Decree n° 2014-1081 of 24 September 2014 concerning class actions in the field of consumer protection enters into force this Wednesday 1st October 2014 and provides awaited clarifications regarding territorial jurisdiction of courts of first instance, the content of information provided to concerned consumers and the consequences of their joining the group of consumers seeking redress, as well as regarding regulated professions entitled to assist certified consumer protection associations.
The class action, created by Article 1 of the Consumer Protection Law n° 2014-344 of 17 March 2014 (Hamon Law), will be open to consumer protection associations as of 1st October 2014, date of entry into force of its implementation decree, Decree n° 2014 1081 of 24 September 2014, which created the new Articles R. 423-1 to R. 423-25 of the French consumer protection code.
Territorial jurisdiction of the defendant’s forum
Article L. 211-15 of the French code of organisation of the judiciary confers exclusive jurisdiction to courts of first instance over class actions. In order to prevent inconsistency and fragmentation of litigation, as explained by the decree’s notice, the new Article R. 423-2 of the consumer protection code confers territorial jurisdiction to the court of first instance of the defendants domicile. When the latter is established in another country or has no identified domicile or residence, jurisdiction falls with the Paris Court of first instance.
For damage claims based on violations of competition law, we believe this general rule does not exclude the application of Article L. 420-7 of the French commercial code which confers exclusive jurisdiction to courts specialised in litigation related to anticompetitive practices. Therefore, in matters relating to competition law, the competent court of first instance is the specialised court of first instance within whose jurisdiction the defendant is domiciled.
No specific procedure
The decree does not provide for any specific procedural rules, the ordinary procedure for litigation before the court of first instance is applicable to class actions. On appeal, under Article R. 423-4 of the consumer protection code, the procedure set out by Article 905 of the French code of civil procedure for short term proceedings is applicable. Accordingly, in the interest of efficiency and expediency, the president of the chamber to which the case is assigned must schedule a hearing as soon as possible.
The decree also provides that the complaint must mention “expressly, failing which it shall be void, the individual claims presented by the association to support its case”, in compliance with the new Article R. 423-3 of the consumer protection code.
The judge ruling on the liability of the professional must also decide on the conditions and modalities under which the concerned consumers are informed. The new Article R. 423-13 of the consumer protection code sets out the content of the information which is communicated in order to enable consumers to join the group. Consumers are provided with the operative part of the ruling on liability, the contact details of the person to whom consumers express their consent to join the group and, where applicable, of the association which must be informed, and with the form, content and deadline within which consent to join must be expressed.
As regards the simplified class action procedure, which applies when the identity and the number of consumers having suffered harm are known and they have suffered loss of an identical amount, Article L. 423-10 of the consumer protection code, created by the Hamon Law, provides that the judge can order the professional to compensate them directly and individually for their loss. The conditions and modalities of the individual information of consumers enabling them to accept compensation are decided by the judge in the ruling. The new Article R. 423-9 of the consumer protection code sets out the content of this information which is identical to what is required in the ordinary procedure and also includes the contact details of the professional from whom compensation can be claimed.
In both cases, the information communication must state that accepting compensation or joining the group empowers the association to receive indemnification on behalf of the consumers.
Similarly, consumers must be informed that joining the group or accepting compensation in the course of a simplified procedure, prevents them from acting individually against the professional in order to seek compensation for the harm for which reparation is being sought in the context of the class action, but they may still seek compensation for other harm or loss.
Also, consumers must be made aware that if they fail to accept compensation or join the group according to the conditions and within the time limits set by the ruling, they will no longer be able to seek redress in the context of the class action.
Consequences of joining the group or accepting compensation
The decree provides that, under a new Article R. 423-17 of the consumer protection code, the power given to the association to receive indemnification requires it to perform, on behalf of the group, all procedural acts and duties, including exercise of rights of appeal, in view of obtaining compensation for harm suffered. By virtue of this power, the association must advance all costs and expenses of the procedure.
This article also states that consumers are free to put an end to the mandate at any time and to retract their membership to the group or their acceptance of compensation.
The decree also sets out the conditions under which the association shall manage the account it must open at the Caisse des dépôts (State bank handling official deposits) for each case. It must immediately deposit any sum received as compensation for consumers and it has sole control over movement of funds and closing of accounts, made under its sole responsibility (new Article R. 423-18 of the consumer protection code).
Role of solicitors and bailiffs
As regards class actions, standing is granted, under Article L. 423-1 of the consumer protection code, exclusively to national consumer protection associations. They may, under Article L. 423-9 of the same code, upon authorisation granted by the judge, be assisted by members of a regulated judicial profession, empowered in particular to receive requests for compensation from the members of the group and to represent harmed consumers against the professional. The new Article R. 423-5 of the consumer protection code appoints solicitors and bailiffs in this respect.
With the entry into force of the implementation decree, on 1st October 2014, the class action procedure now becomes a reality which undertakings also face in France.
It remains to be seen how certified associations will use this new judicial instrument. The class action appears as a real threat for companies, but also presents a considerable risk for associations, not only in the event of failure of the action but also in case the initiative is not met with the expected interest by consumers, given the cost of the action which the associations must advance.
In competition law matters, a few cases in which the French competition authority has adopted infringement decisions, and for which appeals are pending, may give rise to the first class actions in France.
However, violations of consumer protection rules will probably be a privileged field for this new type of litigation.