Until recently, class actions existed only in a handful of EU Member States. However, they will become an EU-wide phenomenon soon as a result of the Representative Actions EU Directive (“RAD”), which should take effect on June 25, 2023.
Under the RAD, all EU Member States must put in place at least one effective procedural mechanism for “qualified entities” to bring class actions to obtain injunctions, damages and other redress on behalf of a group of consumers against traders for alleged infringements of specific provisions of EU consumer law (such as product liability, unfair contract terms, data protection and food information requirements).
The RAD provides that class actions can only be brought by interest organizations that are designated as so-called “qualified entities” by an EU Member State. To be designated as a qualified entity, an interest organization must apply to the competent authority of a given EU Member State, which will grant the designation if certain quality and admissibility requirements are met.
The class actions can be filed against any trader operating in the EU, regardless of where it is established. It is sufficient that there is an alleged violation of EU law by the trader and that the class action is brought in an EU Member State.
EU Member States are allowed to choose whether class actions will operate on the basis of an opt-in or opt-out of the relevant consumers, or a combination of both. However, opt-in is mandatory for consumers who are not habitually resident in the EU Member State where the action is brought.
While the RAD encourages settlements aimed at providing redress, all settlements must be scrutinized by a court (similar to US class actions). The court is required to approve the settlement unless it violates mandatory national law or includes unenforceable conditions, but EU Member States may allow the court to reject the settlement if it is “unfair”. Approved settlements are binding for the parties as well as the consumers. However, consumers may opt-out of a settlement.
The RAD should have been implemented by all EU Member States by December 25, 2022 and should take effect on June 25, 2023. However, to date, most Member States have failed to (fully) implement the RAD. The European Commission has therefore commenced an infringement procedure against several Member States.
Class actions may have a serious impact on US businesses operating in the EU. Loyens & Loeff can assist therewith. With over twenty experts focusing on class actions in our home markets (i.e., Belgium, the Netherlands, Luxembourg and Switzerland), and an impressive track record, we have all areas covered, from securities litigation, data and privacy law to antitrust infringements. In case of questions, you can reach out to anyone mentioned in the slider below or any expert listed on our dedicated webpage.