The topic of ‘collective redress’ is fuelling heated discussions across Europe and beyond. That’s because the EU’s landmark Representative Actions Directive is currently entering into national legislation, making it easier for consumers to go to court as a group if they have suffered collective harm. It’s been a long road to get here, but the journey is not over yet.
This blog is part of our 60th anniversary series, tying the six decades of BEUC’s existence to current day concerns. This one focuses on the 1990s. For more, delve into our anniversary booklet.
A Frankenstein’s monster?
The advent of collective redress has not been smooth sailing. Though it would make consumers’ access to justice easier, its opponents have readily used apocalyptic words, such as “Pandora’s box” or “Frankenstein’s Monster,” to predict a so-called uncontrolled “litigation culture,” which would have detrimental consequences for European economies.
The reality is, however, quite different. What is at stake here is rather the possibility for consumers to enforce their rights and to act together to obtain redress when they have suffered mass harm – e.g., when purchasing a defective smartphone or car. This development is very much welcome, as recent cases (like the Dieselgate) have shown that European consumers are poorly protected compared to their counterparts in other parts of the world.
After a 30-plus year legal battle… Finally!
The paradox of collective redress is that, though it is very topical today, it is far from new. The first forms of collective redress mechanisms appeared in medieval England several centuries ago, then developed in the United States and the Commonwealth countries (Australia, Canada, etc.) during the 20th century. It finally reached European shores in the late 1990s.
At the European Union level, the topic of collective redress has been a very long and thorny one. This is also a topic that BEUC decided to embrace early as the stakes were high and Europe was clearly lagging behind. Step-by-step, BEUC and its member organisations stressed the need to provide consumers with effective tools to obtain compensation. For several years, BEUC went through intense discussions with policymakers and had to face harsh industry lobbying. Not discouraged at the time when the EU seemed only prepared to take “baby steps,” BEUC decided to intensify its efforts to debunk myths and to bring the necessary evidence showing that changes were urgently needed.
Ultimately, the Volkswagen Dieselgate scandal acted as a reality check and a catalyst for change. The fact that many thousands of consumers were stranded without adequate options for justice led eventually to the adoption of the Representative Actions Directive in 2020.
The start of a new chapter: working for collective redress that works
2020 was undoubtedly a milestone in the journey to collective redress but is definitely not the end of the story. The Directive gives important leeway to EU countries when implementing the rules nationally. Notably, governments will have to choose whether to go for ‘opt-in’ or ‘opt-out’ collective redress mechanisms. The former offers consumers automatic access to justice, the latter would mean people would need to sign up to actions individually, bringing with it extra costs and hassle.
It is therefore up to national governments to go the last mile to ensure that consumers can fully benefit from the new rules when they come into application in June 2023. In particular, several issues are now of paramount importance for the future success of collective redress. This includes the necessity to ensure that the representative entities eligible to bring collective redress actions (e.g., consumer organisations) have sufficient funding to do so. Governments must also strike the right balance between the need to have procedures with sufficient safeguards and not imposing too many restrictions which may cause delays and may deter claimants from bringing their claims. What’s more, the different stakeholders involved in the handling of collective redress actions will need time to get acquainted with the new rules.
All of this represents new challenges that BEUC and its members have decided to tackle. Through factsheets and a video raising awareness, to new reports and studies but also training and workshops. All this with the intent to make collective redress the game changer it should be in the years to come.
One thing is therefore already certain: BEUC’s quest for effective collective redress is far from being over. We have a clear objective: that collective redress in Europe does not experience Frankenstein’s tragic end but instead has a bright future.