Following its consultation last year on draft collective redress benchmarks, the Commission has published a green paper seeking stakeholders’ views on how to facilitate legal claims by consumers in situations where large numbers of them have been harmed by a single trader’s illegal practice. One option under consideration is the introduction of new group litigation (‘class action’) mechanisms across the EU.
Studies carried out by the Commission suggest that consumer claimants currently face substantial barriers in terms of access to justice, effectiveness and affordability when bringing claims in the EU – particularly in the case of mass claims whose individual value is so low that it does not make sense for an individual consumer to sue. Only 13 member states currently have consumer collective redress systems and, according to the Commission, these have been applied only in a few cases in recent years. Consequently, ensuring these barriers are broken down and consumers have adequate redress is a priority for the Commission’s Directorate General for Health and Consumers (known as DG SANCO). Meglena Kuneva, has, however, been at pains to point out that it is not the Commission’s intention to introduce US-style class action lawsuits across the EU (see Product risk and liability news January-February 2008).
The green paper identifies four possible options to tackle the problem:
- to take no immediate action;
- co-operation between member states to extend existing national collective reddress systems to consumers from other member states without such mechanisms;
- to introduce a mix of policy instruments to strengthen consumer redress (including collective consumer alternative dispute resolution mechanisms, a power for national enforcement authorities to request traders to compensate consumers and extending small claims to deal with mass claims); and
- binding or non-binding measures for a collective redress judicial procedure to exist in all member states.
In relation to the last option, issues for consultation include:
- how such actions should be financed (eg whether legal fees should be capped or such actions exempted from court fees);
- how unmeritorious claims can be avoided;
- what legal standing consumers’ organisations and others should enjoy to pursue representative actions; and
- how any award of compensation should be distributed.
Of particular importance is the question – still unsettled – as to whether any group litigation procedures that are introduced should be based on the ‘opt-in’ model common in Europe (where consumers would have to actively choose to be added to the claim) or the ‘opt-out’ model that is used in the US and other countries (where the class automatically includes all potentially affected consumers, except for those individuals who actively object to joining the claim).
Copies of the green paper and related information are available from the consumer section of the Commission’s website at http://ec.europa.eu/consumers/redress_cons/ collective_redress_en.htm. The deadline for responses is 1 March 2009.