The search for a proper European mechanism to bring effective consumer collective actions, incorporating sufficient safeguards to eliminate possible abuse of collective proceedings, is now underway.
One may ask whether the imposition of collective redress should be governed by broad principles which leave the implementation to individual member states. Such an approach may encourage the introduction of a new model and render it more acceptable for adoption by member states. On the other hand, a detailed piece of legislation benefits from certainty and coherence.
At the moment there is great confusion on the matter of collective redress in Europe, where even the terminology used differs from one member state to the next. Member states have different litigation cultures and the introduction of certain aspects of collective actions, such as an opt-out mechanism, runs against principles enshrined in the legal norms of many member states.
The term collective redress as used by the European Commission may include all kinds of models, from opt-in models to opt-out models. However, several member states use collective redress proceedings merely as a form of gathering claims (such as the Group Litigation Order in England), while other member states have introduced representative actions either where the representative sues in its own capacity, as in France, or where the representative sues on behalf of its members,113 as is the case in French joint actions. There are also test case models and models for the skimming of profits, such as those used in Germany.114
In addition to differing approaches by member states as a result of varying European collective action models, there are also differences in the foundational features of the procedure. Some member states such as Portugal use the opt-out mechanism whereas
113 Actions for collective interests of consumers under la loi d'orientation du commerce et de l'artisanat
du 27 décembre 1973 (the Royer Act 1973).
Action en représentation conjointe des consommateurs (French joint actions).
114 Gerhard Wagner, Collective Redress – Categories of Loss and Legislative Options
others such as France object strongly to the opt-out machinery. Furthermore, it seems that even broad principles may contradict traditional jurisdictional norms in several member states, such as the French principle of nul ne plaide par procureur (no-one shall plead by proxy), or the prohibition which exists in numerous member states against contingency fees or payments to lawyers by non-clients.115
It should be borne in mind that the majority of the sixteen member states which have already introduced a model of their own have each developed differing systems. If these member states try to adapt their own mechanisms to the broad principles that the Community drafts, there will be no unified coherent procedure and consumers may feel more confident purchasing goods in some member states rather than others. Some of these state models may be more workable than others and cross-border trade within the community will not be as legally redressable as it should be.
In order to provide coherence, the European Community should provide for a binding procedure that includes a unified registry, opt-out mechanism and incentives for lawyers and representatives. Such a binding procedure should take the form of a clear and effective regulation on collective redress adopted by all member states. A directive which leaves room for implementation by member states will not be binding until its implementation, and it is likely that the interpretation and the implementation will not be unified across Europe on view of the current differences regarding collective proceedings within member states.
The regulation must be sufficiently clear and should be directly applicable to individuals in all member states, so that the Community avoids running the risk of inconsistent implementation.
In 1998, the European Commission introduced Directive 98/27/EC empowering consumer organisations116 to apply to courts in other Member States for an injunction against an infringement of any of a number of consumer trading directives committed
115 Veronique Magnier, 'Class Actions, Group Litigation & Other Forms of Collective Litigation
Protocolfor National Reporters France' available at
<http://globalclassactions.stanford.edu/content/class-actions-group-litigation-other-forms- collective-litigation-protocol-national-reporters> accessed 23 September 2012.
116 Directive 98/27/EC of the European Parliament and of the Council of 19 May 1998 on injunctions
in the organisation's own state by an entity in another member state. The directives in question cover areas such as misleading advertising, unfair contract terms, consumer credit, package holidays and consumer guarantees. Unfortunately, since then only two cross-border cases have been brought, the main reason for this being the financial risk for the entity bringing the case, as well as the complexity of national injunctive proceedings.117
Directive 98/27/EC lacks basic provisions on the implementation of collective redress, including an opt-out mechanism, claims by individuals and a mechanism for settlements. It requires a wider scope of possible plaintiffs as well as incentives to use the procedure. In addition to enlarging the scope of Directive 98/27/EC incentives or a system of European funding are needed in order to assist in operating the injunctions procedure under that regulation. It therefore seems that directive Directive 98/27/EC could not form the basis of a collective redress model and a new measure should be introduced following the above-mentioned consultation on a search for a coherent European model published in February 2011.
It is argued118 that such a European intervention could be based on Article 81(2) of the Treaty on the Functioning of the European Union which allows legislation on, inter alia:
(a) the mutual recognition and enforcement between Member States of judgments and of decisions in extrajudicial cases;
[…]
(e) effective access to justice;
(f) the elimination of obstacles to the proper functioning of civil proceedings, if necessary by promoting the compatibility of the rules on civil procedure applicable in the Member States.
However, Fairgrieve and Howells claim that competence is usually restricted to cross- border matters leaving purely domestic procedures undisturbed. Furthermore, with
117 See report from the Commission concerning the application of Directive 98/27/EC of the European
Parliament and of the Council on injunctions for the protection of consumers' interest <http://ec.europa.eu/consumers/enforcement/injunctions_en.htm > accessed 15 November 2011.
118 Duncan Fairgrieve and Geraint Howells, ‘Collective Redress Procedures – European Debates’
regard to the recognition of foreign judgments between member states,119 there are strong fears that a judgment based on the opt-out mechanism would be regarded as manifestly contrary to public policy and therefore unenforceable.120 This is because group members in an opt-out mechanism scenario do not have their day in court, which may run against the fundamental right to a fair trial. Therefore, a procedure which is to be introduced in Europe should also be concerned with the matter of cross-border disputes and mutual recognition of judgments within member states. This matter will be dealt with further in the fifth chapter of this work.