Monday, 9 April 2018

POLITICO publishes draft Commission proposal on collective redress for European consumers

POLITICO, a well-known news website on European affairs, reports that it has obtained a draft proposal of the European Commission for a new Directive on representative actions for the protection of the collective interests of consumers, and repealing the Injunctions Directive (2009/22/EC; referred to as "ID"). Last year, the Commission already announced a 'New Deal for Consumers', including an EU-wide class action and collective redress; see our blog post here.
One of the drivers of this development has been the "the inquiry into emission measurements in the automotive sector", i.e. 'Dieselgate'; see our previous blogs here, here and here. Not all Member States provide for collective redress mechanisms tailored for mass harm situations, so not all consumers have access to effective redress opportunities. According to the Commission, the significant disparities among Member States require EU intervention, particularly in light of the cross-border implications; although the proposal applies to domestic infringements of EU law as well.

The draft proposal is a follow-up to the REFIT Fitness Check of EU Consumer and Marketing Law, which also covered the ID, and to Commission Recommendation 2013/396/EU. The Commission states its intention to further strengthen the redress and enforcement aspects of consumer protection (Article 114 TFEU and Article 38 EUCFR), through the establishment of a complementary EU framework supported by procedural rules on the national level. This should also facilitate access to justice (cf. Article 47 EUCFR); possible benefits of collective judicial actions are lower costs and more legal certainty. The proposal is meant as an additional procedural tool: it does not replace existing mechanisms, nor does it affect substantive rights.

The proposed Directive establishes "certain key aspects", but its lack of further detail is also its weakness. For example, it does not specify which divergences between Member States or gaps in the protection of collective consumer interests are most problematic. It does not make a clear distinction either between injunction orders, redress orders and declaratory decisions, nor does it address corresponding procedural complications and modalities.

The Commission does not explain why the ID needs to be improved and which specific elements need an update. It only observes that the key shortcomings of the ID are its limited scope, the limited effects of injunctions on redress for consumers and the costs and length of the procedure. The Commission therefore proposes to enlarge the scope of the future Directive to other horizontal and sector-specific EU instruments, e.g. in the field of financial services, energy, telecommunication, health or the environment. Consumers who have been harmed must be able to rely on a final decision in a representative action (Article 8 draft proposal). The proposal aims to improve the effectiveness of injunctions in terms of deterrence of unlawful practices, as well as fair and adequate compensation for consumers, but how exactly those goals are to be achieved is not elaborated. Moreover, the proposal aims to strike a balance between facilitating access to justice and ensuring adequate safeguards from abusive litigation (frivolous claims), but again modalities are not defined. The proposal works with 'qualified entities' that must satisfy certain criteria (Article 6 draft proposal), and it emphasises the importance of 'due procedural expediency'. However, how this is to be realized is left to the Member States.

In the Netherlands, for instance, a legislative proposal is pending for the introduction of a collective damages action. The ongoing discussion shows how difficult it is to find a balance between access to justice and effective redress on the one hand, and the prevention of abuse on the other; see here and here for more background information. The most controversial issues, such as the designation of a lead plaintiff, opt-in/opt-out possibilities and the calculation of damage, are not addressed in the Commission's draft proposal. 

It is expected that the Commission will announce its proposal (this draft or an amended version) in the next few months. It is far from certain that it will eventually result in a Directive. Whether it will be adopted or not, the proposal is likely to have an impact on the debate on collective redress.

No comments:

Post a Comment