Class actions, or collective actions as they are known in Europe, have long been a mainstay of US law but have never seen EU wide adoption due to an innate European fear of unmeritorious litigation often encountered in the US class action system. However, given the historically low use of these actions and competition litigation throughout Europe, the EU recently proposed a draft
Directive and a Communication intended to encourage competition and collective action litigation throughout European courts, albeit, one which avoids encouraging unmeritorious claims.
In accordance with this EU initiative, a bill has been introduced before the Belgium Parliament to provide for collective actions. However the bill goes far wider than competition law and also extends to intellectual property and consumer actions. The draft legislation is likely to be enacted in Spring of this year.
To ensure only meritorious claims are started, the Belgium legislation as it currently stands has a number of inbuilt safeguards. These are specifically designed to ensure the action is for the benefit of claimants and not law firms or other interested commercial organisations solely seeking to make a profit from bringing claims. Whether these safeguards are too rigorous and will have the opposite effect to that intended by actually discouraging claims remains to be seen.
In brief, the current bill before the Belgium Parliament allows collective actions in the following circumstances:
- The collective actions must be started by either the Federal Consumer Mediator, an association authorised by the Minister for Economy or through a member of the Belgium (law firms for example cannot act as representatives for the class action).
- Actions may be started on either an opt-in or opt-out basis. Under the opt-in mechanism, claimants have to opt-in to be a part of the class and receive a share of the damages/be liable for a share of the costs. Under the opt-out mechanism, all potential members of a class are presumed to be part of it unless they elect to opt out. This potentially large pool of claimants is entitled to share in the damages awarded. However, the decision of whether to operate either mechanism is to be decided by the judge rather than by the party instigating the collective action. Residents outside of Belgium will not be able to bring opt-out actions.
- The loser(s) of the collective action will bear their own costs, as well as those of the successful party.
This bill goes further than the EU draft Directive by recommending opt-out collective actions in certain cases. Although as mentioned above, this will still be a judicial decision. Whilst the objective of this bill is to encourage Belgium consumers who have been victims of anti-competitive behavior to turn to the Courts, the incentive to bring these collective actions still remains low considering the lack of punitive damages. Litigants can only obtain compensatory damages. It will be down to well funded and informed consumer groups to police markets and start these claims on behalf of consumers. Business victims on the other hand do not have the monetary incentives necessary to encourage such potentially costly litigation.