Out-Law Guide 5 min. read

The impact of the new EU mass actions directive across Europe


Mass actions, sometimes described as collective, class or group actions, are actions brought by multiple claimants against the same defendant or group of defendants, generally in relation to harm said to have been caused to the claimants in the same or a similar way.

There has been growing pressure in recent years, both in the UK and EU, to ensure that effective, affordable routes exist for the bringing of mass actions, particularly by consumers.

The growth of mass actions presents increased challenges and risks for businesses, particularly those which provide services or goods to consumers. Businesses should therefore understand the mass actions landscape in the territories in which they operate.

In this guide, our experts from across Europe consider an important development in the European mass actions landscape, the EU Directive on Representative Actions for the Protection of the Collective Interests of Consumers (the Representative Actions Directive, or RAD), which EU member states were required to transpose into their national legal systems by 25 December 2022. Many jurisdictions appear not to have met this deadline, although many have transition steps underway. We look at how this will impact on mass actions procedures, and therefore exposures, in key EU member states. We give an overview of the mass actions landscape in those jurisdictions; as well as in the UK where, although the RAD does not apply due to Brexit, the scope of mass actions procedures is frequently the subject of legal developments and debate.

The Representative Actions Directive

The RAD came into force on 24 December 2020 following years of discussions at EU level, driven by a view that only a handful of EU member states had adequate regimes for collective claims by consumers.

It requires EU member states, by June 2023, to have in place at least one procedural mechanism which meets minimum standards set out in the RAD, for consumers to seek collective redress when they claim to have been harmed by a business through breaches of certain European consumer laws. The policy areas covered by these laws are wide-ranging, including data protection, financial services, travel and tourism, energy and telecommunications, as well as general consumer law such as rules on unfair contract terms and misleading advertising. Under the RAD, effective procedures must be established for both domestic and cross-border infringements. Cross-border infringements arise where consumers affected live in a member state other than that in which the infringing business is established.

In most if not all jurisdictions, the RAD will require changes to existing national litigation procedures, and in general will involve a significant “levelling-up” of those procedures to make them more claimant-friendly.  All EU member states will now have some form of collective redress system allowing consumers to seek “redress measures” such as compensation; a departure for many EU states where at present relief in collective actions is limited to injunctive remedies or declarations. Member states may, of course, choose to implement reforms which go further than the minimum standards required by the RAD. For example, member states might introduce new procedures which are available not only to consumers but also to businesses.

Core requirements

Collective redress procedures under the RAD will involve the bringing of actions by independent “qualified entities”, which must be designated as such by each state; in practice these are likely to be consumer organisations or public bodies. Individual consumers will not be parties in the actions; nor will they be liable for any costs, save in exceptional circumstances. Qualified entities should be able, on behalf of the consumers they represent, to seek both injunctive relief and redress measures such as compensation, reimbursement, a price reduction or repair, though the RAD discourages punitive damages.

The overall claimant-friendly approach of the RAD is balanced, at least to some extent, by some procedural features which the Directive specifies each state's regime should have in order to avoid “abusive” mass litigation. These include a “loser pays” rule on costs and the ability for courts to summarily dispose of certain claims.

Procedural flexibility

Member states have considerable flexibility under the RAD to decide on procedural issues. These include:

  • whether their regime for domestic collective actions for redress measures should operate on an opt-out or opt-in basis. In opt-in mass actions, each claimant must take proactive steps to join the action; while an opt-out procedure allows a qualified entity to bring a claim on behalf of an entire class, without the express mandate or even knowledge of each member of the class. Most existing mass actions systems in the EU and the UK currently operate on an opt-in basis and it is likely, in our view, that this will continue to be the more popular approach. Additionally, consumers resident in a different member state from that in which a representative action is being pursued will always have to opt in. The introduction of further opt-out regimes would, however, increase risks for businesses, given the relative ease of bringing a large opt-out action, as compared with the extensive “book-building” exercise involved in launching opt-in claims;
  • which bodies will be “qualified entities” authorised to bring collective actions. Member states are given significant flexibility on this in relation to domestic collective actions, although the chosen entities must always be transparent about their funding, avoid conflicts of interest and provide consumers with adequate information about representative actions, for example so that individuals can take informed decisions about whether to join. Qualified entities entitled to bring cross border actions – brought in jurisdictions other than those in which the qualified entity is established – must satisfy more stringent criteria: in essence, they need to be established, independent and properly-governed not-for-profit legal entities with a legitimate interest in consumer protection;
  • what certification process and criteria should apply for a mass action to proceed: for example, how many claimants there should be as a minimum – something on which jurisdictions currently diverge - and the required level of similarity between the issues in the individual claims;
  • the full detail of the safeguards to be put in place around the third party funding of mass actions, if such funding is permitted by domestic law;
  • the extent and detail of procedures for the disclosure and discovery of documents – although the RAD does state that discovery procedures should be available. More extensive discovery regimes are likely to be appealing to claimants.

Forum shopping

Mass actions against businesses with international operations frequently span multiple jurisdictions, and the Directive recognises the need for cross-border mass action procedures.

Whether proceedings can be brought in a given jurisdiction will depend on the circumstances and the application of the rules in the Recast Brussels Regulation, which governs the allocation of jurisdiction in and between the courts of different EU member states. However, in some cases there will be a number of potential jurisdictions in which proceedings could be brought. This is particularly the case given the flexibility which the Recast Brussels Regulation rules give to consumers as to where they bring their claims.

Where that is the case, one factor which is likely to be taken into account by qualified entities in deciding which jurisdiction to choose is the particular mass actions regime established in that jurisdiction. They are likely to look at the particular procedural rules the jurisdiction has put in place, particularly on issues where jurisdictions have flexibility so that there is likely to be a variety of approaches, such as around the availability of third party litigation funding, certification procedures, and the scope of discovery.

As a result, unless different member states implement the RAD in a way which is closely aligned, there is likely to be considerable forum-shopping within the EU in mass actions. Businesses will need to be aware of where claimants’ ‘favoured’ jurisdictions might be, and take early advice on any apparent forum-shopping and what might be done to pre-empt or challenge it.

Here is how the RAD is likely to affect jurisdictions across the EU and the UK.

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