European Models of Collective Actions

Abstract

Aside from some general legal requirements, EU law contains no “federal” legal framework for Member States’ collective action regimes. Member States have procedural autonomy in the application of EU law, that is, they are free to determine the structure and way of application and enforcement, with the proviso that national law must not discriminate between the application of EU and domestic law (principle of equivalence) and “must not be so framed as to make it virtually impossible or excessively difficult to obtain reparation (principle of effectiveness).”

Aside from some general legal requirements, EU law contains no “federal” legal framework for Member States’ collective action regimes. Member States have procedural autonomy in the application of EU law, that is, they are free to determine the structure and way of application and enforcement,¹ with the proviso that national law must not discriminate between the application of EU and domestic law (principle of equivalence)² and “must not be so framed as to make it virtually impossible or excessively difficult to obtain reparation (principle of effectiveness).”³

In 2013, the European Commission adopted a Recommendation on Collective Redress,⁴ a non-binding legal instrument,⁵ proposing that Member States adopt collective redress mechanisms for violations of EU law. Although it may certainly have an impact on Member State laws,⁶ as noted above, contrary to a directive, the Recommendation creates no framework for national regulation. Its significance and potential impact has to be assessed accordingly.

The Recommendation follows a conservative approach. It suggests restricting group representation to non-profit entities and public authorities.⁷ Furthermore, it expresses a strong preference towards the opt-in system, recommending that only those group members should be involved in the collective action who expressly assented to it.⁸ The Recommendation does not ban the opt-out scheme outright but leaves open a gate, even if a small one, to such mechanisms: “[a]ny exception to [the opt-in] principle, by law or by court order, should be duly justified by reasons of sound administration of justice.”⁹

The Recommendation introduces safeguards in order to obviate the incentives to abuse the mechanism of collective actions: it makes the use of the “loser pays” principle mandatory,¹⁰ excludes, at least in principle, contingency fees¹¹ and prohibits punitive damages.¹²

The above European federal framework may change considerably in the foreseeable future. In April 2018, the Commission proposed the adoption of a consumer collective action scheme (termed “representative action”).¹³ The proposed directive is in accordance with the common principles of European collective action laws: it has a sectoral approach (consumer protection), rigorous pre-conditions, confers standing on qualified representative entities, maintains the “loser pays rule” and rules out financial incentives, such as contingency fees and punitive damages. It evades the dilemma of opt-in and opt-out through leaving the choice to Member States.¹⁴ Given that most national collective action schemes already comply with these requirements, the directive is supposed to entail no landslide conceptual reform. Instead, its major virtue is expected to be the introduction of consumer collective action in one third of the Member States where this meachanism is still not available at all.

This chapter gives a transsystemic overview of the European national solutions and schemes along the key issues of class actions.¹⁵ It presents the European landscape, the opt-in and opt-out systems and their main features, the purview of collective action laws featuring a precautious, step-by-step evolution, the pre-requisites of collective actions and certification, the rules on standing and adequate representation, the status of group members, their liability for legal costs and the res judicata effect in opt-in proceedings, the operation of the “only benefits” principle in opt-out proceedings and its impact on the status of group members, and the enforcement of judgments in collective actions.

5.1 The European Landscape: To Opt in or to Opt Out?

In Europe, the history of collective actions started roughly three decades ago.¹⁶ Collective action law gained a foothold in the mid-1990s. Aside from the English representative action, a doctrine rooted in common law but rarely used in practice,¹⁷ class action legislation first appeared in the Hispanic peninsula (Spain, 1984; Portugal, 1995), in Greece in consumer protection law (1994) and in Hungary in the field of competition law (1996). Interestingly, all these systems were based on the opt-out principle and, even more interestingly, they proved to be less effective than one would expect from an opt-out scheme, and way less effective than US class actions. These were followed by the introduction of various opt-in and opt-out schemes. Today, 17 out of 28 Member States provide for collective actions¹⁸ and 10 out of them have a system based, at least partially, on the opt-out principle (Belgium,¹⁹ Bulgaria,²⁰ Denmark,²¹ France,²² Greece,²³ Hungary,²⁴ Portugal,²⁵ Slovenia,²⁶ Spain,²⁷ and the United Kingdom²⁸).²⁹ Accordingly, more than half of the Member States have sanctioned the introduction of collective actions and from those who did, more than half chose, to some extent, the opt-out system and only less than half stuck fully to the more conservative opt-in principle (Finland,³⁰ Germany,³¹ Italy,³² Lithuania,³³ Malta,³⁴ Poland³⁵ and Sweden³⁶).

