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New rules allow EU consumers to defend their rights collectively

New rules allow EU consumers to defend their rights collectively

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Following the approval of a directive in June 2020, consumers across the EU will be granted broader access to collective redress.

The new rules will enable consumers to seek effective judicial protection collectively when traders’ infringements of EU laws deprive them of their rights. These new rules on collective redress would give consumers in all Member States the right to fight cases involving mass harm together, but also introduce safeguards to prevent the abuse of the procedure.

The directive requires Member States to establish a system of representative actions for the protection of consumers’ collective interests against infringements of EU law. It also empowers qualified entities designated as such by Member States to seek injunctions and/or redress, including compensation or replacement on behalf of a group of consumers.

Based on the eligibility criteria, the directive distinguishes between two types of qualified entities. The first group is entitled to bring actions in the Member State where they have been designated (domestic representative actions), while the second is entitled to bring actions in any other Member State (cross-border representative actions). For domestic actions a qualified entity will have to fulfil the criteria set out by the domestic law, whereas for cross-border actions it will have to fulfil the harmonized criteria set out in the directive.

By applying the “loser pays” principle, the EU Parliament aimed at protecting businesses against baseless lawsuits. By ordering the defeated party to pay the costs of the proceedings of the successful party, it may be ensured that the number of abusive lawsuits will be kept to a minimum. To further curb manifestly unfounded cases, the qualified entities are given the privilege of dismissing these cases at the earliest possible stage of the proceedings as regulated by domestic law.

Once the Parliament and Council have formally approved the agreement, Member States will have 24 months from the entry into force of the directive to transpose it into national law, with a deadline of additional 6 months to start applying these provisions.

By Adrienn Megyesi, Partner, KCG Partners Law Firm

KCG Partners at a Glance

KCG Partners is a Hungarian business law firm providing a comprehensive range of legal services to international and local clients seeking local knowledge and global perspective. The firm comprises business-minded lawyers with sector-specific expertise, creating value for clients by applying a problem-solving approach and delivering innovative solutions.

The firm has a wealth of knowledge in corporate law, M&A, projects and construction, energy, real estate, tax, employment, litigation, privacy and forensics, securitization, estate planning and capital markets.

To address clients’ regional and international concerns, the firm maintains active working relationships with other outstanding independent law firms in Central and Eastern Europe, whilst senior counsel Mr. Blaise Pásztory brings over 40 years’ of US capital market and fund management experience.

KCG Partners Law Firm is the result of the teamwork of passionate and talented lawyers guided by the same principles and sharing the same values: 

  • Our most valuable asset is our people. They are the engine of our business and the key to our success.
  • We push boundaries by looking for innovative solutions that can empower our clients to achieve greater results.
  • We place our experience, commitment and professionalism to your service.
  • We are driven by our vision to shape and lead the Hungarian legal market and become a first choice law firm in our practice areas.

Firm's website: http://www.kcgpartners.com