representative action should be limited to ad hoc certified entities that fulfil certain criteria set by law or public authorities.  The representative entity should be required to prove its administrative and financial capacity to be able to represent the interest of claimants in an appropriate manner.

French law, which opted for the representative action, follows the EU Recommendation in this respect as class actions may only be brought by a nationally representative consumer protection association approved by the government.  To date, there are 16 approved associations at national level in France.  

Scope: sectors and types of loss concerned

The Recommendation does not limit the scope of collective redress to certain sectors or types of loss and indicates that the areas where collective redress is of value are consumer protection, competition, environment protection, protection of personal data, financial services legislation and investor protection.

In France, to fall under the scope of a class action, the loss sustained by the consumer must result from the breach of the legal or contractual obligations of a professional, whether in the scope of the sale of goods or the provision of services.  French law also specifies that class actions can also be used to compensate the loss suffered by consumers as a consequence of anti-competitive practices.  In this context, only material losses affecting consumers' assets may be compensated.  Accordingly, losses resulting from bodily or moral injury are excluded.  Therefore, even though the French system does not in theory exclude any sector from the scope of application of class actions, the fact that compensation is limited to certain types of loss implies that some sectors will not be affected by French class actions as they stand now.

Opt-in / Opt-out system

The EU Commission recommends an opt-in system, which means that the claimant party should be formed on the basis of express consent of the natural or legal persons claiming to have been harmed.  Any exception to this principle, by law or by court order, should be duly justified by reasons of sound administration of justice.

The French system is based on the opt-in principle.  Nevertheless, its originality lies in the fact that publicity measures are ordered only after the court rules on the defendant's liability.  Once the decision on the defendant's liability is final, publicity measures are ordered by the court and the potential members of the group can decide whether or not they want to join the action to obtain the compensation set forth in the decision relating to the defendant's liability.

Examination of admissibility

The EU Commission recommends that Member States should provide for verification at the earliest possible stage of litigation in cases in which conditions for collective actions are not met and to discontinue manifestly unfounded cases.

Under the French system, the Court has to rule on the admissibility of the action and on the defendant's liability in the same decision.  This is one of the most criticised features, as it may lead to lengthy proceedings before potentially concluding that the defendant is not liable.  

Alternative dispute resolution

The Recommendation encourages settlement at all stages of the proceedings.  The legality of the binding outcome of a collective settlement should be verified by the courts, taking into consideration the appropriate protection of interests and the rights of all parties involved.

The French system also provides that the parties may resort to mediation at any time and any potential settlement agreement is subject to the Court's approval.

Punitive damages

Punitive damages are prohibited under both the EU and the French systems.

Lawyers' fees

The EU Commission indicates that Member States should not permit contingency fees which risk creating an incentive to litigation that may be unnecessary from the point of view of the interest of any of the parties.  In line with the EU Recommendation, pure contingency fee agreements are prohibited in France.