A couple of states adopted mechanisms that may resemble collective actions but cannot be regarded as a means of collective civil litigation (Fig. 5.1). For reasons advanced above in Sect. 4.3.4, traditional procedural institutions (joinder of parties and assignment of claims) cannot be considered a form of collective action, although they are at times used for the purpose of collective litigation in a couple of Member States (e.g. Austria and the Netherlands). Virtually every single Member State law provides for this possibility and in 11 Member States (Austria, Croatia, Cyprus, Czech Republic, Estonia, Ireland, Latvia, Luxembourg, the Netherlands, Romania, Slovakia), beyond these legal instituions, no special procedural scheme is available for collective monetary claims, even though collective proceedings are available for injunctions and declaratory judgments.³⁷

Fig. 5.1

The European collective action landscape (grey: solely opt-in collective actions are available, black: opt-out collective actions are available)

Although usually listed among Europe’s opt-out collective proceedings, the Dutch collective settlement is not considered to be a collective action, as it merely provides a framework for cases where the defendant concedes liability and is ready to settle. In 2005, the Netherlands adopted the Act on Collective Settlement of Mass Damages (Wet collectieve afwikkeling massaschade),³⁸ which is applicable (as its name suggests) solely to settlements and, accordingly, cannot be used to claim recovery. The group is represented by a social organization, which may conclude a settlement with the tortfeasor; the settlement has to be approved by the court.³⁹ Group members may opt-out from the settlement within three months.

Likewise, regimes providing for the disgorgement of illicitly obtained proceeds for the public budget are not regarded as collective actions, as they are not meant to compensate the victims. For instance, German law, in the field of antitrust and unfair competition law, provides for a disgorgement procedure where wrongdoers may be enjoined to surrender the illicitly acquired economic benefits, however, the proceeds, instead of the victims, go to the federal budget. In the field of unfair competition law, certain associations may sue for monetary relief equal to the illicit profits, less the sums the wrongdoer paid because of the violation, to third parties or the state. The association may enforce the creaming-off claim without the express authorization of group members, however, the money awarded does not go to the victims but to the central budget.⁴⁰ Similar rules are embedded in the German Antitrust Law, which applies in cases where the German Federal Competition Office (Bundeskartellamt) adopted no measure to cream off the illicit profits and provides that the Office shall reimburse the associations for their costs up-to the payments they secured for the federal budget.⁴¹ Accordingly, the creaming-off mechanism’s function is not to secure a private remedy for the injured parties but to supplement public enforcement.⁴²

In same vein, judicial mechanisms that help to coordinate the adjudication of parallel individual proceedings after they have been launched are not considered to be collective actions, as they are not related to access to justice and are not aimed at enhancing the effectiveness of law. For instance, in 2005, Germany introduced a statutory test-case mechanism in capital market law for investor claims.⁴³ However, this mechanism does not unite individual claims to be submitted and enforced jointly but streamlines individual actions already launched. It creates a possibility to suspend individual actions and to have the common legal and factual issues decided by a single court.

As noted above, while Europe is generally considered to feature the opt-in scheme, this observation is only partially valid. On the one hand, it is true that representation without authorization is generally disapproved taking into account that in 40% of the Member States solely traditional joinder of parties and assignment of claims are available as a means to bring collective claims to court. On the other hand, from the 17 Member States which created a special regime for collective litigation, only 7 stuck fully to the opt-in principle.

