The Consumer Act of 17 March 2014 introduces a class action mechanism into French law.
The introduction of class actions into French law has been regularly discussed over the last 30 years. Finally they have arrived, in the form of the Consumer Act (the Act) of 17 March 2014. Articles 1 and 2 provide the details of the new mechanism.
A limited scope
- a class action is only available to consumers (defined at Article 3 of the Act as being individuals only)
- a class action can only be brought to court by a nationally approved consumers’ association, which excludes ad hoc associations created for the purpose of bringing such claims. Currently, only 16 associations would be allowed to bring a class action. The association can be assisted, with the authorisation of the judge, by any individual belonging to a regulated legal profession
- a class action can only compensate material loss (non pecuniary and physical injuries are thus excluded)
- only loss arising from breaches of consumer law (breaches of legal or contractual obligations relating to the sales of goods or the performance of services) or to competition law are concerned. Environmental or health related issues are specifically excluded from the scope of the class action.
The scope is thus narrower than the recommendations made by the European Commission in its Recommendation on collective redress published on 13 June 2013. The Commission considers that such mechanisms should be available to companies as well as individuals, and for a wider range of complaints, including consumer protection, competition, environmental protection or even financial services. The French mechanism is nevertheless compliant with the Commission’s Recommendation in the sense that only non-profit associations are allowed to bring such actions. This is intended to prevent abusive actions.
A class action under the Act is composed of two phases. In the first phase, a judge will:
- verify the conditions of admissibility of the claim brought by the consumers’ association
- rule on liability
- establish the criteria that define the class of relevant consumers
- order the relevant measures to inform consumers who may belong to the class (these measures may however be implemented only once the judgment has become final)
- determine the period within which compensation must be paid (a reparation in kind is also possible if more relevant to the case), and
- order the payment of a provision for the fees borne by the association and/or the deposit of a part payment with the Caisse des Dépôts et Consignations.
The judge can also order any interim measure for the protection and disclosure of evidence that he deems appropriate.
Consumers will have between 2 to 6 months, as determined by the judge, to join the class in order to obtain compensation for their loss. Joining the class means that the individual members must mandate the association to represent them in the action but this does not imply that the class members have joined the association.
The second phase consists of the payment to each consumer in the time period set by the judge. In the event that the defendant does not satisfy all compensation claims, a second hearing will occur in order to resolve any outstanding issues.
All fees, expenses and costs will be paid by the defendant who has been found liable. In the event that the action is not successful, French legal principles mean that the losing party bears the court fees.
In accordance with general French law principles, the quantum of compensation is intended to provide the victim with full compensation for the harm suffered, but there is no concept of punitive damages (in contrast to the US practice).
Two types of procedures
Beside the normal procedure (described above), there is a simplified procedure “when the identity and number of consumers harmed are known, and when consumers have suffered loss of an identical amount, or an identical amount per service performed or by reference to a period of time”. This simplified procedure aims to deal with cases where the company holds information enabling it to precisely identify consumers and where damages are easily calculable (for instance in case of subscription contracts).
In this example, a court could order the defendant to indemnify consumers directly and individually, in a specific time period and according to guidelines that he has determined. Once the judgment is final, the consumers are individually informed in order for them to join the class and be compensated. Thus, even if the consumers are identified at the beginning of the procedure, the constitutional principle that no one can act in the interests of another (except when it is on his/her behalf) requires that an opt-in procedure is set up.
Decrees will soon specify the guidelines to introduce a class action and the conditions for the simplified procedure.
Mediation is still available
The association may also participate in a mediation with the defendant. Any negotiated agreement must still be submitted to the judge for approval, and to verify that the consumers’ interests have been adequately protected. The judge rules on the relevant measures necessary to inform the consumers of this agreement, which are to be paid for by the defendant.
Specific rules for competition matters
There are specific rules regarding class actions in competition matters:
- the principle of a “follow-on action” is established: a class action can only be brought on the basis of a final decision of a national competition authority or court or of the European Union determining the breaches of the competition rules (although the decision does not need to be final, the establishment of breaches must be)
- once a final decision has been handed down by the competent authority or court, this will constitute an irrevocable presumption of liability of the defendant. The claimants will therefore only be required to establish their rights to become a member of the class and the loss suffered
- the filing of a class action is limited to a period of five years starting on the date when the decision/judgment of the national authority or court or of the European Union became final
- in order to avoid the Act having retroactive effect, a class action may only be commenced in respect of those breaches for which a final decision had not already been handed down on or before 19 March 2014, ie the date at which the Act entered into force.
These rules are compliant with the Draft Directive of the Commission on 13 June 2013 on damages actions relating to breaches of competition rules, in the sense that (i) the Directive provides a follow-on action, (ii) the decision of national competition authorities assessing the breach would automatically be considered as proof of the existence of the infringement before the national jurisdictions of all the Member States, and (iii) the victims will have at least 5 years to bring their action.
However, the Draft Directive has a wider scope than collective redress, as it aims to cover a wide variety of damages actions resulting from breaches of competition rules. This Draft Directive thus covers both collective and individual actions, brought by individuals as well as legal entities who are victims of anticompetitive practices.
Among the provisions of the Act, the following are worthy of note:
- the limitation period to bring a damages action is suspended until the judgment on class action becomes final
- an action based on the same facts, same infringements and for the compensation of the same loss as the class action would not be admissible
- however, any action for the compensation of damages outside of the scope of the judgment or the approved agreement is admissible
- any article included in a contract with the purpose of forbidding a consumer from participating in a class action, is deemed to be null and void
- the Tribunal de Grande Instance (the High Court situated in all the principal towns in France) have exclusive jurisdiction to hear class actions.
The decision of the Conseil Constitutionnel
On 17 February 2014, French senators and deputies referred the Act to the Conseil Constitutionnel. They argued in particular that Articles 1 and 2 of the Act were unconstitutional as they affect several rights and principles such as, for instance, the rights of the defence and the representation of the claimants. However, the Conseil Constitutionnel considered in its decision of 13 March 2014 that the class action mechanism is compliant with the French Constitution.
The French Government will submit a report to the Parliament no later than 30 months after the publication of the Act, in particular in order to assess any amendments to the mechanism and to review whether it is appropriate to expand it to environmental and health matters.
However, it appears that we may not have to wait that long: indeed, a bill aimed at implementing a class action for environmental and health related issues was submitted to the French National Assembly on 14 January 2014 by several deputies . Furthermore, on the other hand, the Health Minister, Marisol Touraine, has announced a law for 2014 on health matters which would include a class action mechanism and Benoit Hamon, the Minister for Consumption, confirmed during the debates before the French Senate that Philippe Martin, the Minister for Ecology, Sustainable Development and Energy, is currently working on a bill introducing class actions in the environmental field.
This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.