Collective redress mechanisms in Member States

A growing number of EU Member States are introducing collective redress mechanisms for consumers to respond to the sharp increases in multi-party cases.[1]

At present, the principal common law jurisdictions already have a category of collective action for damages, while the civil law jurisdictions vary in the degree of availability of such actions. At least 16 Member States include collective redress mechanisms, while others have relevant legislative proposals.[2] This marks a new trend in recognizing consumer protection as a collective procedural right.

Despite considerable differences in national collective redress procedures, three broad models can be distinguished within the EU: representative actions, group actions, and test cases.

Representative collective actions are introduced either ‘by an organization, a state authority or an individual on behalf of a group of individuals, who are, however, not parties to the proceedings’.[3] Consumer associations or public bodies, such as an ombudsman, can represent the consumer interest, depending on the country. In the case of Austria, Belgium, Finland, Hungary, Italy, and the Netherlands, representative collective actions take the form of injunction procedures.[4] In other countries such as France, Greece, and Poland, the judge can effectively provide damages for the prejudice or moral harm caused to collective consumer interests. These damages are, however, not distributed to the individual victims, but are kept by the representative consumer body or are used by the state for public policy objectives.

In a group action, a delimited category of persons may bring an action to enforce their individual claims together, in one procedure, and in accordance with specific rules designed for such a purpose.36 Group actions can be differentiated according to whether they apply a so-called ‘opt-in’ or ‘opt-out’ procedure. Opt-out procedures include all the victims of a harmful action, with the exception of those consumers who explicitly ask to be excluded.37 In countries such as Norway and Denmark, opt-out options are complementary to the opt-in mechanisms, but are only applicable where the harm caused to the consumer is low. Conversely, other countries have only introduced an opt-in approach, which requires the explicit authorization by the harmed consumer to be included in the procedure, before the court decision has been taken. Examples of such opt-in group actions exist in Sweden and Spain, where consumers or interest groups can lead the case.

In test cases, one or more individuals can file a claim, which leads to a judgment that forms the basis for other claims with the same interest against the same defendant. These test cases were developed in countries such as Germany38 and the UK,39 and can be filed either by a consumer or by an organization.40 Consumers whose claims fulfil the requirements of a test case can subscribe to a register maintained by the acting claimant of the test case. The peculiarity consumers. See the European Commission’s Report concerning the application of Directive 98/27/EC, COM(2008) 756 final, 18.11.2008.

  • 36 Member States with group actions are Bulgaria, Denmark, Lithuania, the Netherlands, Portugal, Spain, Sweden, and the UK; H.-W Micklitz and A. Stadler, 4 The Development of Collective Legal Actions in Europe, Especially in German Civil Procedure’, (2006) 17 Eur. Bus. L. Rev., p. 1481.
  • 37 In the Netherlands only authorized associations can initiate such procedures to propose a settlement, while in Denmark only the Ombudsman can apply the opt-out option.
  • 38 The German Capital Markets Test Case Act, in force since 1 November 2005, introduced test cases for investors who have sustained loss through false, misleading, or undisclosed information relating to public capital markets; see A. Halfmeier, P. Rott, and E. Feess, Kollektiver Rechtsschutz im Kapitalmarktrecht, Evaluation des Kapitalanleger-Musterverfahrensgesetzes (Frankfurt: Frankfurt School Verlag, 2010).
  • 39 See the Civil Procedure Rules, r. 19.15 on test claims at the webpage of the Ministry of Justice:.
  • 40 Usually, a test case requires different individuals with overall similar claims against the same defendant; see Micklitz and Stadler, ‘The Development of Collective Legal Actions in Europe, especially in German Civil Procedure’ (n 32), p. 1478.

of such a case is that the court chooses only one claim and bases its decision on this, which binds all the registered claims. Test case procedures offer the opportunity to have legal questions relevant for a number of claims clarified by the court at once, and can thus reduce litigation costs. However, the judgment has no binding effect for the third parties that did not subscribe to the case.[5] Furthermore, the German test case procedure under the Capital Markets Model Case Act (KapMuG) has been criticized, owing to a number of shortcomings, such as complex and inefficient procedures, in particular for low-stakes claims.[6]

These facts suggest a trend in several Member States towards grouping individual claims for damages, while still following different national traditions. These legal variations (and an outright lack of collective action for damages in some countries) create legal inconsistencies, and may pose a barrier to an effective resolution of cross-border litigation. To understand the extent of these barriers, we will look at some important collective redress cases in the Member States, evaluating their cross-border aspects and implications.

  • [1] H.-W. Micklitz & A. Stadler, ‘Collective Legal Actions in Europe’, (2006) 17 Eur. Bus. L. Rev.,p. 1475.
  • [2] According to a 2011 study by the European Parliament collective redress schemes exist in16 Member States: Austria, Bulgaria, Denmark, Finland, France, Germany, Greece, Hungary,Italy, Lithuania, the Netherlands, Poland, Portugal, Spain, Sweden, and UK, see the Parliament’s‘Overview of existing collective redress schemes in EU Member States’, IP/A/IMCO/NT/2011-16July 2011 PE464.
  • [3] Leuven Study (n 22), p. 261. Representative collective procedures exist for example in Austria,France, Germany, Greece, the Netherlands, and the UK; see the Collective Redress Report(n 31), p. 6.
  • [4] With Directive 98/27/EC on injunctions for the protection of consumers’ interests, OJ L166, 11.6.1998, injunction procedures have become mandatory under EU law. As a result, everyMember State now provides for an injunction procedure to protect the collective interests of
  • [5] The same, however, is true for group actions with an opt-in procedure; e.g. Leuven Study(n 22), p. 262.
  • [6] In order to improve the effectiveness of the KapMuG, it has been suggested to introduceopt-in mechanisms and further extend the reversal of the burden of proof for causation to thedefendant; see E. Feess & A. Halfmeier (2010), ‘The German Capital Markets Model Case Act(KapMuG)—A European Role Model for Increasing the Efficiency of Capital Markets? Analysisand Suggestions for Reform’, The European Journal of Finance (2012), published online, pp. 1-20.
 
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