Class Actions in Europe

Europe is unison in its rediscovered interest for collective and group litigation. New initiatives, legislative projects and model rules on collective redress emerge almost on a daily basis. In this chapter, the editors provide the background to this development and introduce the research presented in other chapters gathered in this book. Longstanding tradition of American class actions and their broad practical use are contrasted to the relatively recent European fascination with collective redress mechanisms and their limited reach. But, while incoherent and fragmented legislation on collective redress still does not produce spectacular results, many diverse initiatives demonstrate that the landscape of collective litigation is changing quickly. The trial and error approach that has so far characterized European attempts to introduce a workable collective redress system that is radically different from American-style class actions, did not so far produce a universal solution. However, a few important steps towards the Holy Grail of effective European collective redress have been made, both at the EU level, and at the level of its Member States. After a brief summary of the developments noted in the chapters which follow, the authors ask questions regarding the limits of collectivization of civil justice in a European context. Should the spread of collective procedures be embraced without reservations, or may it turn out to be a ‘wrong trail’? The answer to this question depends on the ability to adjust collective redress mechanisms to urgent social needs and public purposes on one side, and to specific features of European legal systems on the other side. Recent global developments show that particular local circumstances play an important role in designing specific forms of collective redress. The enthusiasm about class and representative relief should take into account multiple risks entailed in the collectivization of civil procedure. Examples from Canada, Brazil and China indicate that local procedures may or may not work properly, but that none of them can be simply exported to different environments with different social policies and institutional infrastructures.

This chapter asks two fundamental questions. What should the aims of collective redress be? Which mechanisms best deliver collective redress? The first is a normative question, and the second is an empirical question. The second question asks to what extent any particular technique or mechanism succeeds in satisfying the objectives set in the first question. The answer to the first question is a matter of public policy and perhaps legal philosophy. The answer to the second can only be decided by empirical evidence. The empirical evidence indicates that a number of techniques are better than others. Current evidence is that mechanisms such as online independent ombudsmen and regulatory authorities with mass redress powers are particularly effective in delivering redress to consumers.

Throughout the twentieth century, virtually all European countries that had studied the American class action had rejected implementation of the class action as a part of domestic law. In the early twenty­first century, however, several European countries reconsidered their longstanding antipathy to the American class action. The EU Parliament in 2013 issued a Recommendation for Injunctive and Compensatory Collective Redress Mechanisms requesting that all EU countries—by 2017—implement some form of collective redress mechanism. In May 2018, the Commission issued a Report assessing the practical implementation of the Recommendation. The Commission’s study reveals that the 28 EU countries have developed a patchwork quilt of differing approaches to collective redress. Although many EU countries have undertaken legislative initiatives and implemented some of the Commission’s recommendations, in a number of countries, several of the Commission’s principles have had little or no impact on domestic laws. Perhaps most significantly, the 28 EU countries largely have eschewed implementing procedural mechanisms that resemble the American class action rule, in efforts to preserve domestic cultural and legal norms, and to avoid American­style class action abuses. Thus, European initiatives towards implementing a class action device represent an American class action defense lawyer’s dream.

The Netherlands is internationally known for its collective settlement mechanism that was introduced in 2005. In a small number of cases with a global outreach this settlement regime has proven to be effective. However, its application relies on the willingness to conclude a settlement agreement and to have it declared binding by the court. A collective action regime had been in place for decades, but was limited to injunctive and declaratory relief. After years of discussion the collective redress system was ‘upgraded’ by introducing a collective action procedure for damages in 2020. While the intention behind this latest addition can be welcomed as an effective collective action system in this regard was lacking, some of its features are also subject to criticism and have raised doubts as to whether the new Act is an improvement. That is especially the case with respect to actions filed for declaratory and injunctive relief by so called ‘ideological claimants’. Another crucial aspect for the effectiveness of collective redress mechanisms in general, but particularly with respect to monetary relief, is the availability of funding. The different modes of financing litigation, are the topic of extensive debate. In particular third-party funding as a solution to enable expensive collective actions to take place, has gained critical attention in Europe, even though it may prove to be the only available or viable funding option in the international context. This chapter discusses developments in collective redress in the Netherlands with a focus on the issue of funding and on the position of the Netherlands collective redress regime in the European and international context. It concludes that if the Netherlands is to continue to hold its predominant position in Europe in relation to collective redress, that will not be because of the new law, but because of the creativity of lawyers, the pragmatism of the Dutch courts and the willingness of funders to rely on both.

In 2014, Belgium introduced a consumer class action. In 2018, the procedure was expanded to disputes between SMEs and businesses. This chapter opens with a description of Belgium’s class action procedure (class action prerequisites, jurisdiction, opt-in or opt-out, procedure, redress and enforcement phase). It follows with an overview of the cases brought between September 2014 and April 2020 (nine in total). This (limited) case law allows us to draw a number of conclusions about the pros and cons of the procedure. The chapter then draws attention to new and alternative ways to achieve collective redress (consumer dispute resolution (CDR) and regulatory redress). The conclusion arrived at is that our focus should be on exploring and optimising all options for mass harm situations and to connect these options so they can form an integrated dispute resolution framework.

