Topics
ADR/Ombudsman & Regulatory Redress
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Essentials – clear and brief
Representative Actions
Representative actions are a type of collective action where claimants are represented by an organisation/body. Those organisations can be in principle private or public. The objective of a representative action is to clarify questions regarding the breach of law and redress. More specifically, the European Commission defines it as “an action for the protection of the collective interests of consumers to which the consumers concerned are not parties”.
Why
The European Commission published a proposed Directive on Representative Actions in April 2018, as part of its New Deal for Consumers Package. This regulatory package also comprises the Directive on better enforcement and modernisation of EU consumer protection rules known as Omnibus Proposal, for which an agreement was reached in April 2019.
One of the main objectives of the European Commission is to allow each and every EU citizen to have compensatory collective redress tools at national level. The European Commission originally identified nine Member States which did not provide such mechanisms (Estonia, Czech Republic, Ireland, Latvia, Cyprus, Greece, Hungary, Luxembourg and, Slovakia).
How
By introducing the representative actions’ proposal, the European Commission proposed to enlarge the scope of the former Injunction Directive by including a redress part. The suggested text couples injunction proceedings - which order specific action or cessation of action - with collective redress proceedings.
The current representative actions approach of the EU, however, should take into consideration the following points outlined by expert analysis and independent academic research:
- More clarity is needed on the Proposal’s implications on cross-border litigations. The current proposal risks disrupting already existing, effective legal systems implemented in Europe.
- More regulatory harmonisation should be achieved. The Proposal disregarded important safeguards that the European Commission recommended itself in 2013 to prevent abuses. This approach risks provoking a “race to the bottom” in regulation and consequently would lead to forum shopping.
- Collective in-court litigation is an old technique: it is complex, costly, lengthy and open to abuse. The right approach should build on Alternative Dispute Resolution (ADR) mechanisms, such as ombudsmen or public supervisory bodies, which have proven to be more effective.
Where do we stand
On 22nd of June, the European Parliament and the Council reached an agreement during the 4th trilogue. COREPER adopted the result on 30th of June.
On 24th November the European Parliament formally approved the Directive on Representative Actions.
On 4 December, the final text was published in the Official Journal of the European Union.
The Directive entered into force on 24th December. Member States will have until January 2023 to transpose the Directive and are required to apply it from 25 June 2023.