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07 December 2020 / news

European Parliament adopts Directive on Representative Actions for Consumers

Companies operating in the EU may face additional class action systems across the EU once the EU Directive on Representative Actions is implemented. All member states must offer at least one effective procedural mechanism for representative actions brought against traders for alleged infringements of specific provisions of EU consumer law such as product liability, data protection and food information requirements.

Timing and scope

On 24 November 2020, the Directive was adopted by the European Parliament. It must be implemented into national law in all Member States within 24 months and applied ultimately within 30 months after the date on which it enters into force. The new rules will apply to representative actions brought on or after its date of application.

The Directive distinguishes between "domestic" and "cross-border" representative actions, depending on where the entity initiating the claim is domiciled and where it brings its claim. The domicile of the consumer and trader are not relevant. So what does this mean for businesses operating in our home markets?

Belgium

Belgian law already provides for a class action system that allows a group representative (a non-profit organization or a public body) to bring an action for collective redress on behalf of consumers and small and medium-sized enterprises against enterprises for alleged violations of their contractual obligations or of specifically enumerated Belgian and European law, including consumer law and competition law.

While the Belgian legal framework already meets many of the requirements set forth in the Directive, the Belgian legislator will need to make slight amendments to fully implement the new rules. For example, the Directive stipulates that, in order to bring cross-border actions to court, qualified entities will have to comply with the same criteria across the EU, which will now have to be implemented in Belgian law.

Luxembourg

Since the launch of the European policy “New Deal for Consumers” in 2018, Luxembourg has given increased recognition to the protection of consumers. It established a ministry for the protection of consumers, followed by the publication of a bill creating class actions in consumer law. That bill is intended to be voted on and adopted by mid 2021. Therefore, the implementation of the new EU directive should not encounter major obstacles.

Luxembourg is on some points very well prepared to welcome the new directive on time while its own bill enables not only qualified entities, but also individuals to bring representative actions. With sufficient safeguards against abuse also embedded into the proposed legislation, Luxembourg is ready to protect both consumer rights and defend businesses from potential abuses.

Netherlands

As of 1 January 2020, the Act on Collective Damages in Class Actions (WAMCA) expanded the possibilities for class actions in the Netherlands, which are of a general nature and are not limited to specific topics or to consumers only. We would expect that – where necessary – the Dutch legislator will fit the requirements of the Directive into the existing Dutch mechanisms for collective redress. Although there are subtle differences between the Directive and the existing Dutch mechanisms, Dutch legislation already tackles aspects like quality/admissibility of representative organisations, finality subject to opt out and third-party funding practices.

Switzerland

Switzerland is not a member state of the EU and the Directive does hence not apply to it. Nevertheless, Switzerland is currently considering implementing rules on representative actions in the civil procedure code. Instruments that are currently in discussion are representative actions of consumer or other non-profit organisations with an opt-in possibility as well as group settlements with an opt-out possibility. The contemplated instruments are controversial and it is not clear yet when the proposed changes will be discussed in the parliament and whether they will be implemented.

Get in touch

Class actions or (potential) collective claims may have a serious impact on your business. With over twenty experts focussing on class actions, we have got all areas covered, from securities litigation, and data and privacy law, to antitrust infringements.

Do you have any questions about what the Directive means for your business? Please reach out to one of our dedicated advisers in the Litigation & Risk Management department.



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