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A framework for collective redress (class actions)
SUMMARY OF:
WHAT IS THE AIM OF THIS RECOMMENDATION?
- It sets out a series of common non-binding principles for national collective redress1 mechanisms.
- The aim is to enable citizens and companies to enforce their rights granted to them under European Union (EU) law where these have been infringed.
- These redress mechanisms should be available in different areas where EU law grants rights to citizens and companies, such as in consumer protection, competition, environmental protection and financial services.
KEY POINTS
The main principles are laid down in a European Commission recommendation, published in parallel with a communication which suggests that all EU Member States introduce collective redress mechanisms based on agreed principles. These principles are as follows:
- Claimants should be able to seek court orders to cease violations of their rights granted by EU law (‘injunctive relief’) and to claim damages for harm caused by such violations (‘compensatory relief’) in a case where a large number of persons are harmed by the same illegal practice.
- Collective redress procedures must be fair, equitable, timely and not prohibitively expensive.
- Collective redress systems should be based on the ‘opt-in’ principle. Under this principle, potential claimants who have not directly expressed their consent are not members of the group and therefore, may not benefit directly from a favourable outcome of the collective redress proceedings.
- There should be procedural safeguards to avoid abuse of collective redress systems such as:
- a ban on punitive (i.e. excessively high) damages and interest;
- entities representing claimants should not be profit-making;
- a ban on the payment of contingency fees to lawyers.
- The losing party is required to pay the winning party’s legal costs.
- The judge has a key role in the collective litigation2 to effectively manage the case and must be vigilant against any possible abuses.
- Claimants should be able to settle the case by means of collective consensual dispute resolution mechanisms (i.e. procedures whereby parties reach consensus on a solution).
WHEN DOES THE RECOMMENDATION APPLY?
Member States were invited to apply these principles no later than .
BACKGROUND
Collective redress facilitates access to justice by those whose rights have been violated by one and the same entity. It allows them to enforce their rights collectively where they would not have done on an individual basis because of the cost or the time that it entails.
The EU framework for collective redress complements the existing mechanisms at EU level namely:
KEY TERMS
- Collective redress: a mechanism that results in the ending or preventing of an unlawful business practice that affects a group of claimants or the compensation for the harm caused by these practices.
- Group/collective litigation: a lawsuit brought by a group of claimants.
MAIN DOCUMENT
Commission Recommendation 2013/396/EU of on common principles for injunctive and compensatory collective redress mechanisms in the Member States concerning violations of rights granted under Union Law (OJ L 201, , pp. 60-65)
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