The 2002 Swedish Act on Group Proceedings⁴⁴ is one of the first comprehensive national codifications of collective actions that covered the whole spectrum of civil claims (and not only specific sectors or branches of law).⁴⁵ The Swedish Act entered into force on 1 January 2003. Although it adopts an opt-in system, the available statistical data suggests that the Swedish Group Proceedings Act is relatively effective: 17 group proceedings were initiated until the beginning of 2014 (that is, in the first 12 years of the law).⁴⁶ These matters include the enforcement of air passengers’ rights, claims by insurance holders, a procedure against the Swedish state for violating EU law, overcharges concerning electricity supply (violation of fixed universal service prices).⁴⁷

The Finnish parliament adopted the Act on Collective Proceedings in February 2007, after 15 years of social debate⁴⁸; the Act came into force on 1 October 2007.⁴⁹ The central feature of the Finnish system is that is creates an opt-in system⁵⁰ empowering exclusively the Consumer Ombudsman to institute a collective action⁵¹ in matters coming under its competence (consumer matters).⁵² Until recently, there has been no proceedings instituted on the basis of the Finnish Act⁵³; this may be explained with the opt-in rule and with the fact that collective actions may be launched exclusively by the Consumer Ombudsman.⁵⁴ Of course, the lack of cases does not necessarily mean that the Finnish Act has been devoid of impact on the behavior of enterprises.⁵⁵

The Italian legislator enacted a law on collective actions in December 2007 by inserting Section 140bis in the Italian Consumer Code.⁵⁶ These rules were, nevertheless, replaced by a new Section 140bis,⁵⁷ which entered into force on 1 January 2010.⁵⁸ Contrary to the rules of 2007, which referred to the “collective interests” of group members, according to the rules of 2009, the collective action aims to protect the “individual interests” of group members. In 2012, one of the pre-requisites of collective action was softened: as from 25 March 2012, it suffices if the rights of group members are “homogeneous”, they do not have to be “identical” anymore.⁵⁹ The Italian class action may be used only for pursuing consumer claims arising from specific cases: standard contractual terms and conditions, defective products and services, unfair commercial practices and anticompetitive conducts.⁶⁰ According to publicly available sources, 58 class actions had been launched under this provision until January 2016, although a considerable part of them was declared inadmissible and the vast majority of them is pending.⁶¹

Poland introduced collective actions in 2009 (Act on Pursuing Claims in Group Proceedings). These rules went into effect on 19 July 2010.⁶² The Act underwent significant changes in 2017,⁶³ which entered into force on 1 June 2017. The regime initially applied to consumer law, product and tort liability (with the exception of the protection of personal interests). In 2017, it was extended to claims resulting from the non-performance or undue performance of an obligation, unjust enrichment and certain infringements of personal interests (bodily injury or health disorder).⁶⁴ The Act follows the opt-in principle.⁶⁵ Members may join the group after the court certifies it.⁶⁶ Standing is conferred on class members and the regional consumer ombudsman (a public body).⁶⁷ Notwithstanding the opt-in rule, the Polish system has produced numerous cases.⁶⁸

Malta introduced opt-in collective actions in 2012 covering the violations of consumer protection, competition and product safety law.⁶⁹ Group members may join the action within the deadline specified by the court.⁷⁰ It appears that so far two cases have been launched.⁷¹

Lithuania introduced collective actions in 2015.⁷² The regime was inserted into the Lithuanian Code of Civil Procedure⁷³ (articles 441¹ to article 441¹⁷).⁷⁴ The act introduced an opt-in scheme of general application having a horizontal approach. So far the Lithuanian rules have been applied in a handful of cases.⁷⁵

Germany introduced a “model declaratory claim” (Musterfeststellungsklage) in 2018, which was inserted as Book 6 (Sections 606-614) in the Code of Civil Procedure (Zivilprozessordnung).⁷⁶ The collective action, which entered into force on 1 November 2018, created an opt-in scheme for consumer matters. As a peculiar feature of the Germany system, courts have no power to award damages but may enter a declaratory judgment as to the pre-conditions of liability (they may establish that the claim’s or legal relationship’s factual and legal pre-conditions exist or do not exist).⁷⁷ Group members may seek monetary relief, on an individual basis, after the pre-conditions of the defendant’s liability have been established. The final declaratory judgment is binding on courts in matters between the defendant and those consumers who opted in, provided these have the same aim and concern the same fact pattern as the collective declaratory judgment.⁷⁸ Since the law’s very recent entry into force, the institution of three cases has been published⁷⁹; the first “model declaratory claim” (emerging from Volkswagen’s notorious diesel emissions scandal)⁸⁰ was submitted on the very day when the rules entered into force.

