The Directive on Representative Actions formally approved by the European Parliament

On 24th November the European Parliament formally approved the Directive on Representative Actions, following the trilogue agreement that had been reached by the co-legislators in June 2020. The Directive means that collective redress will be made readily available across the EU, covering a broad range of areas from financial services to passenger rights, data protection, medical devices, telecommunications or energy. It does so by obliging Member States to create at least one collective redress mechanism, where only Qualified Entities, including consumer organisations designated by Member States, will be able to launch an action. Consumers will be able to file cases on past infringements once the collective redress directive has been applied in member countries.

Countries that already have existing collective redress systems can either introduce or adapt to the new models provided by the EU Directive. However, numerous Member States without collective redress mechanisms will need to introduce a new mechanism.

The final text will shortly be published in the Official Journal of the European Union, and twenty days after its publication, the Directive will enter into force. Member States will have until January 2023 to transpose the Directive. With a national application of the Directive 6 months later, we can expect representative actions to be brought to court on behalf of qualified entities (QEs) as of mid-2023.

We recognise that the Parliament’s final approval is an important step for the protection of consumers, where an effective redress toolbox is necessary when there have been infringements of EU consumer’s rights. However, some of our main issues remain unsolved. For example, on Third Party Litigation Funding (TPLF), while the Directive has included some safeguards for this, some are still missing. Other important points are clarification regarding the basis of cross-border actions (Brussels Ibis) or on a stringent EU wide IT-infrastructure for courts and public authorities. There is an opportunity to ensure these points are taken-up as well as strengthened during the implementation of the Directive at national level.

The transposition phase will therefore be an important next step for EJF. With the support of its legal network, EJF has set up the building blocks of a monitoring framework and will analyse how collective redress is being used by Member States. This will be an opportunity to assess the risks and opportunities that may arise at national level during the transposition of the directive as well as to capture emerging trends linked to collective redress mechanisms, in order to give feedback on the effectiveness of EU regulation.

Please do not hesitate to get in touch if you would like to know more.