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News
June 2, 2017

Will the EU Commission Embrace U.S.-Style Class Actions?

By Scévole de Cazotte, ILR’s Vice President, International Initiatives

In what could be the opening of Pandora ’s Box, the EU Commission has begun its review process of collective redress in EU Member States. Depending on the results of this review, the Commission could propose liability-expanding legislation on collective redress.

The review process began last week with the Commission releasing a “call for evidence,” asking stakeholders to share their experiences with collective redress in EU Member States.

The purpose of this online consultation is to review whether European countries have or have not introduced collective redress laws and also to check on how “well” existing collective redress mechanisms are being used. 

In 2013 the EU Commission issued a Recommendation on Collective Redress, which invited EU Member States to adopt some form of collective redress mechanism by July 2016. While the Recommendation was not binding, the Commission asked for a review of collective redress to take place after the July 2016 date. In addition to the online consultation, the EU has also contracted an expert study, which should help the Commission decide if further EU legislation or other action on collective redress is needed.

The Commission’s review is timely in view of a recent report by the U.S. Chamber Institute for Legal Reform (ILR), The Growth of Collective Redress in the EU: A Survey of Developments in 10 Member States, which finds that while collective redress mechanisms are proliferating across Europe, there are warning signs that this unchecked growth could lead to exploitation of the civil justice system.  These warning signs include the filing of multiple billion euro claims, the expansion of U.S. class action firms to the European market, and significant growth of the litigation funding industry without any government oversight.  Based on these findings, the study suggests several critical safeguards to strengthen the fairness of collective redress systems and help to prevent abuses.

These warning signs should not come as a surprise to EU officials, who on many occasions have cautioned its Member States not to adopt U.S.-style class action features and have encouraged countries to implement the reasonable safeguards that it justly included in its Recommendation on Collective Redress.

ILR is looking forward to working constructively with EU officials on this important review and on finding common sense solutions to avoid the pitfalls of the old-fashioned and ill-fated U.S. class action system. Individuals and organizations have until August 15, 2017 to submit responses to the call for evidence.  

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