The Croatian Presidency of the Council of the EU has a new mandate to start negotiations with the European Parliament on Monday, 22 June, regarding the proposal for a directive on collective redress procedures initiated by qualified entities representing consumers deliberately harmed by unfair practices by the same company infringing EU law.
Permanent representatives from the 27 Member States (Coreper) approved this mandate on Wednesday, 17 June, by endorsing a comprehensive compromise proposal concocted by the presidency so as to increase the chances of reaching an agreement with the Parliament, while preserving the balance of the text.
“The discussions took place in a good atmosphere, and the aim is still to reach an agreement under the Croatian Presidency”, emphasises a diplomatic source (see EUROPE 12504/16).
According to the compromise seen by EUROPE and amended in the margin, the mandate focuses on the following points:
- strengthening mutual recognition of qualified entities in cross-border representative actions (each qualified entity designated in one Member State will be recognised as such in the other Member States without further testing) in order to facilitate their work;
- introducing the ‘loser pays’ principle (new Article 8a on the allocation of the costs of the representative action for damages) as requested by the Parliament as a deterrent against abusive litigation and initially considered by the EU Council to fall under the procedural autonomy of the Member States;
- increasing the information available to consumers (Article 9) so that they are aware of the existence of an action and are thus able to determine whether they want to participate in it as well as introducing provisions on publicly accessible national electronic databases used to exchange information on the designation of qualified cross-border entities and their best practices;
- introducing a provision ensuring that punitive damages are not imposed on offending traders in accordance with national law: punitive damages that exist under US law do not exist in European law, yet the Parliament would like this to be reaffirmed so as to reassure companies in the long term; and
- reinforcing assistance to qualified entities.
Austria, Belgium, Bulgaria, Estonia, Germany, Ireland, Latvia, and Portugal abstained; “most of them [did so] because they are reluctant to let the directive interfere too much with their procedural autonomy”, according to another diplomatic source.
The permanent representatives will be informed of the outcome of the interinstitutional negotiations on Wednesday, 24 June. Should the Parliament and the EU Council reach an agreement on 22 June, Coreper will be called upon to give its approval on 30 June, the last day of the Croatian Presidency of the Council. (Original version in French by Aminata Niang)