By Claire West
The European Commission has launched a public consultation aimed at achieving a coherent approach towards collective redress in the European Union.
The Commission, as a public authority and the guardian of the EU Treaties, enforces EU law. In parallel, individuals and business can seek enforcement of their rights under EU law in national courts.
In some cases, the violation of EU law may trigger multiple individual lawsuits.
Current EU law already provides for the possibility of pursuing collective actions for injunctions in the field of consumer law, but the national legal systems vary considerably concerning financial markets, competition, environmental protection, and other areas of law.
The situation is even more diverse among Member States when several consumers or businesses want to seek damages in the same case.
The Commission’s public consultation will therefore attempt to identify common legal principles that should underpin collective actions across the EU (such as the need for effectiveness and efficiency, information for citizens and safeguards against abusive litigation).
The outcome of the public consultation is open. Contributions can be sent until the end of April 2011.
Collective redress is a broad concept that includes injunctive relief (lawsuits seeking to stop illegal behaviour) and compensatory relief (lawsuits seeking damages for the harm caused). It needs to be clearly distinguished from so-called "class actions" that are common under the US legal system. In Europe, collective redress procedures can take a variety of forms, such as actions in court, out-of-court settlements, alternative dispute resolution mechanisms, as well as entrusting representatives with the enforcement of legal claims.
Collective redress is not a new concept in the EU. Injunctive collective redress is a normal feature in the EU's consumer legislation and also known in the field of EU environmental law. As regards collective actions for damages, some Member States have them, while others do not. The Commission is therefore launching a horizontal public consultation “Towards a more coherent European approach to collective redress.”
The purpose of this consultation is, among other things, to identify common legal principles, should a future Commission initiative be presented on collective redress and how these principles could fit into the EU legal system and into the legal orders of the 27 EU Member States.
The consultation also explores in which fields different forms of collective redress (injunctive and /or compensatory) could have an added value for improving the enforcement of EU legislation or for better protecting the rights of victims.
At the same time, the Commission firmly opposes introducing “class actions” along the US model into the EU legal order, or creating incentives for abusive litigation.
The public consultation will inform the Commission’s eventual position on collective redress. Nothing is decided at this point. The Commission will take into account all views to identify whether collective redress may or may not be a suitable subject for EU legislation, taking into account the principles of subsidiarity, proportionality and effectiveness.
A hearing will be held to complete the consultation. The Commission will then publish a Communication on the results. The final decision on whether new EU legislation is needed will be based on the consultation’s outcome and, if appropriate, after a detailed impact assessment exploring all possible actions.