European Union: Commission Consults On Common Legal Principles For Collective Actions

Last Updated: 15 February 2011
Article by SJ Berwin's EU & Competition Team

The European Commission (Commission) has launched a consultation on the future of collective actions in Europe.  The aim is to identify common legal principles relating to collective redress across the 27 EU member states with a view to developing a coherent EU approach. 

Where the same breach of EU law harms a large group of citizens and businesses, individual lawsuits are often not an effective remedy.  There is however currently a diversity of existing national collective redress mechanisms, resulting in inconsistent and ineffective enforcement of private rights throughout the EU.  A coherent European framework drawing on national traditions may therefore be the answer.  This would cover both injunctive relief and claims for damages for the harm caused.

The Commission is clear however that despite these issues, all policy options are still on the table and asks for feedback on whether EU legislation is required at all.  

The consultation also seeks feedback on which areas of EU law would benefit from such legislation.  Reference is made to the Commission's earlier work in relation to competition and consumer law, but parties are also asked whether the proposals should be extended to other areas, such as environment or financial services law.

One long standing point of contention is whether such an EU mechanism would lead to abusive claims, such as those associated with the US class action system.  The US system contains economic incentives for parties to bring a case to court even if it may not be well founded.  The Commission seeks to underline that the two systems would be very different and that the European approach would build in safeguards, for example by adopting the 'loser pays' principle under which the losing party pays the court and lawyers fees of both parties.

Other topics for debate include:

  • the role of representative bodies;
  • the availability of appropriate financing; and
  • the importance of effective enforcement across the EU.

On the basis of the responses to this consultation, the Commission will decide on future action, including whether there is a need for EU legislation.

The consultation is the latest in a line of initiatives by the Commission on this topic.  A green paper on competition damages actions including collective actions was produced in 2005 followed by a white paper in 2008, however due to political pressures this did not proceed any further.  A green paper in relation to collective redress in the consumer field was published in 2008. This time round the consultation is a collaboration between three Commission departments - competition, consumer policy and justice.

Submissions are invited by 30 April 2011.

To view Community Week, Issue 508; 11th February 2011 in full, Click here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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