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Europe at class action stations

by Antony Collins on 23 May 2014

Europe at class action stations
Class action culture in Europe has never been as fervent as in the US. As a recent JAMS International blog on weather-related insurance claims observed, collective redress has focused mainly on liability issues, like the mis-selling of PPI policies. But are things about to change?

Recent reforms in Europe are finally promising to bring collective action towards the mainstream. In March, Belgium passed a bill – Title II “class actions” in Book XVII of the new Belgian Code of Economic Law – to allow consumers to file a group claim for breach of contract. In the same month, the French Consumer Law N° 2014-344 was enacted, paving the way for class actions in competition complaints.

 The European Parliament, meanwhile, is encouraging more collective redress after it recently approved a proposal for a Directive to “help citizens and companies claim damages if they are victims of infringements of the EU antitrust rules, such as cartels and abuses of dominant market positions”. One of the changes is to make consensual settlements between victims and infringing companies easier by clarifying their interplay with court actions.

Suzanne Rab, an EU and competition barrister at Serle Court, says – in the case of the new European Directive – it is focused on making it easier to bring private litigation against cartels in the national courts, covering issues such as disclosure, legal standing and the timeframe to bring a claim, rather than being focused on class actions specifically.

“Even so, the rationale is still to encourage more private enforcement against cartels, whether individual or collective actions,” she adds.

The raft of recent proposals have reignited interest in collective actions in Europe. Experience in the US of class actions shows that most cases prefer to settle before they reach the courts, so any uptick in European class actions may present a potential boost when it comes to encouraging more mediation.

Mediators, however, acknowledge that there are still hurdles to overcome. The scope of both new pieces of national legislation, for instance, is relatively specific; neither allow carte blanche class actions across the board so the initial wave of claims will be limited. In France, claims can only be launched by accredited consumer rights organisations; Belgium allows consumer rights organisations as well as organisations not pursuing economic profit and autonomous public services to file claims.

Neither of the national new bills make the provision for the US-style “opt out” model, where possible class members are provided with notices and have to “opt out” of the action (the UK announced in 2013 it was to introduce the “opt out” regime in Competition Appeal Tribunal matters), which may also limit interest.

“The new [Belgian] bill provides a lot of potential for mediation although there are factors that will affect any possible cases,” explains Patrick Van Leynseele, a partner and mediator at Dal & Veldekens in Brussels. “The Belgian model proposals, for instance, suggest an “opt-in” system, which means classes are unlikely to get as large as they would in the US or other places with an “opt-out” policy. There are also no punitive damages in Belgium and the courts will likely take a strict approach to class actions.”

As such, the feeling is that opportunities for law firms and mediators may be limited, at least in the early stages: “Consumer groups are not always keen on hiring legal counsel and are often well-equipped to handle negotiations themselves, so prefer to avoid going to court,” Van Leynseele adds.

Even so, experts believe there is the chance that an increase in class actions may well make early settlements and mediation more attractive. After all, any attempts to inspire more collective redress, even if it is initially in consumer and competition cases, may well help to develop the culture and bypass the perceived problems.

Rab highlights the widespread lack of certain legal mechanisms across Europe, such as treble damages and contingency fees as well as many member states’ civil law systems, which will likely limit the appetite for EU competition-related class actions on a par with the experience in the US.

“That said, follow-on antitrust litigation is gathering momentum in the EU and the American claimants bar has been increasing its interest in Europe recently,” she continues. “Many antitrust actions settle before they get to court so there is certainly scope for alternatives to litigation.”

Indeed, JAMS has decades of experience in the US in resolving large, complex disputes such as class actions and mass torts in the US, including in antitrust and consumer actions, to underscore just how important a mechanism mediation can be. European class actions may be in their infancy but experts believe that as attitudes change and the system evolves so too will the approach towards mediation as a viable solution.

“If negotiations with a defendant fail then there will certainly be room for mediation,” Van Leynseele summarises of the new Belgian law. “The biggest challenge, however, remains that mediation has yet to be fully embraced in Belgium and a lot more work needs to be done to encourage the process.”

This post was written by Antony Collins who is a freelance journalist. He can be contacted at ac@acollinsmedia.com

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Topics: Mediation, Legislation, Litigation

Antony Collins

Written by Antony Collins