In the EU, there are 10 Member States which have sanctioned (at least partially) an opt-out scheme.

Four of these combine the opt-in and the opt-out rule and leave it to the judge to decide under which scheme to carry out the collective action.⁸¹

The Danish rules on collective action are applicable to proceedings instituted as from 1 January 2008.⁸² It is up to the court to decide whether to carry out the action in the opt-in or the opt-out scheme. However, the value of this flexibility is significantly reduced by the fact that the opt-out scheme can be used only if the group representative is an administrative agency.⁸³ The court decides for the opt-out pattern if the claims’ individual enforcement is not feasible due to their low monetary value and it may be assumed that the opt-in pattern would not be appropriate for managing the claims. According to the travaux préparatoir, the monetary value of the claim is low if it does not involve more than DKK 2000 (approximately € 270).⁸⁴ If the court adopts the opt-out pattern, a deadline is set for group members to abandon the collective action. Until recently, there has been nine cases launched on the basis of the Danish Act on Class Action.⁸⁵

In the same vein, in Belgium,⁸⁶ it is up to the court’s discretion whether to certify the collective action under the opt-in or the opt-out scheme.⁸⁷ However, group members residing habitually or having their principal place of business outside Belgium are covered only if they opt in.⁸⁸ Furthermore, only the opt-in scheme may be used in case of physical and moral damages.⁸⁹

In the United Kingdom, due to a mechanism introduced in 2015,⁹⁰ opt-out class actions are available in competition matters and it is up to the Competition Appeal Tribunal (CAT) to decide whether the procedure will be carried out in the opt-in or the opt-out scheme.⁹¹ It is worthy of note that class members domiciled outside the United Kingdom have to opt-in, even if the CAT chose the opt-out scheme for the case. The Competition Act does not set out the factors the CAT has to take into account when exercising its discretion, however, the Competition Appeal Tribunal Rules of 2015 list two considerations: “the strength of the claims” and “whether it is practicable for the proceedings to be brought as opt-in collective proceedings, having regard to all the circumstances, including the estimated amount of damages that individual class members may recover.”⁹²

The CAT’s 2015 Guide to proceedings⁹³ amplifies these requirements. Without carrying out a full merits assessment, the CAT “will usually expect the strength of the claims to be more immediately perceptible in an opt-out than an opt-in case, since in the latter case, the class members have chosen to be part of the proceedings and may be presumed to have conducted their own assessment of the strength of their claim. (…) For example, where the claims seek damages for the consequence of an infringement which is covered by a decision of a competition authority (follow-on claims), they will generally be of sufficient strength for the purpose of this criterion.” As to whether it is practicable for the proceedings to be brought in the opt-in scheme, the CAT “will consider all the circumstances, including the estimated amount of damages that individual class members may recover in determining whether it is practicable for the proceedings to be certified as opt-in.” It has to be emphasized that “[t]here is a general preference for proceedings to be opt-in where practicable.” “Indicators that an opt-in approach could be both workable and in the interests of justice might include the fact that the class is small but the loss suffered by each class member is high, or the fact that it is straightforward to identify and contact the class members.”

