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Collective redress

Group litigation, class actions, injunctions, regulatory oversight, ADR, and more: collective redress is much more than collective litigation!

Collective redress has become the key issue within the EU consumer law agenda. It is also important in other policy areas, especially competition law - as part of the wider agenda of antitrust enforcement (which is also one of our HOT TOPICS – see link).

One of the main challenges is to try to stop Brussels equating "collective redress" with "collective litigation". EJF's message is that redress can best be achieved without litigation, which should only be a last resort.

In the context of wider reforms of civil justice systems taking place across the World, collective litigation (such as: class actions, group actions, representative actions, collective settlements, and others - see link to our glossary) have already been introduced or are at least contemplated by many countries across the world. In the EU 14 member states already have the possibility of collective litigation damages. But that is not a reason to introduce an EU-wide measure on collective litigation.

We accept that national courts which from time to time have to deal with multi-party actions, but that does not mean that collective litigation should be the main means of collective redress. Collective redress is a much wider concept, and policymaking and lawmaking ought to see it as such. Redress can be best provided using ADR, public enforcement mechanisms, self–regulatory and voluntary mechanisms.

EJF's work for both individual and collective redress is based on:

  • ADR
  • complemented by the role of public authorities in helping resolve disputes (ombudsman) and in enforcing consumer protection laws (regulations) and
  • supported by the court in ensuring ADR process are fair (and if requested by the parties) in endorsing voluntary agreements and making the both legally enforceable and final.

This aproval is based on the Oxford research showing what actually happens in practice.

Europe already has over 750 ADR bodies and mechanisms. A SANCO report published in 2009 indicates that over 500 000 disputes were resolved by ADR each year. The evidence is that this figure is raising rapidly.

Public authorities already plan an active role in promoting redress. The consumer ombudsman in the Norsk regions are asked by both claimants and defendants to help resolve disputes. Moreover, the ombudsman filter out on estimated one third of complaints on which key were formulated. In London, the financial Ombudsman Service handles over 160 000 complaints each year and filters out some 40% on being ill founded. The remainder of complaints are resolved.

Consumer protection regulations are enforced in many consumer facing industries such as utilities and travel. The regulator cannot (and must not) dictate compensation, but encourage it.

We see this model of collective redress emerging in Europe, for example in the ombudsmen systems of the Nordic countries and in the restorative justice policy of the UK.   

The Netherlands currently has the best developed ADR structure. All of industry and commerce is covered by the sectoral boards, to which companies are in practice obliged to join to protect their reputation. There is an overarching Dispute Resolution Committee (Geschillencommissie) that assures standards and good practice. It also provides a single information point for consumers wanting to know where to lodge a complaint. Once a complaint is lodged with any of the sectoral boards it is processed and companies are obliged to behave by its ruling. This system process is excess of 11 000 complaints each year.

In addition, if the parties so wish, they can ask the court to endorse an agreement voluntarily reached ( the Dutch Financial Settlement Law 2005). The court which satisfy itself that the agreement was reached fairly and that those affected are aware of the settlement so that they can take part. Subject to that, the court endorses the agreement making it enforceable (no one can renege on the agreement) and final no one who is the party for the agreement can raise the same complaint again.

EJF is a model of collective redress based on the voluntary resolution of disputes, supported by the responsibilities of the public authorities and overseen by the court to ensure fair play. Our recent  (July 2011) statement of our policy to the European Parliament is to be found here.

How this website can help foster the debate:

Our website contains information on the topic of collective redress, and will hopefully serve as ‘food for thought’ for those who are involved in this area:

For terminology and definitions see glossary, and in particular: consumer redress, collective redress, group actions, representative actions, collective settlements.

Of course, collective redress is only one element of civil justce systems. The way in which collective redress mechanisms are shaped in particular country depends on the overall rules and legal traditions of the country. Our view is that one should not lose sight of this more general context when considering options for a collective redress mechanism for example, this contextual approach also allows a better understanding of the workings of the US system. In contrast, European which class actions are not just a means of suing for damages, but also a means of enforcing public regulations.

Our website provides a comprehensive guide to these wider issues: one of our HOT TOPICS is this contrast between the European and US systems: we observe the trends in the European justice systems for signs of ‘Americanisation’ (Assessing the trends in European civil justice systems).

The Current Issues section contains updates on developments in the areas in which collective redress is most relevant at present on the EU level: consumer law and competition law.

See also the information on judicial cooperation in civil and commercial matters (Glossary for main features, and Legislation for key legislative measures, drafts and policy papers) for details of the process harmonisation of civil procedures in the EU.

Law enforcement as a concept has become particularly relevant in the area of competition law – it is also one of our HOT TOPICS (Link). DG COMP was planning to launch a Directive on this subject in October 2009. The new Commission took office on 10 February 2010 and began a new consultation process to determine what should be Commission policy. Should it introduce EU-wide collective redress mechanisms, and if so, should they be based on collective litigation?

The consultation on collective redress with result in a "Communication" of Commission policy at the end of 2011. If there are to be any EU-measures of collective redress, they will have to be conform to principles and guidelines contained in that Communication.

In parallel, DG SANCO has consulted on ADR in the EU. It is expected to launch two legislative proposals in late 2011:

  • A framework Directive aimed at developing ADR in Europe. This is not expected to be perspective, but rather to contain principles which should be adopted by member states; and
  • a Regulation on online dispute resolution; from information currently available, the approach of DG SANCO is likely to be in line with EJF's views. 

NOTE: The recent book by Dr Christopher Hodges of the University of Oxford (The Reform of Class and Representative Actions in European legal systems) contains a comprehensive evaluation of the reforms which take place in the area of collective redress in Europe and beyond, and advocates rethinking of a collective redress model to include, to a larger extent than presently, regulatory oversight, and ADR.

Copies are available at € 52.50/ £ 35.00 from the Hart Publishing Limited, IGC Worcester Place, Oxford, OXI 2 JW, UK + 44 1865 517530 mail@hartpub.co.uk

See further information about collective redress - the latest developments, our views and activities, and what other key players are doing in the following categories:

  1. Competition Law
  2. Consumer Law