We have previously reported on the steps being considered to introduce a system of collective redress in the EU (see edition dated November 2010). Effectively, this is a proposal to enable consumers to bring claims under group actions.
There have been ongoing discussions over several years to make it less costly for consumers to pursue litigation through the Courts. The paralysis over the way forward stems from the divergence of views on the approach required and the desirability of allowing group claims. Unsurprisingly, consumer groups favour the model of collective redress whilst many businesses oppose the proposal. Member states also have a divergence of views with some members having some form of collective redress and others none. It is recognised that there is a need for a consistent approach for consumers to take but this whole process has been fraught with difficultly, starting with a Green Paper on Collective Redress published in 2008.
Collective redress is not a new concept in the EU, with injunctive collective redress featuring in the Union's consumer law. However, a major issue to address is the divergent approaches to claims for compensation taken by member states.
A consultation period under the Green Paper to discuss the merits of the proposal ended in April 2011 and there has been speculation as to whether the Commission has a particular model of collective redress in mind. Some thoughts on what could be achieved have already been indicated by EU Justice Commissioner, Viviane Reding, in a speech on 12 July 2011. Here she stressed the importance of businesses and consumers having access to adequate means of obtaining compensation where their rights have been infringed and of ensuring access to justice within the EU. She also referred to the divergence of views on how the EU should deal with this issue and that at the end of the year, the Commissioner plans to issue a communication on the approach the Commission will take. Introducing any system of collective redress is likely to be controversial and could potentially damage businesses. Any initiative would have to respect the legal traditions of the member states and avoid the worst possible abuses which have occurred in other legal systems, for example, in the US.
Manufacturers will need to consider the implications of potentially dealing with group actions and, although the options currently remain open-ended, we are moving increasingly towards a form of collective redress. This could have a big impact on consumer damages claims and open up new potential claims under product liability and recall.