Over the past few years, there has been a significant surge in the number of collective actions being filed by consumer organizations in Slovenia. Rojs, Peljhan, Prelesnik & Partners Partner Aljosa Krdzic and Jadek & Pensa Partner Mitja Podpecan discuss the current surge of collective actions being taken against companies, along with the primary factors driving it, and make predictions regarding the outcome of such litigations.
Collective Action Is on the Rise
“Collective consumer protection is a recent development in Slovenia,” Podpecan says. “The Collective Actions Act entered into force in April 2018. Since then, seventeen collective actions have been filed.” According to him, the first collective action was filed in 2018, two were filed in 2019, thirteen in 2022, and one in 2023.
“All of these class actions are primarily based on the provisions of the Slovenian Consumer Act, and in all of these class actions the plaintiff organizations claim the unfairness of certain contractual provisions or behavior of the defendants,” Krdzic adds. “The last three bulks of collective actions in Slovenia were filed against Apple with a damage claim deriving from the ‘Batterygate’ scandal; against twelve Slovenian banks with a reimbursement claim linked to the illegality of floor clauses and floor practices used by the banks in relation to the negative Euribor rates; and against the four largest Slovenian telecommunication companies, with the reimbursement claim related to the alleged illegality of unilateral price increases for their services.”
What’s Driving It?
Podpecan and Krdzic point to different factors that drive the new developments in the collective action landscape in the country. “Speaking on a general level, in our view there are several reasons why the collective redress gained traction in Slovenia in the past years,” Krdzic notes. “The first one is the increase in collective redress activities in various EU member states, such as Spain, Italy, Netherlands, etc. All these activities likely made the consumer and other organizations think about the alternative approaches available to them to increase the level of protection of consumers and other people.”
“The second reason is likely linked with the public’s perception that Slovenian regulators do not have sufficient tools at their disposal to efficiently fight the foreign and domestic infringers,” Krdzic continues, pointing to disproportionate fines and the absence of punitive damages in individual cases which do not have a sufficient detrimental effect. “This is why consumers and other organizations likely believe that the only efficient way to increase the level of protection of consumers’ rights is to resort to collective actions and thus more efficiently protect the rights of all class members at once,” he says.
Podpecan, on the other hand, highlights the role of Slovenian law firms in the increase of collective actions: “what the collective actions filed in 2021, 2022, and 2023 have in common is that they are all funded by the law firms representing the claimants. In return for the funding, the law firms have, in all cases, negotiated a fee of 30% of the amount awarded.” According to Podpecan, “given that the amounts claimed in all cases are in the millions, in one case amounting to almost EUR 30 million, one cannot but question whether the real motive for this increase in the number of collective actions in Slovenia is really to protect – fairly and adequately – the rights of the allegedly affected individuals.”
The Jury Is Still Out
Given that collective actions have been filed only in recent years, Podpecan and Krdzic say that the proceedings are still in their early stages. “No judgments based on the collective actions for damages have been issued in Slovenia thus far,” Krdzic says, adding that “proceedings against Apple, the banks, and the telecom operators are in their early stages, namely neither of these actions has yet been certified.”
“Only two proceedings have been concluded,” Podpecan notes. “In one case, the collective action was dismissed for non-compliance with the certification criteria,” he says, as “the court concluded that the question of whether the alleged infringements had occurred had to be examined on an individual worker-by-worker basis, which is not the purpose of collective actions.” According to him, in the second one regarding consumer injunctive on using ‘floor clauses’, “according to which the negative Euribor is not taken into account when determining interest rates in credit agreements, the court upheld the claim on the merits.”
Despite proceedings still being ongoing, Krdzic points out that the collective actions have already had some impact on market participants’ behavior: “some market participants have become more aware of the potential consequences that they might face in case of breaches that they usually disregarded in the past. The potentially threatening collective action has become an important risk factor when market participants conduct their risk analysis related to a specific behavior/practice.” For example, he says, “the filed collective actions for damages against the banks immediately resulted in them altering their behavior concerning some other potentially controversial past practices.” Namely, he notes, after a collective action related to the floor clauses and floor practices was filed, “some banks voluntarily initiated cost reimbursement programs, which shows that the collective action related to the floor clauses and floor practices had some impact on the behavior of the banks regarding another unlawful practice.”
Here To Stay
It seems that it is still early to prognosticate the future development of Slovenia’s collective actions. “Considering the past developments in similar Apple cases abroad, we are of the view that, in the Apple case, the Slovenian consumers will be awarded damages,” Krdzic notes. “The same applies to the case against the banks – we believe that the case against the banks is strong and will result in Slovenian consumers being reimbursed with the excess interests that the consumers overpaid as the banks did not apply the negative Euribor rates for the consumers’ loans.”
Still, Podpecan and Krdzic guess that consumer-related collective actions are likely to rise. “In terms of the future of the collective redress, we predict that some other consumer-related collective actions might be filed, however only after the caselaw will become more developed,” Krdzic notes. “I especially expect that some environmental organizations might use collective redress in cases of future, hopefully rare, environmental disasters where a large number of individuals will be affected. On the other hand, considering an unsuccessful certification of a collective action for damages filed by a union of soldiers a few years ago, I do not expect significant developments in the union’s collective redress activities.”
“The trend of an increasing number of compensatory collective actions is likely to continue until case law is established as to when the certification criteria are met,” Podpecan agrees. “The future trends of compensatory collective actions concerning consumers will therefore depend on the case law that will be established by a decision on the above-mentioned cases.”