Strengthening Private Enforcement

To improve the conditions for private enforcement some measures need to be taken by the Member States.

3.3.1 Coordination of individual and collective redress

According to the decision of the ECJ in Munoz full effectiveness of Union Law '(implies) that it must be possible to enforce that obligation by means of civil proceedings instituted by a trader against a competitor'.[1] On the other hand, collective redress is a much-discussed instrument to strengthen effective private enforcement of consumer protection law, including the law on unfair commercial practices. The coexistence of collective redress and potential individual claims raises the issue of their relationship to each other.[2] The basic principle should be that individual victims are not deprived of their right to claim damages if they choose to bring their own action for damages. Likewise, they should not be deprived of their right not to bring an action at all. Finally, necessary safeguards should be put in place in order to avoid the same harm being compensated more than once through individual and collective actions.

3.3.2 Capability to be sued

Another crucial issue in modeling effective private enforcement mechanisms is the question who should be sued in the case of legal persons as wrongdoers. The UCP Directive does not expressly rule whether, for instance, in the case of companies enforcement measures may be addressed against the company as well as the directors of the company. According to Article 2 of the UCP Directive, 'trader' means any natural or legal person who, in commercial practices covered by this Directive, is acting for purposes relating to his trade, business, craft or profession and anyone acting in the name of or on behalf of a trader. It has to be scrutinized if a direct liability of directors and officers on behalf of consumers is a suitable means of effective enforcement.[3]

3.3.3 Adjusting civil procedural law

Private enforcement mechanisms are not effective if conditions of entitlement are so stringent that the respective party entitled to claim is regularly not able to successfully enforce the claim.[4] Therefore, effective private enforcement may require balanced rules in regard to civil proceedings.[5] On the one hand, an effective and efficient procedure is needed. On the other hand, one needs to avoid encouraging a litigation culture.[6]

At this point, only two of the issues to be discussed can be emphasized. Firstly, appropriate measures are necessary to effectively tackle the difficulties encountered by victims of unfair commercial practices to get access to justice. At the same time, safeguards against abusive litigation are indispensable. Secondly, the public interest in effective enforcement must be sufficiently considered in civil proceedings.

a) Access to court and safeguards against abusive litigation

Effective private enforcement depends on free access to justice.[7] Access to justice may be enabled by minimizing the costs of litigation and by alleviating the burden of proof. In most Member States, costs are allocated according to the 'loser-pays' principle. This principle acts as a strong deterrent to unmeritorious litigation. However, another effect of the 'loser-pays' principle may be to discourage meritorious claims so far as victims are risk-adverse. Therefore, in order to alleviate the obstacle that legal costs may represent for potential claimants, specific measures are necessary. An example for alleviation of the normal cost rule in the interest of effective enforcement is included in Directive 2004/48/ EC on the enforcement of intellectual property rights.[8] According to Article 14 of this Directive, the unsuccessful party shall bear reasonable and proportionate legal costs incurred by the successful party, unless equity does not allow this. Furthermore, the European Commission is contemplating further deviation from the loser-pays principle and limitation of expenses in the interest of private enforcement.[9] Especially the option to grant civil courts the power to allocate the costs by derogation from the loser-pays rule is a suitable means to foster private actions and, consequently, effective enforcement. To avoid abusive litigation, the court order should be subject to certain conditions. By requiring a court order for alleviation from the cost burden the court would be given the opportunity to filter and thus prevent abusive litigation.[10] Furthermore, certain requirements for standing to sue might diminish abusive litigation.

b) Access to evidence

Although the relevant information is more easily available in regard to unfair commercial practices than in other fields of law, access by claimants to such evidence is the key to making private enforcement effective. It should therefore be considered whether and to what extent particular rules concerning evidence or obligations to turn over documents should be introduced.[11]

c) Considering public interests in civil proceedings

Another issue is to consider public interests in civil proceedings.[12] One instrument is involvement of public authorities in civil proceedings as amicus curiae (see, for example, Article 15 Regulation 1/2003). In addition, courts and judges should become experts in the field of enforcement of the UCP Directive and hence public interests. Specialization can be achieved by constraining the competence to some few courts which focus only on cases dealing with unfair commercial practices. This could be possible by concentration of jurisdiction or setting up special courts.

