On 25 June 2023, the Maltese law transposing the Representative Actions Directive came into force.
The Representative Actions Directive required Member States to implement a harmonised procedural framework to permit consumer class actions where a party is in breach of laws on, amongst others:
- consumer protection
- data protection
- utilities
- financial services
- product and medicine safety
- environment
Malta enacted the transposing Maltese law on 5 June 2023 by way of an Act of Parliament. This is Act No. XVII of 2023, entitled 'An Act to provide for representative actions for the protection of the collective interests of consumers, and to carry out other consequential amendments' (the Representative Actions Act). The Representative Actions Act was preceded by a public consultation issued by the Maltese Government.
The following are some of the key features of the Representative Actions Act:
- Malta has decided to impose an opt-in mechanism, rather than an opt-out for such representative actions. Consumers will have to register their claim with a qualified entity, who will then act as plaintiff and represent the consumers in a specific representative action.
- The certification of the class action is meant to be done in the initial stages by the Court by means of a decree and after having heard both parties in a pre-trial hearing.
- In principle, the qualified entities acting as plaintiff are exempt from the payment of court registry fees upon filing of representative actions.
- Third-party litigation funding is limitedly permitted for such class actions.
- The Malta Competition and Consumer Affairs Authority is meant to set up a national electronic database on representative actions filed in Malta.
Class Actions in Malta
Class actions are already provided for in Maltese procedural law. The Collective Proceedings Act, which has been in force since 2012, permits class actions where competition laws and consumer laws are breached. However, and 10 years later, only a couple of class actions, involving a handful of consumers, were initiated in terms of the Collective Proceedings Act.
Over the years, there were also other notable class actions which were initiated outside the scope of the Collective Proceedings Act. However, these class actions were based on the default civil procedural law and were managed and decided outside a structured procedural framework for class actions.
This is set to change with the Representative Actions Act.
The Representative Actions Act
Representative actions as contemplated by the Act may be brought by qualified entities, generally designated organisations or public bodies representing consumers. These entities, who will take up the role of plaintiff in the proceedings, will be able to claim both injunctive measures and redress measures. Qualified entities can only represent consumers and cannot represent undertakings or legal persons.
Injunctive measures may involve provisional and definitive measures to cease or prohibit an infringement, while redress measures may include compensation, repair, replacement, price reduction, contract termination, or reimbursement of the price paid.
Representative actions must be brought by means of a sworn application before the Civil Court (Commercial Section) (the Court) and, in certain circumstances, before a national administrative authority.
The Court must decide whether the proceedings are appropriate for representative actions and whether the claims made are admissible in terms of the Representative Actions Act. It will decide after a pre-trial hearing and by way of a decree. The Court shall order that such decree be published and shall state that any additional consumers may request to be represented by the qualified entity. Such a request must be brought within a period determined by the Court, not exceeding 5 months from the date of the decree, by registering their claim with the qualified entity and concluding a representative action agreement. The represented consumers will then be bound by a judgement on their common issues.
The qualified entity must act in the best interests of the represented consumers, providing them with information about the nature of the proceedings, their progress, and any relevant judgements or decrees. It is the duty of the qualified entity to inform the consumer on whether it intends to appeal any judgement or decree. In addition, the qualified entity is required to preserve and maintain a register detailing the identities and claims of the consumers represented in representative action proceedings.
If the Court rules in favour of the qualified entity, acting as plaintiff, and orders the defendant to pay compensation, the Court may further order the defendant to credit the amount owed to a particular account held by the plaintiff and may issue other orders to the plaintiff as it sees fit, to ensure that the compensation is fairly distributed among the represented consumers.
Qualified entities are exempt from paying Court Registry fees when initiating representative action proceedings unless the Court rules against the qualified entity.
Concluding thoughts
The Representative Actions Act is meant to facilitate and encourage the filing of collective actions by consumer organisations and other entities acting in the public interest, while also ensuring that there exist the necessary safeguards for representative actions to be fair, efficient, and effective. It remains to be seen whether the Representative Actions Act will bring about a culture of class actions in Malta.
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.