Scandals such as Dieselgate and Cambridge Analytica have clearly exposed the fact that law enforcement for consumers in Europe – in particular in comparison to the USA – is insufficient. Hence, the proposal for a Directive on representative actions is an important milestone for European consumers. The trilogue negotiations on this important legal act will start In January.
Many of the EU States, including Austria, have significant deficits regarding the enforcement of mass torts against companies. As identified by the European Consumer Association BEUC, efficiently working representative action systems exist in only 6 of the 28 EU States (Belgium, France, Italy, Portugal, Spain and Sweden). Commenting on the proceedings in the Dieselgate case, Petra Leupold, Austrian Consumers’ Association (VKI) recently summarized at a discussion event in the EU Parliament that only 2 % of consumers affected by Dieselgate are represented by the pending proceedings.
Hence, the high standards in material consumer law, which we have in Europe, are faced with large deficits in law enforcement. In future, the Directive on representative action will be able to ensure that consumers also have effective legal protection within the scope of class action. In March 2019, the EU Parliament had already agreed the Directive proposal on representative action with a large majority and submitted its amendments to the Commission proposal. On 28th November 2019, the Council also adopted its general approach to the directive, thereby clearing the way for the trilogue negotiations between Commission, Council and EU Parliament. Unfortunately, the decision of the Member States makes litigation funding more difficult. However, the intention to cover also damages based on medical and unsafe products may be regarded as a positive development.
The trilogue negotiation shall begin under the Croatian Presidency in January 2020. From the Chamber of Labour’s point of view, the new Instrument has to be practical and efficiently applicable. Therefore, Renate Anderl, President of the Federal Chamber of Labour, and Christoph Klein, Director of the Chamber of Labour, have used a letter to the trilogue negotiators to point out the most important demands from a consumer point of view:
- The Directive should make it clear that it provides minimum harmonisation: Member States have to be allowed to retain or introduce more favourable provisions for consumers.
- It shall be possible to also fight already ceased infringements, which is necessary, if the effects of an infringement continue.
- Special rules concerning jurisdiction and applicable law are needed. The qualified entity should be able to bring representative action in its own Member State, if infringements have taken place against consumers who are resident there.
- The Chamber of Labour is currently one of the qualified entities, which is able to bring action under the Injunction Directive. It has to be made clear that those entities that are qualified entities under the Injunction Directive may also be able to bring claims under the Representative Actions Directive.
- The Austrian system of third-party funding for litigation costs, which is required in particular with regard to representative action in connection with larger mass torts, must still be possible under the Representative Actions Directive.
- Apart from that, it must be ensured that all possible effects of infringements may be fought by the representative action.
- A clear right for the Member States to choose between opt-in und opt-out in case of redress action has to be enshrined.
- It has to be possible to bring redress action without previous injunction measures. This enables speedy redress in case of infringements.
- It is important – as provided for in the Council text – that a company, in case of a final decision, is obliged to inform the consumers affected – at its own expense.
- A once determined infringement must also be assessed as infringement in subsequent proceedings.
- The suspension or interruption of limitation periods has to occur when representative action is brought. This is essential for the success of proceedings.
- It is also essential that Member States take measures to ensure that the costs of the proceedings do not present a financial obstacle for bringing representative action as this had been stated in the Commission proposal (limitation on court costs, access to legal aid, provision of earmarked public funds).
- It is also vital that the Directive on representative actions quickly helps air and rail passengers to exercise their rights.
- It is also imperative that the General Data Protection Regulation remains in the Directive.