Class actions were introduced in Norwegian civil procedure with the Norwegian Dispute Act of 2005, inspired by the United States’ federal rule on class actions. Norwegian civil procedure already had several other types of collective litigation, but these procedures did not cover the catchment area for the class action rules. The chapter on class actions was a novelty when the act was passed and it represented something new in Norwegian civil procedure. The ability to decide on a legal question with effect for many individual claims reduces the costs of each claim and thus gives access to the courts for claims involving amounts or interests so small that they would otherwise not be brought as individual actions. This chapter gives an introduction to the Norwegian class action rules and discusses whether the rules have been a success or not. The rules are compared with the source of inspiration. The importance of the origin of the rules and its influence on the interpretation of Norwegian rules is examined.

In Sweden, a system of group actions has been in force since 2003. The original aim was to see about 20 such actions a year. In actual fact, in the 17 years of the existence of the system, 21 group action cases have been initiated, a number of which ended successfully for the plaintiffs. In Finland, only a public group action is allowed by the Group Action Act and the only authority that can bring the action is the Consumer Ombudsman. Up to the present time, there have been no group actions filed in Finland, even though the Act has been in force since late 2007. This cautious start was made in order to guarantee safeguards against the abuse of the group action system and to reach consensus to accept group actions in the country. Thus, so far East-Nordic (ie Swedish and Finnish) group actions have not been very successful. This has led to discussions in both countries as to the reasons why. In Sweden, discussions examine how to make the group action procedure more effective in the future. In Finland, discussions explore the scope of group actions and the possibilities to make them broader. However, those who are opposed to the group action system per se and its widening repeat the argument that the American way of litigation brings risks and does not fit well into Nordic legal culture. This argument was already common at the time the group action system was adopted in Sweden and in Finland as well. Does, in fact, this argument hold true? Or, can group actions actually correspond with East-Nordic culture? This contribution explores—and offers answers—to these questions.

On April 12, 2019, the Italian Parliament passed a statute providing for a new regulation of collective redress. For the first time in the relatively short life of Italian group actions, both actions for compensatory relief (i.e. damages or restitution) and actions for injunctive relief are governed together and moved from the Consumer Code to the Code of Civil Procedure. This reflects a new vision of collective redress, namely a wider scope of application: no more references to consumers and users, but standing granted generically to bearers of ‘homogenous individual rights’, whether or not they are consumers or users. Furthermore, the new perimeter of class actions encompasses any claims arising out of both contract liability and tort liability, which signals another significant change aimed at designing class actions as general remedies. Yet, nothing has changed as far as the procedure by which class members can join the action is concerned: the opt-in option has been preserved even though the timeframe for opting in has been extended. In spite of a few interesting features, the new rules sketch a procedure that is still cumbersome and excessively technical. It should be interesting to see whether this attempt at reinvigorating group actions will be successful.

The Slovenian Collective Actions Act (CAA) was enacted in September 2017 and came into effect in April 2018. Collective redress available in Slovenia before the enactment of the CAA did not provide for any collective compensatory actions for any group of victims. Only collective injunctive relief was available for safeguarding the interests of consumers under the Consumer Protection Act of 1998 that implemented the EU Injunctions Directive. As more and more mass harm cases were detected in Slovenia, and as collective redress became one of the focal topics within the EU, the CAA was perceived as an urgently needed piece of legislation and a top priority of the Slovenian Government in guaranteeing access to justice. The CAA was drafted in 2016 taking into account the European Commission’s Recommendation of 11 June 2013 on common principles for injunctive and compensatory collective redress mechanisms in the Member States concerning violations of rights granted under EU law, as well as best legislative solutions and practices of various foreign models. It introduced collective settlements, and compensatory and injunctive collective actions. Since the start of the application of the CAA, three collective actions have been filed with the courts under its rules. The purpose of this contribution is to show the challenges faced and the decisions taken in drafting the act as well as the problems the parties and the judiciary have been facing in the application of the CAA. The Slovenian experience may serve as a model of the “dos” and “don’ts” for all drafters of such legislation in the EU Member States where collective redress has not yet been implemented.

