The newly enacted Collective Proceedings Act, Chapter 520 of the Laws of Malta (hereinafter the 'Act') came into force on the 1st August 2012, giving consumers, for the first time, the right to institute proceedings on a collective basis. This type of redress is common in the USA and the European Union is currently working on the development of a similar law at a European level. The legislation provides a procedural solution to those situations where a group of persons have claims arising from common issues. Such persons have been granted the right to seek redress collectively. Currently, this law only applies to matters arising under consumer and competition law administered by the Malta Competition and Consumer Affairs Authority. By virtue of this Act, individuals may seek redress collectively, through the institution of one court case, represented by one individual.

Before this law was enacted, consumers could file separate and individual proceedings to protect their consumer rights. The Act has provided consumers with a more effective and less costly means of redress in the event of common infringements of the main consumer laws in Malta, facilitating justice and providing more opportunities for consumers to seek justice to protect their rights.

Members specified in the collective proceedings or class members are given the opportunity to opt into proceedings within a period to be specified by the Court, which shall be published in the Gazette and in a local English and Maltese newspaper. Nonetheless, a class member may not be represented in collective proceedings if he has already filed a cause with the common issues, unless such class member discontinues or applies to stay the cause before opting‐in the collective proceedings. Furthermore, a class member may not be represented where such member has already reached an out of court settlement on the common issues set out in the collective proceedings, where an arbitration decision between the class member and the defendant has already been issued or where a decision on the common issues set out in the collective proceedings has already become a res judicata and remedies have been decided in favour of the class member.

A pre‐trial hearing shall be held whereby the Court will decide whether the proceedings shall be continued or stayed. The Court will allow collective proceedings to take place in the event that it is satisfied that common issues are raised and that such proceedings are brought on behalf of an identified class of two or more persons, whereby a 'class' is defined in the Act as a group of persons who have suffered or are suffering harm and whose claims arise from common issues. The Court should also be satisfied that collective proceedings are the most appropriate means to resolve the matter in the most efficient and fair manner, which shall be determined by taking into account the benefits of the proposed collective proceedings and the nature of the class. In the event that the Court declares the proceedings not to be collective proceedings, the action will be dismissed. In such case, there is nothing in the Act which prevents the parties of the joint action from instituting proceedings on an individual basis.

The class representative is obliged to act in the best interests of the class members, explaining the nature of the civil proceedings and keeping them informed on the progress of the proceedings, the class representative shall also maintain a register wherein the identity and claims of the class members are recorded. The class representative may be substituted should the latter no longer enjoy the approval of the Court in terms of the Act. Nonetheless, in order for a class representative to withdraw from its role, permission from the Court is required, whereby the latter will consider whether the class representative has given notice of its application to withdraw from its role and has satisfied any conditions imposed by the Court.

In collective proceedings, the Court shall primarily hear and determine the common issues for a class action. It will then hear and determine the common issues for a sub‐class action, that is, common issues pertaining to only some of the class members. Individual issues are heard and determined only after the common issues are resolved. One judgment may be given with respect to the common issues and separate judgments in respect of any other individual issues.

The costs may be awarded in favour or against the class representative and in the event of a sub‐class action, may be awarded to the class representative of that sub‐class. Furthermore, with respect to individual issues, the costs shall be awarded in favour or against the relevant individuals. In the event that the Court finds the collective proceedings to be frivolous or vexatious, the Court may award increased costs of up to two thousand five hundred Euros (€2,500) against the class representative.

The enactment of the Act therefore aims to (i) increase individual access to justice, as it gives consumers the opportunity to pursue a claim that they may not have individually pursued; (ii) induce increased compliance by undertakings as a result of the threat of joint action; (iii) improve judicial efficiency and economy, as the Act provides that individual cases which may be collectively heard shall be heard as one case rather than separate cases and therefore this will speed up proceedings in court.

The Act has however failed to address certain issues relating to juridical interest and the calculation of damages. Although the Act has provided for the definition of 'common issues' as being those situations which are common, even if not necessarily identical issues of fact, or those situations which are common, even if not necessarily identical issues of law that arise from common but not necessarily identical facts, the Act fails to provide for the interest which each individual should have as a common ground to be considered as being a common issue in terms of the Act and therefore giving rise to it being heard collectively in a class. Furthermore, the Act fails to lay down a method which may be used to assess the damages in collective redress proceedings, which gives the impression that the issue is determined on a case by case basis by the judge presiding over such proceedings.

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.