France - A new French bill introducing an unified legal regime for class actions
A new French bill introducing an unified legal regime for class actions was filed by the French Assembly on 15 December 2022, which is not yet final and will be discussed between the MPs during public sessions. Amendments to this new French bill were filed by MPs on 9, 10, 11 and 14 February 2023 and were discussed by the Commission for Constitutional Law, Legislation and the General Administration of the Republic on 15 February 2023. Next public discussions are scheduled on 8 and 9 March 2023. If the text is adopted by the French Assembly, it will then be sent to the French Senate.
French class actions have not been as successful or widespread as anticipated so far. There is a preference for the collective action route, which has always existed under French law, and which offered the quickest procedural routes to obtain compensation.
This new French bill aims at simplifying the class action procedure, ensuring better compensation for the consumers concerned and shortening the time within a judgment is issued. The new French bill introduces one single and unified legal regime for all class actions in civil matters. Hence, the various legal regimes of class actions in civil matters currently codified in different French Codes depending on the nature of the claim would be deleted.
In a nutshell, the main notable measures suggested are as follows:
The extension of the association's right to act and initiate class actions to a certain number of associations that do not meet the criteria currently required, notably by entitling associations as well as ad hoc associations that meet certain criteria.
The deletion of the prior formal notice ("lettre de mise en demeure") to be sent by the association to the defendant at least 4 months before initiating a class action that was mandatary depending on the nature of the claim.
The creation of a civil penalty, independent of the damage suffered, to be paid by the defendant under certain conditions.
The extension of the Judge in Charge of Procedural Matters' powers with the possibility to enjoin the defendant to cease its alleged wrongdoing before a judgment on the merits is handed down by the Court.
The increased involvement of the Public Prosecutor's Office within the class action proceedings, with the possibility to initiate a class action for all civil matters for injunctive relief (as the main party), or to intervene in any class actions initiated by authorised associations (as a joint party). The Public Prosecutor's Office is immediately to be informed of any class actions launched.
The exclusive jurisdiction of specialised French Judicial Courts for ruling on class actions.
Germany - Public consultation opened
The German government has still not produced an official transposition bill to date. The Federal Ministry of Justice released a draft proposal which is not yet fully aligned within the Federal Government. Notwithstanding this the Federal Ministry of Justice has invited trade associations and other interested third parties to comment on the implementation of the Directive and to provide statements by 3 March 2023. See here our previous published more detailed analysis of the current draft proposal by the German Federal Ministry of Justice.
Italy- Legislative Decree proposal from the Government, awaiting for the final approval
On 7 December 2022 the Council of Ministers preliminarily approved the draft Legislative Decree implementing the Directive (“Draft Decree”). Recently the Italian Senate and the Chamber of Deputies expressed their favourable opinion on the Draft Decree and suggested some minor edits. As the Parliament provided its opinion by the assigned deadline, we expect that the final version of the Draft Decree will be approved in due course (i.e. Q2 2023). According to the Draft Decree, the bill will enter into force starting from 25 June 2023 as requested by the Directive.
Italy had already introduced a new regime in 2021, included in the Italian Civil Procedure Code (“ICPC”), under which class actions (both redress and injunction measures) can be brought. As the scope of application of the existing class action system provided by the ICPC is broader than the Directive’s one as regards both the subject matter and the entities entitled to bring representative actions, only minor adjustments of the new regime were expected. However, quite surprisingly, the Draft Decree includes a new section in the Consumer Code instead of modifying the existing provisions on class action set forth in the ICPC, thus creating parallel and, in some cases, alternative systems for Italian consumers.
The Draft Decree lays down rules on jurisdiction and procedure which are similar to the ones governing the existing class actions system provided by the ICPC, but some innovations are worth noting:
From now on, it will be possible for qualified entities to bring cross-border representative actions (if the unlawful conduct affects consumers from different Member States, the representative action may be brought jointly by qualified entities of different Member States) in order to seek, also jointly, compensation or the adoption of injunctive measures.
In relation to injunctive measures, it will be possible, if grounds of urgency exist, to claim for provisional injunctive measures pending the proceedings. Moreover, the qualified entities submitting a motion for preliminary injunctive relief shall not be required to prove the traders’ fraud or negligence, nor actual losses or damages suffered by consumers. Finally, the Draft Decree requires that a letter of formal notice must be sent before an injunction action can be brought (it can only be brought if traders fail to comply within 15 days).
In relation to redress measures, the Draft Decree, as incentive, provides that the consumer - if the action is not successful - shall be ordered to reimburse the legal costs to traders only in the case of wilful misconduct or gross negligence.
Netherlands - on 23 November 2022 the implementation act was published - it enters into force on 25 June 2023
The Netherlands have already passed its implementation Act for the Directive. The Act amends the current WAMCA regime. The Netherlands has established itself as a leading jurisdiction for class action litigation. The implementation act enters into force on 25 June 2023.