International Cases

Finally, globalization poses specific challenges to effective enforcement of the UCP Directive. Recent technical progress has rendered international trade easier, faster and cheaper. This has led to a higher degree of international cooperation and competition in the field of production and sale in globalized markets.[13] Along with this development, unfair commercial practices go beyond the frontiers of the Member States as well as of the European Union. The financial crisis has shown that and to which extent commercial practices may negatively affect foreign markets and international economy. Especially the interests of consumers in the European Union need to be protected from rogue traders based in third countries. Therefore, globalization makes it necessary to develop international enforcement procedures to apprehend unfair commercial practices in third countries which affect interests of citizens in EU Member States.[14] The Commission itself recognizes this issue and recommends 'international agreements to be negotiated [at the Union level] with third countries regarding mutual assistance in the enforcement of the laws that protect consumers' interests' (recital No. 18). An alternative enforcement instrument might be private enforcement because by means of International Private Law the applicable law can be determined. According to Article 6 of the Rome II Regulation, the law applicable to a non-contractual obligation arising out of an unfair commercial practice shall be the law of the country where competitive relations or the collective interests of consumers are, or are likely to be, affected. However, specific problems arise because unfair commercial practices often cause harm in many different countries. In so-called multi-state infringements it is difficult to determine jurisdiction as well as the applicable national law.[15] Furthermore, the European experience with cross-border infringements has shown that under certain circumstances it is appropriate and necessary to facilitate cooperation between public authorities responsible for enforcement of the laws that protect consumers' interests.[16]

  • [1] Case C-253/00 Munoz [2002] ECR I-7289, para 30. See above III.
  • [2] See Norbert Reich, Individueller und kollektiver Rechtsschutz im EU-Verbraucherrecht (Baden-Baden: Nomos, 2012) 50 et seq.; Poelzig, Normdurchsetzung durch Privatrecht (n 6) 497.
  • [3] In detail see Poelzig, Normdurchsetzung durch Privatrecht (n 6) 461 et seq.
  • [4] Cf. in detail van Boom, 'Efficacious Enforcement in Contract and Tort' (n 9).
  • [5] As to the need of rethinking the role of civil courts van Boom, 'Efficacious Enforcement in Contract and Tort' (n 9) 47.
  • [6] Commission, 'Green Paper on Consumer Collective Redress' COM (2008) 794 final, 27 November 2008, para 48.
  • [7] 1See Christopher Hodges, The Reform of Class and Representative Actions in European Legal Systems: A New Framework for Collective Redress in Europe (Oxford: Hart Publishing, 2008) 89, 190.
  • [8] Directive (EC) 2004/48 of the European Parliament and of the Council of 29 April 2004 on the Enforcement of Intellectual Property Rights [2004] OJ L157/45.
  • [9] See the proposals for strengthening private enforcement in competition law, Commission, 'Commission Staff Working Paper accompanying the White Paper on Damages Actions for Breach of the EC Antitrust Rules' SEC (2008) 404, 2 April 2008, paras 73 et seq.
  • [10] See Commission, 'Commission Staff Working Paper' (n 102), para 259: 'fairness, reasonableness or equity'.
  • [11] See Commission, 'Damages Actions for Breach of the EC Antitrust Rules' (Green Paper) COM (2005) 672 final, 19 December 2005, 5.
  • [12] In detail see Poelzig, Normdurchsetzung durch Privatrecht (n 6) 512 et seq.
  • [13] Werner F Ebke, Global Economy - Global Law?, in J Attanasio and J Norton (eds), Multilateralism v. Unilateralism. Policy Choices in a Global Society (London: BIICL, 2005) 83, 95; Werner F Ebke, 'Foundations, Conflicts of Laws and the European Community', in Pieter Bekker, Rudolf Dolzer and Michael Waibel (eds), Making Transnational Law Work in the Global Economy: Essays in Honour of Detlev F. Vagts (New York: Cambridge University Press, 2010) 298 et seq.
  • [14] For details see Poelzig, Normdurchsetzung durch Privatrecht (n 6) 542 et seq.; Dörte Poelzig, 'Privat(rechtlich)e Normdurchsetzung - Chance und Herausforderung auf globalen Märkten' (2011) Zeitschrift für Vergleichende Rechtswissenschaft 395 et seq.
  • [15] See Case C-68/93 Fiona Shevillet et al. v Presse Alliance SA [1995] ECR I-415.
  • [16] Cf. Recital No 3 of the Regulation on Consumer Protection Cooperation.
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