9 January, 2020

Xnet Warns of Threaths to Consumer Rights if EU Prevents Class Action

A New Deal For Consumers in Europe – A lost opportunity for open access to group redress in consumer and citizen rights in the EU?

The purpose of this paper is for the trilogue discussions on the new directive, beginning on 8 January, to include the right of citizens to self-organise for independent, grouped court action either at Member States or transnational level, in the context of the upcoming Directive on Representative Actions for the Protection of the Collective Interests of Consumers – 2018/0089(COD)

Most importantly, in view of the stated European Commission policy objective of “granting consumers more rights while preventing misuse”, we advocate for the right to effective legal protection and freedom of association for the aim of collective redress at EU level as the two basic principles to be enshrined in the upcoming EU Directive.
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The European Commission’s landmark project for a “New Deal for Consumers” was presented by President Juncker on his State of the Union speech of 13 September 2017.

This regulatory package, containing a proposal for Directive on representative actions for the protection of the collective interests of consumers, was presented as an important achievement for the access to justice and redress for large groups of citizens. The Commission presented this initiative as a solution for those citizens who would normally avoid litigation for diverse reasons such as excessive cost and uncertain win; and especially for those EU jurisdictions that do not have these legal figures allowing it in an efficient manner yet. The Dieselgate scandal was cited as an example for the inability for car purchasers to pursue collective legal actions in most EU countries.

So, the proposed Directive, which will now enter the trilogue phase, establishes that Member States shall designate a limited number of qualified entities that will have exclusivity on the proposed collective action regime by the EU at national level. This is a “minimum harmonisation” Directive: for these EU countries already counting with national collective action systems -which, by the way, in general already restrain access just for consumers associations; namely in countries like Italy, Belgium or Spain- these will preserve their existing national systems, that will coexist with a new pan-EU regime.

In this regard, we are especially concerned about the existing disregard for the possibility of offering more agile solutions by granting legitimation to only a limited number of entities to represent large numbers of citizens. The European Commission’s proposal for Directive 2018/0089/COD could have been a great opportunity to address the faults of the existing plethora of national collective actions regimes -so, far, only the existing system in Portugal grants citizens good access to collective action- while extending collective action to the rest of EU jurisdictions still lacking of such systems.

One of the key fundamentals for the Commission proposal was to “prevent abusive litigation”, as stated in the document referred below “The New Deal for Consumers – How will the new Collective redress mechanism work?”. By “abusive litigation” we mostly understand action by big law firms that may amass individual claims to put pressure over certain companies in ways that come closer to blackmail than to the seeking of justice. We believe the current draft Directive wording by the European Commission, who is legitimately worried about the excesses of American-style litigation, however creates a grievance in Europe -where such a system does not exist- by impeding groups of damaged citizens to group in a NON permanent way in a single case, and therefore contributing to alleviate the overburdening of in courts – currently, law firms can only cumulate cases but not group them. We deem, as well, that limiting the number of eligible organisations that can take corporations to court on behalf of a group of citizens or consumers is non democratic.

In addition to our general concern about closing the door on a wider range of possibilities for civil society to litigate against corporate abuse, in view of the original Commission proposal; the final European Parliament position adopted in Strasbourg in a plenary vote on 26 March 2019 is deeply concerning since in our view it favours an even more restrictive approach. In our view, this will result in:

• An unjustified restriction to the access to redress for civil society organisations, and most remarkably grassroots and and-hoc groups; and limitation for the right of self-association for the aim of collective defence of citizen rights

• In addition of this, Commission refers to transnational cooperation between institutions, but not to cooperation between entities, or even to legitimation for qualified entities to act in other Member States. Indeed, more options such as allowing entities with legitimation to collectively represent citizens pursuing its activity in any EU Member State and represent citizens from any EU member state; or allowing damaged citizens from any EU Member state in transnational cases (such as the Dieselgate) to ad-hoc group themselves in order to litigate; must be considered.

• Finally, in order for class actions to be actually effective and to avoid any undue delays, courts should count with the necessary human and material resources. A slow justice is no justice. Therefore, we propose to establish maximum timeframes for cases to be resolved.

Therefore, we are calling for the trilogue discussions to advocate for a Directive that guarantees the right of European citizens to a group action system based, most importantly, on the following key founding principles:

PROPOSAL

1. LEGITIMATION OF CIVIL SOCIETY – Co-existence between traditional consumer associations and ”ad-hoc” consumer and citizen platforms of temporary existence for the purpose of group representation. The latter will, of course, not persist after consecution and its targeted aim radically reduces the possibility of misconduct.

2. TRANSNATIONAL COOPERATION – Allowing both consumer associations as well as ad-hoc groups to represent as well citizens based in other EU Member States and be legitimized to act in any EU Member State.

3. TIME LIMIT – To guarantee effective legal protection

 

This paper has being create by:

• XNET, the activist platform for the improvement of the democracy in the digital era (https://xnet-x.net)

This paper has been prepared by Juan Manuel Viver, consultant in financial consumer protection and consumer representative at the European Securities and Markets Authority Stakeholder Group (SMSG).

Example:
– Law Proposition from the above endorsing organisations to consider as a practical example to better understand the proposals we are putting forward:
https://xnet-x.net/ley-demandas-colectivas-acumuladas/
 

Sources:

– European Commission Press release on the New Deal for Consumers, 11 April 2018:
http://europa.eu/rapid/press-release_IP-18-3041_en.htm

– The New Deal for Consumers – How will the new Collective redress mechanism work? European Commission, April 2018
https://ec.europa.eu/info/sites/info/files/ndc_factsheet4_redress_mechanism.pdf

– European Commission Proposal for Directive on representative actions for the protection of the collective interests of consumers
https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:52018PC0184&from=EN

– European Parliament final position on the Directive on representative actions for the protection of the collective interests of consumers
http://www.europarl.europa.eu/sides/getDoc.do?type=TA&language=EN&reference=P8-TA-2019-0222

– Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on representative actions for the protection of the collective interests of consumers, and repealing Directive 2009/22/EC
https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CONSIL:ST_14600_2019_INIT&from=EN

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