Airfreight Cartel is a regulatory case currently being litigated before the Court of Justice of the EU for infringement of Article 101 of the Treaty on the Functioning of the European Union (Consolidated Version of the Treaty on the Functioning of the European Union, OJ EU C 326, 26.10.2012, pp. 47–390.). While competition litigation in EU law is a topic of interest, the far more interesting issue from the point of view of civil litigation is the coordination of pending class actions in the United States, Canada, Australia, the Netherlands, the United Kingdom and France. The infringement of competition law in the airfreight cartel is challenged by collective redress lawsuits in these different jurisdictions (Sect. 1) (In this study, only European regulatory responses will be assessed. Decisions and rulings of Australian, Korean and US Competition Authorities will not be assessed in depth. At the regulatory level (prosecution by authorities of infringement of competition law, i.e. in Europe, Art. 101 TFEU) there are two European Commission decisions and several judgments annulling the first decision by the General Court of the EU.). This paper assesses the stakes in coordination of parallel lawsuits in collective redress from a European point of view (Sect. 2). Mechanisms of coordination of parallel lawsuits in collective redress are the cornerstone of any successful cross-border collective redress mechanism. There are several mechanisms that can be applied in coordination of collective redress (Sect. 3). These include mechanisms unknown in the EU such as the doctrine of toleration of foreign-related class actions (Sect. 4). A novel approach in coordination would be an international panel on cross-border collective redress (Sect. 5). Forum non conveniens and anti-suit injunction will be explored in the class action context (Sects. 6 and 7). The European answer to such mechanisms are described as the lis pendens and related actions doctrine (Sects. 8, 10 and 11). Lis pendens as a mechanism of coordination of parallel lawsuits in collective redress has already been explored in Quebec (Sect. 9). In conclusion, the possibility of agreements on prorogation of jurisdiction will be assessed within a collective redress framework (Sect. 12).

On 22 June 2020, the European institutions reached a historical deal on a new Directive for representative actions for consumers, which was finally adopted on 25 November 2020 New EU Directive 2020/1828 allows Qualified Entities across the EU to seek compensation on behalf of consumers affected by mass harm situations. Presented by the European Commission in April 2018 as part of its “New Deal for Consumers” package, the Directive intends to strengthen the enforcement of consumer rights and to ensure access to justice when large-scale damage arise. It also gives considerable leeway to the Member States when implementing the new rules into their national legislations. Therefore, the effectiveness of the new EU instrument will strongly depend on the choices made by Member States at national levels. These issues are pivotal to ensure that the new EU collective redress instrument meets its objectives and fully delivers for all harmed individuals.

While collective redress mechanisms continue to develop in much of Europe and in pockets around the world, the oldest class action regimes are undergoing reform. This contribution explores the state of reform in the first and second generation class action jurisdictions: the United States, Australia, Israel and Canada. Their respective class action procedures are outlined in Sect. 2. Section 3 discusses the reform initiatives of the past 3 years in each of the four countries. In Sect. 4, common areas of concern as well as areas of divergence are explored. Comparing and contrasting these reform efforts illustrates the evolution of class actions in these countries and provides useful insights for those studying and contributing to the development of newer collective redress systems.

This contribution evaluates the economic utility and effectiveness of class actions in Quebec based on empirical data obtained at the Class Actions Lab over a period of 25 years. The University of Montreal Faculty of Law’s Class Actions Lab is conducting this study in the course of its “Class Action Compensation Project”. The Project began in the summer of 2015 and is scheduled to conclude in 2022. The Project seeks to compile and compare take-up rates in various class action files, as well as per-plaintiff recovery data. Ultimately, it measures the end product of class action litigation, the value and benefit of this kind of litigation, and, incidentally, its costs as assumed by the parties and the system. The Project has identified specific parameters that can be used to evaluate empirically class action costs and benefits, and a significant list of criteria directly associated with higher rates of participation and compensation. This is the first Canadian study of its kind. The contribution shows that class actions are instruments of compensation of class members, but that this compensation remains imperfect by way of the number of members compensated, the extent to which they are compensated and the exorbitant costs of bringing such actions.

It is recognized that the Brazilian experience with class actions is one of the most developed in the civil law world. However, this experience is not only successful. After a long period of broad access to justice, for pragmatic reasons, new techniques are coming to the fore. This chapter focuses on the traditional Brazilian class actions, addressing some new trends and risks. The goal is to sketch a broad and realistic view of Brazilian class action landscape, highlighting the good experiences and new trends, as well as the evolution of the Brazilian system. An analysis of quantitative and qualitative data from more than 286,000 class actions filed between 2014 and 2018 is provided. The most important features of the Brazilian class action system: standing, res judicata, lis pendens, costs and fees, etc. will be presented, showing how new Civil Procedure Code applies to the collective redress schemes. The focus will be on the emergence of aggregate litigation as a form of collective redress, in combination with Brazilian class actions. Finally, we will deal with “the procedural law of disasters”.

China has two major judicial reliefs against large-scale rights’ infringements. One, established in 1991, is a mass private interest action under which the victims of mass harm can opt-in and join the plaintiff class in representative litigation. The plaintiff class selects their representatives who participate in the trial. The plaintiffs are bound by the judgment. The victims who did not join the plaintiff class may sue separately, but in separate litigation the class judgment is usually applied as a ‘model-litigation’. This type of judicial relief was not sufficiently effective, which led to legislative changes and the establishment of another type of collective relief. In 2012, a new form of collective relief, called ‘public interest litigation’ was established. In public interest litigation the procurator and some other legally authorized social organizations act as plaintiffs in cases of environmental harm and mass infringement of consumer rights. An individual consumer is not allowed to file a public interest lawsuit, in spite of the fact that the legally authorized plaintiff entities often lack motivation to file such claims. Apart from these two means of collective redress, this contribution also addresses the main features of a new, opt-out type of class action established by the Securities Law at the end of 2019.