11
Mon, Nov
61 New Articles

EU: New Deal for Consumers - A Proposal to Strengthen Collective Redress

EU: New Deal for Consumers - A Proposal to Strengthen Collective Redress

Briefings
Typography

The European Commission has just published its comprehensive proposal for the so-called "New Deal for Consumers", which aims to strengthen EU consumer rights and enforcement. This includes the proposal for a new Directive enabling certain qualified entities to seek redress on behalf of consumers who have been harmed by an unlawful commercial practice.

Collective redress – quo vadis?

A few days ago, the discussion about collective redress mechanisms on a national and European level gained momentum as the European Commission proposed a Directive (the "Proposal") that will enable consumers to receive damages for infringements of a variety of Union consumer protection laws, such as data protection, financial services, travel and tourism, energy, telecommunications and environment.

Proposal for further collective redress mechanisms

Until now, Member States had only to ensure under EU law that certain qualified entities, e.g. consumer protection associations, can apply for an injunction to stop or prohibit a trader's practice that infringes EU consumer protection law (Directive 2009/22/EC).

The Proposal still does this, but its primary aim is to implement mechanisms that make it easier for consumers to claim damages. National courts or administrative authorities will be able to issue a redress order that obliges the trader infringing Union law to provide, among other things, monetary compensation, repair, replacement, price reduction, contract termination or reimbursement of the price paid.

Alternatively, instead of a redress order, a declaratory decision on the trader's liability towards consumers harmed by an infringement may be issued, provided that (i) consumers are not identifiable and have not suffered comparable harm in relation to a period of time or a purchase (e.g. long-term consumer contracts), and (ii) it is not a so-called "low-value case" where the loss suffered was so small that reasserting claims based on the declaratory decision would be disproportionate. A final declaratory decision irrefutably establishes the trader's liability towards the harmed consumers in the same Member State.

Finally, a qualified entity and the alleged author of the infringement will be able to request a court or administrative authority to approve a collective settlement reached before a representative action has been initiated. The court or administrative authority must assess the legality and fairness of the settlement, mainly by considering the rights and interests of the consumers concerned. Individual consumers are free to either accept or refuse to be bound by the settlement.

Essential procedural aspects

Collective representative actions will be initiated by qualified national entities designated, at their request, by the Member States in advance and placed in a publicly available list, e.g. consumer protection associations. Qualified entities must have a non-profit character and have a legitimate interest in ensuring that the relevant Union laws are complied with.

For easier redress of qualified entities, the competent court or administrative authority will also have the right under certain circumstances to order that evidence which lies in the control of the trader must be presented in the proceedings (easement of proof). A similar, more comprehensive provision on the disclosure of evidence can be found in the Damages Directive 2014/104/EU, which the Member States should have already implemented.

The submission of a representative action (i.e. injunction, redress order or declaratory decision) suspends or interrupts the limitation periods applicable to any redress actions for the consumers concerned.

What's next?

The European Parliament and the Council will discuss the European Commission's Proposal. Although the Proposal sets forth quite a detailed legal framework for collective redress, the Proposal will likely undergo changes during the EU legislative process. The actual implementation of the Directive will finally be a matter of national law, taking into consideration national substantial and procedural law.

By Klara Kiehl, Counsel, Philipp Wetter, Associate, Schoenherr 

Czech Republic Knowledge Partner

For more than 25 years PRK Partners has been providing top tier, comprehensive legal services in all areas of law – always at the highest professional level. The company’s offices in Prague, Ostrava and Bratislava, as well as its specialised teams of legal practitioners and tax advisors, allow PRK Partners to offer solutions to any kind of legal issues, providing an international point of view and in-depth knowledge of the respective local legal system.

The full-service law firm has worked on many of the region’s largest and most complex transactions. The firm puts emphasis on the highest standards of quality, efficiency and flexibility in its advisory services, which are tailored to the specific requirements of each client. 

Our team is composed of professionals with international education and experience. The firm frequently works on a non-exclusive basis with leading international law firms on large cross-border transactions.

PRK Partners is consistently recognised among the top law firms by leading international and domestic directories and ratings agencies and has been honoured with numerous awards: 

• National Law Firm of the Year 2016 by the Chambers Europe Awards, the most prestigious international law firm competition. This is the fifth award PRK Partners has received since the awards were first given; National Law Firm of the Year 2014, 2013 and 2010 and Law Firm of the Year 2012 for Best Client Service.

• 2018 Best Law Firm of the Year in the category of Banking &Finance and the absolute winner in the main category of the Domestic Law Firm of the Year awards organised by epravo.cz under the auspices of the Czech Bar Association three times since the award's inception (in 2016, 2013 and 2011).

• a finalist of the Central European Law Firm of the Year category in The Lawyer European Awards 2018. 

The firm has a strong commitment to corporate social responsibility and pro bono work.

PRK Partners is the exclusive member firm in the Czech Republic for Lex Mundi, the world’s leading network of independent law firms, with in-depth experience in 100+ countries worldwide. In addition, the firm is a member of Celia Alliance, AFI (Association for Foreign Investment) and CVCA (the Czech Private Equity and Venture Capital Association).

Firm's website: www.prkpartners.com

Our Latest Issue