In Slovenia, the law on collective actions was adopted in 2017 (and entered into force in April 2018).⁹⁴ It leaves the choice between the opt-in and the opt-out scheme to the court.⁹⁵ The opt-in system has to be used if non-pecuniary damages are involved or if at least 10% of group members has a claim in value exceeding EUR 2000. Nonetheless, even if the opt-out system is chosen by the court, group members not domiciled in Slovenia can become part of the proceedings only if they opt in.⁹⁶

Seven Member States provide for the statutory right to opt-out collective litigation (in England this operates in addition to the foregoing competition law mechanism combining the opt-in and the opt-out system).⁹⁷

Greece introduced opt-out collective actions very early, in 1994, in the field of consumer protection.⁹⁸ This vests certified consumer protection organizations with standing to claim damages on behalf of a group of injured consumers. Since its introduction, this mechanism has produced, on average, 2–3 cases per annum.⁹⁹

The Portuguese collective action law dates back to 1995, long before this question became so topical in Europe, and has a constitutional basis.¹⁰⁰ The Portuguese provisions have a general application and enable actions for any civil claim, including financial relief. The general rules on popular actions (acção popular) are included in Act 83/95 and special provisions are to be found in particular fields, e.g. Law No. 19/2014 of 14 April on Environment Policy, Law No. 24/96 of 31 July on Consumer Protection, Law No. 107/2001 of 8 September on the Cultural Heritage, Securities Code and Law 23/2018 of 5 June on Antitrust Damages Actions. Notwithstanding the opt-out rule, the Portuguese popular action seems not to be particularly successful¹⁰¹; the information available suggests that the law’s first decade saw only a few collective proceedings.¹⁰²

The Spanish system¹⁰³ is a mixed opt-in-opt-out scheme with a restricted sectoral approach (it applies only to consumer matters).¹⁰⁴ In 2007, a similar provision was inserted as to matters concerning equal treatment between men and women.¹⁰⁵ Only some collective cases have made their way to court over the last thirty years, mostly injunctive actions. Collective actions are rare in practice due to their cost and the difficulty involved, first, in legally understanding what is needed to proceed with the action, and, second, in gathering group members and evidence and administering enforcement. In the recent years, an increase has been observed as a result of the economic downturn.¹⁰⁶ Notwithstanding the non-exhaustive and uncertain regulation of the field¹⁰⁷ and the absence of a settled practice,¹⁰⁸ 49 collective proceedings have been recorded until 2008.¹⁰⁹

In Hungarian law, opt-out collective action mechanisms exist in competition law and consumer protection law, while an opt-in joint action scheme was introduced by the new Hungarian Code of Civil Procedure as to certain subject-matters (consumer protection, employment matters and environmental damages).¹¹⁰ Although the opt-out mechanism has been in force for two decades, it has produced only a single published case where monetary relief was awarded.¹¹¹

Bulgaria adopted an opt-out class action scheme in its Code of Civil Procedure of 2007.¹¹² However, courts continuously apply high requirements on class formation and representation, effectively transforming the procedure into an opt-in system, with the exception where the plaintiff is a public authority (the Commission on Consumer Protection) or a representative consumer association pursuing injunctive measures.¹¹³ In terms of statutory language, the regime may cover all violations of law, though the case-law has the tendency to limit the scope to non-contractual violations.¹¹⁴

Besides consumer associations’ usual power to request an injunction or a declaratory judgment on an opt-out basis,¹¹⁵ the French Consumer Code (Code de la consommation) contains two patterns of collective action where monetary relief may be sought. First, in 1992 an opt-in scheme was inserted into the Consumer Code (action en représentation conjointe),¹¹⁶ and subsequently introduced as to other matters (investor protection,¹¹⁷ environmental protection). This appeared to be less efficient given that it produced, in the first one and a half decade of its history, only a few cases.¹¹⁸ Second, recently, in 2014, the French legislator inserted an opt-out collective action regime into the Consumer Code (action de groupe), which appears to be much more effective than the ancien régime, having produced seven cases in two years’ time. This regime was extended to health care matters and, in 2016, converted into a general scheme applicable to discrimination, environmental protection, personal data¹¹⁹ and health care matters.

