Brussels, 11/06/2013 (Agence Europe) - After more than a decade of measures and talks, the Commission unveiled a strategy on Tuesday for collective redress mechanisms (class action) at EU level, but as expected, did not unveil any measures that would be binding on the member states, simply recommending that collective redress be introduced into national legal systems as harmoniously as possible. The Commission has not wholly rejected the idea of legislation (a directive), but wants to see first in a mid-term review whether its recommendations suffice. Consumer group BEUC expressed disappointment on Monday about the ideas being set out in a recommendation rather than binding legislation (see EUROPE 10863). Eurochambres, which represents chambers of commerce in Europe, is also disappointed, fearing a major financial impact on its members, but said in a press release that recommendations were the lesser evil.
The recommendation published on Tuesday invites all member states to have national collective redress systems and sets out a number of common European principles that such systems should respect: (a) Member states should have a system of collective redress that allows private individuals and entities to seek court orders ceasing infringements of their rights granted by EU law (so called “injunctive relief”) and to claim damages for harm caused by such infringements (so called “compensatory relief”) in a situation where a large number of persons are harmed by the same illegal practice; (b) Member states should ensure that the collective redress procedures are fair, equitable, timely and not prohibitively expensive; (c) Collective redress systems should, as a general rule, be based on the “opt-in” principle, under which claimant parties are formed through directly expressed consent of their members. Any exception to this principle, by law or by court order, should be duly justified by reasons of sound administration of justice. The 16 member states that already have class action schemes use a combination of opt-in and opt-out.
The Commission is anxious to avoid US-style class action cases, which have become controversial in Europe in recent years. The Commission recommends a number of safeguards and solid procedural guarantees, as it explains in a press release, to ensure that nobody is encouraged to abuse the collective redress system. Member states should ban “no win-no fee” system for lawyers, which encourage class action-type cases. Entities representing claimants have to be of non-profit character, to ensure that they are guided by the interests of those affected in situations of mass damages. Another way of preventing abusive litigation is the prohibition of punitive damages which usually increases the economic interests at stake in such actions. Instead, full compensation should reach individuals once the court confirms that they are right in their claims.
The Commission notes the utility of out-of-court settlements. Several out-of-court dispute settlement systems have been introduced at EU level over the past ten years, which are clearly preferable from the political point of view. (SP/transl.fl)