Collective Action and Individual Action - United or Divided?

The second issue may be of even more fundamental reach, as it is of utmost practical importance. What is the potential effect of a decision of a national court holding that this and that standard contract term used by a company or recommended by a business association is void? Does it affect individual contracts in which the very same term shows up? Is a potential effect tied to the same user or is the potential impact directed against the unfair term? This question came up in the early 1970s when the German law on unfair standard terms was hotly debated in academic circles and political fora. Every German unfair contract terms enthusiast knows that § 11 UKlaG (German Injunctions Act) enables individual consumers to refer to a judgment in a collective action in order to make sure that the same term used by the same user in individual contracts cannot gain legal effect to the detriment of the consumer. The Federal Ministry of Food, Agriculture and Consumer Protection (BMELV) commissioned a study in 2010 which confirmed what insiders know all too well: that the rule in § 11 on the so-called Rechtskrafterstreckung - extension of res judicata - does not play a role in practice.[1] Neither Directive 93/13/EEC nor Directive 2009/22/EC on injunctions for the protection of consumers' interests give concrete indications on how to respond to the question of a possible link between individual and collective legal redress.

This lacuna led to great diversity in the Member States. Most of the Member States did not adopt particular rules,[2] unlike Poland and Hungary, from which Invitel originates, which granted erga omnes effect to injunctions. Little is known as to how the erga omnes effect functions and how courts and private litigants make sure that a term registered as invalid may not gain effect despite the erga omnes rule.[3] So how could the ECJ in Invitel get into an issue which EU law has not regulated and where Member States defend and uphold their 'procedural autonomy'? It should be recalled that EU law is per se more open and tries to detach itself from 'national traditional thinking', since it always pursues integration-related objectives. The Hungarian Court raised the question of whether and to what extent the erga omnes rule is in compliance with EU law and whether it should be applied ex officio:[4]

May Article 6(1) of that directive be interpreted, where an order which benefits consumers who are not party to the proceedings is made, or the application of an unfair standard contract term is prohibited, in an action in the public interest, as meaning that an unfair term which has become part of a consumer contract is not binding on all consumers also as regards the future, so that the court has to apply the consequences in law thereof of its own motion?

As the efforts of the EU Commission to promote the development of collective legal redress have more or less ground to a halt,[5] debates over the potential link between the unfairness of the term and a possible compensation for the loss these consumers suffered from are compelled to shift into courtrooms.[6] This is all the more true as the European Commission never seriously considered the extension of res judicata, not even during the most ambitions discussions on the then envisaged revision of the consumer acquis which later ended up in the rather modest Directive 2011/83/EC on Consumer Rights, modest because the Directive no longer includes unfair terms and consumer sales regulation.

  • [1] There is no evidence - not even in the recently concluded empirical study -of the degree to which consumers are making use of the possibility in their litigation to a judgment of a court against the same supplier that has declared the incriminated term void, Höland and Meller-Hannich, Gutachten Evaluierung der Effektivität kollektiver Rechtschutzinstrumente (2011).
  • [2] See U Docekal, P Kolba, H-W Micklitz and P Rott, 'Verbraucherschutz durch Unterlassungsklagen, Rechtliche und Praktische Umsetzung der Richtlinie Unterlassungsklagen 98/27/EG in den Mitgliedstaaten' (2007) VIEW Schriftenreihe, Band 17, with regard to Hungary see Reich, FS E Schmidt (2005) 239, [248].
  • [3] On Poland, H-W Micklitz, 'Reforming European Union Unfair Terms Legislation in Consumer Contracts' (2010) ECRL 347, 352.
  • [4] ECJ Case C-472/10 nyr.
  • [5] Communication from the Commission 'Towards a European Horizontal Framework for collective Redress', COM (2013) 401/2, 11.6.2013.
  • [6] ECJ Case C-92/11, RWE-Vertrieb/VZ NRW 2013 ECR I-nyr, is just another example. See for details H-W Micklitz and N Reich, 'Von der Mißbrauchs- zur Marktkontrolle' (2013) EUZW 457.
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