English law provides for three options for collective litigation: two general procedural tools (representative proceedings, group litigation orders¹²⁰) and a sectoral tool in competition law (where, as noted above, it is at the CAT’s discretion to choose the opt-out scheme). Although representative proceedings may be carried out on an opt-out basis, they have remained ineffective due to the strict construction of the preconditions in the judicial practice.

5.2 Purview: Step-by-Step Evolution of a Precautious Revolution

Most European collective action laws have a limited (sectoral) purview¹²¹ reflecting the notion that collective actions should be limited to cases where they are badly and obviously needed. Some Member States have used “leapfrogging” to extend the scheme to other sectors demonstrating the precautious approach of the European legal systems as to collective litigation.

In Greece, collective redress is available only in consumer protection law.¹²² The Finnish Act on Collective Proceedings of 2007 applies exclusively to matters coming under the remit of the Consumer Ombudsman (consumer matters).¹²³ Italy introduced collective actions in the Consumer Code,¹²⁴ which may be used to pursue consumer claims arising from specific cases: standard contractual terms and conditions, defective products and services, unfair commercial practices and anticompetitive conducts.¹²⁵ The purview of Maltese collective actions is confined to certain fields, such as competition, consumer protection and product safety law.¹²⁶ The Polish regime introduced in 2009¹²⁷ initially applied only to consumer law, product liability and tort liability (with the exception of the protection of personal interests) but was extended, in 2017, to claims resulting from the non-performance or undue performance of an obligation, unjust enrichment and certain infringements of personal interests (bodily injury or health disorder).¹²⁸ The Spanish class action rules¹²⁹ apply only to consumer matters.¹³⁰ In 2007, a similar provision was inserted as to matters concerning equal treatment between men and women.¹³¹

After the introduction of group actions in the field of consumer protection in 2014¹³² and health care in January 2016,¹³³ in November 2016, the French legislator created a general framework for group actions.¹³⁴ The new regime extended the purview of the mechanism to discrimination, environmental protection, personal data and health care matters; consumer matters are not concerned by the general framework.¹³⁵

Hungary introduced opt-out class actions in 1996 in the Competition Act and then in 1997 in the Consumer Protection Act.¹³⁶ Interestingly, while the operation of these systems attracted no criticism, the new Hungarian Code of Civil Procedure, having gone into effect on 1 January 2018, introduced an opt-in scheme applicable to consumer, employment and environmental tort matters.

The Slovenian regime on collective actions applies to consumer, competition, securities, labour and environmental law matters.¹³⁷

The German model declaratory claim procedure introduced in 2018 applies solely to consumer matters.¹³⁸

In English law, opt-out representative proceedings have been available long since, though they remained ineffective due to the strict construction of the preconditions in the judicial practice.¹³⁹ After introducing a general opt-in procedural tool (group litigation order),¹⁴⁰ the English government rejected the introduction of an opt-out scheme of general application and decided to introduce this mechanism on a sector-by-sector basis.¹⁴¹ As a result, an opt-out scheme was made available in competition matters.¹⁴²

The Belgian collective action was initially available only for consumers but in 2018 it was extended to SMEs.¹⁴³ It applies to cases where an enterprise¹⁴⁴ breaches one of its contractual obligations or violates one of the 31 (Belgian or European) laws enumerated in Section XVII.37 of the Code of Economic Law (Code de droit économique). These extend to fields like banking, competition law, consumer protection, energy, insurance, intellectual property, passengers’ rights, payment and credit services, privacy, product safety and professional liability.¹⁴⁵

A few Member States have collective action regimes of general application. The 2002 Swedish law on group proceedings, introducing an opt-in scheme effective as from 1 January 2003, covers the whole spectrum of civil claims (and not only specific sectors or branches of law).¹⁴⁶ Likewise, the Portuguese collective action law of 1995 has a general application and enables actions for any civil claim, including financial relief, albeit special provisions can be found also in particular fields, e.g. Law No. 19/2014 of 14 April on Environment Policy, Law No. 24/96 of 31 July on Consumer Protection, Law No. 107/2001 of 8 September on Cultural Heritage, Securities Code and Law 23/2018 of 5 June on Antitrust Damages Actions. The Bulgarian opt-out collective action scheme inserted into the Code of Civil Procedure of 2007 also covers all violations of law, albeit the case-law has the tendency to limit the scope to injunctive measures concerning consumer disputes.¹⁴⁷ The Lithuanian system introduced in 2015 is also of general application.¹⁴⁸ The Danish rules on collective actions having gone into effect on 1 January 2008 introduced a generally applicable system where it is up to the judge to decide whether to approve the collective action under the opt-in or the opt-out scheme.

