Breakthrough late Monday evening: Representatives of the EU Parliament, the Council of Ministers and the Commission have agreed on the details for the planned possibility of EU-wide class action lawsuits. According to this, consumer protection organizations and associations should in future be able to go to court in all member states against unfair business practices, for example in the areas of environmental, health and data protection, as well as telecommunications and tourism, and be able to file claims for damages.
Among other things, the MPs enforced that air and train passengers are also better able to enforce their rights under civil law in the new way. This is likely to suit many consumers, especially in the Corona crisis, given the large number of canceled trips. The government representatives of the EU countries had initially put themselves here.
The EU Commission launched the initiative in 2018 as part of its “New Deal” for consumers. In doing so, she responded above all to the diesel scandal. The institutions entitled to bring an action, which, unlike the USA, must not themselves be geared towards profit, should therefore also be able to exercise rights to repayment, price reductions, replacements or repairs. The Brussels government wanted to avoid a “lawsuit industry”.
Qualified institutions for legal standing
After this compromise now found each member state must designate at least one qualified entity that is empowered and has the financial resources to initiate injunctions and appeals on behalf of consumer groups. Courts or administrative authorities can dismiss apparently unfounded cases at the earliest possible time in accordance with national regulations. The Commission should examine whether a European Ombudsman for collective redress should be set up to deal with representative cross-border lawsuits at EU level.
In order to start a multi-country initiative, legitimate bodies must have a one-year record of protecting consumer interests and have a charitable character. They are designed to ensure that they are independent of third parties whose economic interests conflict with those of consumers.
For national complaints, Member States must establish appropriate criteria that are compatible with the objectives of the directive. This can be the same as for cross-border lawsuits. The principle introduced by the representatives of the people, according to which the loser has to pay, is to ensure that the losing party bears the cost of the successful party’s proceedings. In general, the project aims to make the internal market function better. It is designed to help prevent illegal business practices more effectively.
Consumer protection and legal security for companies
The agreement still has to pass through the plenary session of the parliament and an official council meeting, but this is a matter of form with the deal. MEP rapporteur Geoffroy Didier of the Conservative EPP Group spoke of a good balance between consumer protection and legal certainty for businesses. “Comforting and stopping tactics on canceled flights and on environmental issues will no longer pay off in the future,” said Green Anna Cavazzini.
In Germany there is already the instrument for the model declaratory action, in which in the first step at least ten, later 50 damaged consumers have to take part. What is particularly known is the action taken by consumer advocates on the basis of this instrument against VW after the diesel affair. So far, profits from data misuse, for example, cannot be skimmed off using the tool in this country, so there is a need for reform.