On 30 June 2020, the final text of the draft EU group-claims directive (the Directive) was published (https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=consil:ST_9223_2020_INIT). The final text was agreed between representatives of the European Commission, the member state governments and the European Parliament on 22 June 2020. The Directive is said to be adopted by the European Parliament this fall.
The Directive aims to ensure that within all EU member states, consumers have effective means to file claims against businesses for unlawful practices in areas such as data protection, financial services, travel and tourism, energy and telecommunications, in addition to general consumer law. The Directive does not pertain to provisions of competition law. The Directive applies to both domestic as well as cross-border infringements.
Under the Directive, member states shall ensure that actions for the protection of the collective interests of consumers that are brought on behalf of consumers (so-called ‘representative actions’) can be brought by ‘qualified entities’. These are organisations (in particular consumer organisations) which have been designated as a ‘qualified entity’ by a member state.
Organisations can be designated as such for the purpose of bringing cross-border representative actions if they comply with several criteria, including that they can demonstrate 12 months of actual public activity in the protection of consumer interests, they have a non-profit making character and they are independent and not influenced by persons, other than consumers, who have an economic interest in the bringing of any representative action, including in case of funding by third parties.
Member states shall ensure that the criteria they use to designate an entity as a qualified entity for the purpose of bringing domestic representative actions are consistent with the objectives of the Directive to make effective and efficient functioning of such actions.
Member states will have to ensure that cross-border representative actions can be brought in their courts and that, if the relevant infringement affects or is likely to affect consumers from different member states, such actions may be brought by several qualified entities from different member states for the protection of the collective interest of consumers from different member states.
The relief sought in these proceedings can be both an injunction measure, such as a provisional or definitive measure to cease an infringement, as well as a redress measure, such as compensation. For actions in which redress is sought, the member states are free to determine whether consumers are bound on an opt-in or an opt-out basis. However, in order for the action to bind consumers from other member states than the one where the action has been brought, these consumers have to explicitly opt-in. If the relief sought is an injunction, no consent is needed from consumers. In the latter case, the qualified entity shall neither have to prove actual loss or damage on the part of individual consumers affected by an infringement nor the intention or negligence on the part of the trader.
Claims funding is endorsed under the framework set out in the Directive. Member states only have to ensure that conflicts of interests are prevented and that the funding by a third party having an economic interest in the bringing or the outcome of the representative action for redress does not divert the action from the protection of the collective interests of consumers.
In proceedings which are governed by the Directive, a “loser pays” principle applies. However, member states only have to ensure that the defeated party pays the costs of the proceedings borne by the successful party in accordance with the conditions and exceptions provided for in national law applicable to court proceedings in general.
The Directive shall not prevent member states from maintaining other procedural means aimed at the protection of the collective interests of consumers, provided that at least one of these complies with the Directive. As for collective redress in the Netherlands, the procedure described in the Directive bears resemble to the collective action framework set out in Section 3:305a DCC (see our earlier post about this relatively new framework). However, whereas the Directive pertains to infringements of consumer law only and is aimed specifically at organisations which have a history in consumer protection, the Dutch collective redress framework is also open for other types of claims and claimants.
Member states have two years to implement the Directive after it will have entered into force, and shall apply the implementing provisions from six months thereafter. Hence, these provisions won’t be applied before 2023. It is yet to be seen how the Directive will be implemented in Dutch legislation.