Europe wide approach
In June 2013, the European Commission issued a non-binding Recommendation on common principles for injunctive and compensatory collective redress mechanisms in the Member States concerning violations of rights granted under EU law. The Recommendation followed Green and White Papers from the European Commission's Directorate General for Competition on antitrust damages which included chapters on collective redress, the Directorate-General for Health & Consumers White Paper on consumer collective redress in 2008, and an abortive draft Directive on antitrust damages put forward by DG Competition, which was withdrawn days before it was adopted due to lobbying by Germany and pressure from the European Parliament, which objected to the proposal not being subject to its jurisdiction under the co decision procedure.
As recommended by the European Parliament, the three directorates for Competition, Justice, Fundamental Rights and Citizenship, and Health and Consumer Policy joined forces to formulate a joint approach to collective redress. On 4 February 2011, the three directorates published a consultation paper entitled "Towards a coherent European approach to collective redress" seeking views on whether common legal principles could be identified that would support collective redress across the EU for consumers in all fields, not just competition. Despite a wide divergence of views across the Union and within different groups, the rather modest set of recommended practices were ready to publish by June 2013.
In the Recommendation, Member States were recommended to incorporate into their law national collective redress systems which meet a common standard across the EU, but take into account the different legal traditions that obtain in the different jurisdictions. Common principles should apply to claims for compensation and injunctive relief and both judicial and out of court collective redress. The common principles include:
- Injunctions to be heard speedily and be backed by sanctions for non-compliance
- clearly defined conditions of eligibility for who can bring a claim
- two or more affected individuals or legal entities on their own behalf
- designated non-profit making representative entities with a direct relationship between their objectives and the infringement and sufficient resources properly to represent multiple claimants
- ad hoc entities designated for a particular action or
- public authorities
- an opt-in mechanism for identifying class members
- early identification of whether a collective claim is admissible
- access to evidence that balances the right of access to information with the protection of the defendant’s reputation
- timing of claims (generally follow on rather than standalone) to avoid conflicting decisions
- reimbursement of legal costs of the winning party
- funding (which should neither create incentives for abusive litigation nor limit access to justice) so third party funders to be prevented from seeking to influence the decisions of claimants and remuneration not permitted to be based on the settlement or award reached unless regulated by a public authority
- contingency fees for lawyers prohibited, unless regulated by a public authority
- a prohibition against punitive damages in collective claims, and
- availability of collective consensual dispute resolution mechanisms, with outcomes verified by a court.
The recommendations were intended to facilitate a minimum standard of access to compensation for groups of injured parties, to be capable of producing procedural economy, legal certainty, and fairness for all parties, while providing robust safeguards against abuses of litigation and avoiding incentives for speculative claims to be brought and avoiding controversy over opt-out regimes. Any exceptions to the opt-in regime are to be justified on the ground of the sound administration of justice. The UK, for example, can point to the failure of its opt-in regime to generate more than one claim in ten years.
Although the Recommendation is non-binding, the Commission made clear that it expected its provisions to be implemented by June 2015, with a review of its impact following two years later, and the option for the Commission to take further measures if it is dissatisfied with progress.
An European Commission call for evidence was issued on 22 May 2017, closing on 15 August 2017, on how Recommendation 2013/396 is being implemented in practice.
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