5.3 Pre-requisites of Collective Action and Certification

The pre-conditions of collective action in Europe normally extend to those of US class action (numerousity, commonality, typicality and adequate representation),¹⁴⁹ however, some systems go beyond this and require that the collective actions be expedient or superior to individual litigation and that the group be definable. The requirement of expediency contents itself with that the collective action is an appropriate means to enforce the claims of group members. Superiority goes beyond this expectation and requires that a collective action be more expedient than individual litigation. The latter has a higher significance in opt-out proceedings: these are expected to be more expedient than individual actions and definability plays a much more important role here, as group members are unknown, thus, the beneficiaries will have to be identified on the basis of the final judgment’s group definition. Of course, legal counsels may go as far as possible with the common questions, to the extent permitted by the definability of the group, e.g. they may request the court to establish the legal basis (defendant’s liability) but leave quantum to collective actions covering sub-classes or to individual litigation. In this sense, due to the requirements of superiority/expediency and definability, the purview of European collective actions is more restricted than that of their US counterpart.

It is worthy of note that some of the laws do not specify all the traditional requirements of collective action, such as numerousity, superiority and adequate representation. However, this may be due to the circumstance that owing to the rules on scope and standing, such a specification might appear to be redundant. Quite a few systems limit the availability of collective actions to consumer matters where it is assumed that a number of victims are concerned and they have small-claims which would be difficult to bring to court but for collective litigation. Similarly, several systems lean towards ensuring adequate representation through limiting standing to public entities and recognized civil organizations or through granting these plaintiffs a privileged status.

In France, opt-out collective actions may be launched if numerous persons (numerousity) placed in a similar situation suffer damages caused by the same person, the common cause of which is a similar breach of legal or contractual obligations (commonality).¹⁵⁰

In Germany, model declaratory claims may be submitted only by qualified consumer protection organizations. It is noteworthy that heightened requirements apply here: in addition to the conditions applicable to organizations eligible to launch actions for an injunction, organizations engaging in actions for compensation need to fulfill extra requirements (adequate representation).¹⁵¹ Furthermore, the matter is eligible if, at the time of submission, it is substantiated that it concerns at least 10 consumers and within two months after the procedure’s publication at least 50 consumers register their cases (numerousity).¹⁵²

Under Greek law, consumers’ associations may bring consumer collective actions “for the protection of the general interests of the consuming public” or if “an illegal behavior hurts the interests of at least thirty (30) consumers.”¹⁵³

In Poland, the court certifies a collective action if the following conditions are met:

• numerousity (the group shall consist of at least 10 people)¹⁵⁴;

• commonality (the class action has to cover claims of the same kind and with the same or similar factual basis)¹⁵⁵;

• the Polish Act contains an idiosyncratic requirement which may be regarded as an emanation of the requirement of commonality: if a law-suit concerns a monetary claim, a collective action may be launched only if the amounts claimed by individual group members are equal; however, representative plaintiffs may obviate the problems emerging from this requirement through forming sub-classes and requesting a declaratory judgment.¹⁵⁶

Section 140bis of the Italian Consumer Code establishes the following pre-conditions for collective actions:

• prima facie case (the claim is not manifestly unfounded);

• numerousity (a number of consumers is involved);

• homogeneity (the individual rights to be enforced are homogeneous);

• adequate representation (there is no conflict of interest between the group representative and group members and the group representative shall be capable of representing the group adequately).¹⁵⁷

