In 2013, the European Commission adopted a Recommendation on Collective Redress. It invited Member States to adopt a collective redress framework by July 2016 that would include the features mentioned in the Recommendation and then by July 2017, to report to the Commission about the extent to which they had done so. On the basis of the Member States’ report, the Commission will assess whether further actions by the EU is required.
After some years of hesitation by national legislatures, it is now clear that collective redress or so-called class-action models are multiplying across the EU. A large majority of the Member States now have at least one way for claimants to combine their claims and sue an alleged harm-causing party or parties for damages before national courts.
Though collective redress presents advantages (mainly the potential time and cost efficiency of dealing with multiple, similar claims at the same time), such mechanism is not without risks. In particular, experience in non-EU jurisdictions has shown that the opportunity to aggregate claims can in some cases cause litigation abuse. This potential for abuse is more potent where the rewards of litigation far outweigh the risks meaning that there are significant financial incentives for filing weak (or even entirely meritless) claims.
The Commission’s 2013 Recommendation acknowledged this risk and proposed several safeguards that are intended to prevent abusive litigation by keeping the risks and rewards under control.
It is particularly appropriate to determine whether safeguards have been adopted at all, and whether and how those safeguards are being implemented in practice.
Against this background, the U.S. Chamber Institute for Legal Reform (ILR) has ordered a survey on the “state of play” of collective redress in 10 Member States (including all of the largest economies). The survey was coordinated by Sidley Austin LLP in Brussels. It called on the expertise of practitioners in all of the Member States surveyed, including Stibbe Amsterdam (Jeroen Kortmann) for the Netherlands and Stibbe Brussels (Oliver Stevens) for Belgium. The survey identifies trends and issues that seem to be emerging across the EU. It finds that Member States have been accelerating the introduction of policies that simplify lawsuits, with the value and volume of claims increasing steeply. However, ILR’s study also finds that Member States, depending on the Member State in question, have failed to a larger or lesser extent to implement or maintain important safeguards for collective redress.