The scope of the current WAMCA regime is already broader than the scope of the Directive. The current WAMCA regime can be used for any type of civil law claims (i.e. all industries, consumers and non-consumers, public interest claims, etc.). On certain topics the Representative Actions Directive is however more strict and amendments to the WAMCA regime of a rather procedural and systematic nature were necessary:
Some changes made only apply to the cases covered by the Directive, for other cases the amended requirements do not apply. For example, for cases falling under the Directive, the funding provider may not fund a representative action brought against a defendant that is a competitor of the funding provider or against a defendant on which the funding provider is dependent.
Dutch courts may not assess whether foreign qualified entities, which are communicated and on the list of the European Commission, are entitled to bring cross-border actions (as they are required to do with Dutch organizations), but may only assess whether the specific collective action of the foreign qualified entity meets the WAMCA requirements.
The WAMCA opt-out possibility does apply only to Dutch consumers and not to consumers from other Member States to whom the opt-in mechanism, as required by the Directive, applies.
Poland - Draft law from the Office of Competition and Consumer Protection now under the supervision of the Council of Ministers
On 6 December 2022 the Office of Competition and Consumer Protection provisionally prepared the draft law implementing the Directive ("Draft"). The Draft was published together with the explanatory memorandum on 21 December 2022 and is now under the supervision of the Council of Ministers. Currently, a public consultation is taking place and several opinions have already been reported, including those of the National Judiciary Council and the Polish Supreme Court. Afterwards, the draft will be evaluated in various committees. In light of this, we do not expect that the final version of the draft will be approved earlier than Q2 2023. According to the Draft, the bill should enter into force starting from 25 June 2023 as requested by the Directive.
The Draft envisages the introduction of a model of group actions against entrepreneurs. Provision is made for two types of class actions in domestic group proceedings and cross-border group proceedings brought on behalf of consumers by qualified entities. So far, the Draft foresees that scope of the cases that are the subject of class actions will correspond to the scope set forth in Annex I to the Directive.
Group and class actions are already available in Poland, but are time consuming, formalistic and possible only in certain areas of law. After the implementation, it is expected that class actions may become much more common in Poland.
Spain - Council of Ministers approved preliminary draft
On 20 December 2022 the Council of Ministers has approved the Preliminary Draft Law (“APL”) of Representation Actions for the Protection of the Collective Interests of Consumers; the implementation is still ongoing.
Although the Spanish legal system already provides consumers with the possibility to bring collective actions, the APL aims to create an unitary and coherent system of collective protection, which will put an end to the current regulatory dispersion in this area.
Its principal purpose is to remedy consumer's weakness in judicial proceedings, as in most cases there is a disproportion between the costs which consumers have to incur to prove the entrepreneur's unlawful conduct, and the money consumers recover.
The main notable measures suggested in the APL are as follows.
The creation of a special proceedings to process collective representative actions. This proceedings will be included in the Spanish Civil Procedure Act ("Ley 1/2000 de Enjuiciamiento Civil").
The inclusion of a new title defining the types of representative actions for the protection of collective interests of consumers: declaratory actions requesting cessation of conducts and redress (damages) actions. These two actions may be brought cumulatively or separately. If the actions are brought cumulatively, the judge may decide whether to hear them cumulatively or separately (in the latest case the redress action would be suspended until there is a decision on the declaratory action).
The possibility of reaching an agreement within the process is foreseen in the APL. The peculiarity of this agreement is that it must be approved by the judge.
Very importantly, the APL defines an opt-out system. Therefore the affected consumers who don't want to be affected by the lawsuit must expressly decline to participate. The declination to participate should be done through an electronic platform. The use of an electronic platform constitutes a real innovation that will allow a smoother proceeding and an advantage for consumers, who will have an easy access to the most up-to-date information on the proceedings.
Another procedural novelty is the certification hearing, in which the court will verify that the necessary homogeneity of the claims is met and that the action is not manifestly unfounded. If the requirements are met, the court will issue the certification order, a crucial part of the process, since it will determine the objective scope of the process (alleged infringements of the trader examined) and its subjective scope (the consumers concerned).
In relation to evidence, the APL establishes a mechanism whereby important data for the proceedings held by the entrepreneur or third parties would more easily accessible (including information to identify the consumers affected).
Watch out for political discussions and on-going implementation. The Directive provides for optional features that could lead to some differences between the implementing laws in Member States. We are already seeing differences e.g. in the approach to opt-in or opt-out participation or the admissibility of ad hoc created qualified entities. So far, only some Member States have published their official draft implementation bill to transpose the Directive into national law. We expect to see an acceleration on the national transposition proceedings in the first two quarters of 2023.
Overall, the Directive will strengthen the cross-border angle, as consumers can join actions in other EU Member States and qualified entities can act as plaintiffs across borders. Whilst collective action mechanisms have been very different so far in the EU Member States, the Directive compels the Member States implementing as minimum standard for collective redress the Directive’ representative action procedure for injunction and redress measures. For practice, the different national provisions on transition of pending lawsuits and pre-implementation matters will be of particular interest.
Authored by Christine Gateau, Sarah de Magalhaes, Dr. Matthias M. Schweiger, Katrin Weixlgartner, Christian Di Mauro, Enrica Ferrero, Leonore Bruining, Jessica Booij, Wojciech Marchwicki, Aleksandra Polatynska, Jon Aurrekoetxea and Ana Jimenez-Tuset.