On 11 April 2018, the Commission published a proposal for a new Directive on representative actions for the protection of the collective interests of consumers, and repealing Directive 2009/22/EC.
The proposal follows the REFIT Fitness Check of EU consumer and marketing law, published on 23 May 2017, which showed that due to globalisation, the rise of cross-border trading and e-commerce, the risk of infringements affecting large numbers of consumers is increasing.
The proposal aims to modernise and replace Directive 2009/22/EC (the Injunctions Directive). In order to do so, it intends to:
(a) expand the scope of the injunctions system in order to cover other horizontal and sector-specific EU instruments relevant for the protection of collective interests of consumers in different economic sectors (such as financial services, energy, telecommunications, health, environment);
(b) lay down procedures for compensatory redress (currently, Member States must have in place only procedures for obtaining an order to stop or prohibit an infringement);
(c) modify the rules on qualified entities;
(d) make the procedure more efficient – Member States will have to ensure ‘due expediency’ of procedures and to avoid procedural costs becoming a financial obstacle to bringing representative actions;
(e) promote collective out-of-court settlements.
Within the European Parliament, the proposal was referred to the Committee on Legal Affairs (JURI) with Geoffroy Didier as rapporteur. He submitted his draft report to the JURI Committee on 12 October 2018. The Committee adopted the report on 7 December. Parliament adopted its first-reading position on 25 March 2019.
The proposal was presented by the Commission to the Council on 22-24 April 2018. On 20 November 2019, the Permanent Representatives Committee (COREPER) decided to submit a compromise text proposed by the Finnish Presidency to the Competitiveness Council of 28 November 2019, with a view to reaching a general approach. The text as agreed is available here.
In what follows I offer a summary of the main points of the proposal from a private international law perspective. Some, like the definition of a “cross-border action”, are a little bit puzzling, to say the least. I leave nevertheless open the assessment of the impact of the Directive on domestic law and the relationship with the current European private international law rules. Prof. Stefaan Voet (Leuven University) has kindly accepted to address these points in a future post.
1. The Directive should cover both domestic and cross-border infringements, in particular when consumers concerned affected by an infringement live in one or several Member States other than the Member State where the infringing trader is established (Recital 8 and Article 2(1)).
2. This Directive should not affect the application of nor establish rules on private international law regarding jurisdiction, the recognition and enforcement of judgments or applicable law. The existing Union law instruments apply to the representative actions set out by this Directive (Recital 9 and Article 2(3)).
3. A qualified entity should be able to bring a representative action in the Member State where it has been designated as well as in another Member State. Building on Directive 2009/22/EC, the new Directive should make a distinction between these two types of representative actions. When a qualified entity brings a representative action in another Member State than the one of its designation, that action should be considered a cross-border action. When a qualified entity brings a representative action in the Member State where it is designated, it should be considered a domestic representative action even if that action is brought against a trader domiciled in another Member State or even if consumers from several Member States are represented within that action. Decisive for determining the type of the representative action should be the Member State in which the action is brought. For this reason, a domestic representative action could not become a cross-border one during the course of proceedings, or vice versa (Recital 9a and Article 3(4b)).
4. The right of a qualified entity to bring a cross-border representative action should be limited to the area of activity of that entity (Recital 10c and Article 4a).
5. Qualified entities designated on an ad hoc basis should not be allowed to bring cross-border representative actions (Recital 11a).
6. It should be for the designating Member State to ensure that the qualified entity designated for the purpose of cross-border representative actions fulfills the required conditions, to assess whether it continues to comply with them and, if necessary, to revoke the designation of the qualified entity (Recital 11b and Article 4.a – whereby Member States may designate as well public bodies as qualified entities for the purpose of cross-border representative actions.)
7. Qualified entities from different Member States should be able to join forces within a single representative action in front of a single forum, subject to relevant rules on competent jurisdiction. This should be without prejudice to the right of the court or administrative authority seized to examine whether the action is suitable to be heard as a single representative action (Recital 11d and Article 4b).
8. The mutual recognition of the legal capacity of qualified entities designated for the purpose of cross-border representative actions should be ensured. The identity of these organisations and public bodies should be communicated to the Commission and the Commission should make that list publicly available. Inclusion on the list should serve as proof of the legal capacity of the organisation or public body bringing the action. This should be without prejudice to the right to examine whether the purpose of the qualified entity justifies the action in a specific case (Recital 11e and Article 4a).
9. In order to prevent conflicts of interest, Member States should be able to set out rules according to which their courts or administrative authorities could examine whether a qualified entity bringing a cross-border representative action for redress is funded by a third party having an economic interest in the outcome of a specific cross-border representative action and, if this is the case, reject the legal capacity of the qualified entity for the purpose of that action (Recital 11e a and Article 4b).
10. The courts or administrative authorities should be able to assess the admissibility of a specific cross-border representative action in accordance with national law. In accordance with the principle of non-discrimination, the admissibility requirements applied to specific cross-border representative actions should not differ from those applied to specific domestic representative actions (Recital 11h and Article 4.b).