In Malta, the court certifies¹⁵⁸ “the proceedings as appropriate for collective proceedings” if they “raise common issues” (commonality)¹⁵⁹ and “are the most appropriate means for the fair and efficient resolution of the common issues” (superiority).¹⁶⁰ Interestingly, the law expressly excludes the requirement of numerousity when it provides that “the proceedings are brought on behalf of an identified class of two or more persons.” The law sets out requirements as to the adequacy of group representation: a registered consumers’ association (or ad hoc constituted body) or a group member may be approved, if the court “is satisfied that the class representative (a) would fairly and adequately act in the interests of the class members; and (b) does not have, in relation to the common issues for the class members, a material interest that is in conflict with the interests of the class members.”¹⁶¹

A collective action may be launched in Bulgaria, if the following requirements are met:

• commonality (a collective action may be certified if group members’ common interests were impaired by the same infringement and this may give rise to similar legal consequences for all of them)¹⁶²;

• definability (group members are identifiable)¹⁶³;

• adequate representation (it has to be proved that the group representative has the capacity “to protect the harmed interest seriously and in good faith, as well as to incur the charges related to the conduct of the case, including the costs”).¹⁶⁴

The requirement of numerousity does not appear in the Bulgarian Code on Civil Procedure.¹⁶⁵

In Sweden, the institution of group proceedings is subject to the following pre-conditions.

• commonality (“the action is founded on circumstances that are common or of a similar nature for the claims of the members of the group”);

• expediency (“group proceedings do not appear to be inappropriate owing to some claims of the members of the group, as regards grounds, differing substantially from other claims”);

• superiority (“the larger part of the claims to which the action relates cannot equally well be pursued by personal actions by the members of the group”);

• definability (“the group, taking into consideration its size, ambit and otherwise, is appropriately defined”);

• adequate representation (“the plaintiff, taking into consideration the plaintiff’s interest in the substantive matter, the plaintiff’s financial capacity to bring a group action and the circumstances generally, is appropriate to represent the members of the group in the case”).¹⁶⁶

In Finland, collective proceedings may be launched in consumer matters, if the following requirements are met:

• numerousity (“several persons have claims”);

• commonality (“several persons have claims against the same defendant, based on the same or similar circumstances”);

• expediency (“the hearing of the case as a class action is expedient in view of the size of the class, the subject-matter of the claims presented in it and the proof offered in it”);

• definability (“the class has been defined with adequate precision”).¹⁶⁷

In Denmark, a collective action may be initiated, if the following substantive conditions are met:

• commonality (the parties dispose of a common claim arising from the same factual and legal basis);

• superiority (the collective action is the best mechanism to settle the claims; this condition is met, if the collective action is more expedient than traditional joinder of parties);

• definability (group members are identifiable and may be informed in an appropriate manner);

• technicality (the judge disposes of the expertise required to adjudicate the claims);

• adequate representation (an appropriate person can be appointed as the group’s representative).¹⁶⁸

In Hungary, the pre-conditions of collective action under the Competition Act and the Consumer Protection Act may be boiled down to the following requirements¹⁶⁹:

• numerousity (the violation concerns numerous consumers);

• definability (the victims of the violation are identifiable on the basis of the circumstances of the violation);

• adequate representation is not expressly required, however, as standing is conferred solely on public bodies and recognized consumer rights organizations (on the Hungarian Competition Office as to the Competition Act and on the consumer protection agency, the public prosecutor and consumer rights organizations as to the Consumer Protection Act), such a specification seems to be redundant.

Under the new Hungarian Code of Civil Procedure, the court certifies an opt-in collective action, if the following conditions are met¹⁷⁰:

• numerousity (the joint action may be certified, if at least 10 plaintiffs join)¹⁷¹;

• commonality—identity (the plaintiffs may bring to court one or more rights that are, in terms of content, identical in relation to all plaintiffs—“representative right”—, if the facts sustaining the representative right are, in essence, the same in relation to all plaintiffs (representative facts) and it can be proved that the individual plaintiffs are entitled to the representative right—“linking”)¹⁷²;

• superiority (the court may decline the request for certification, if it is not reasonable to certify the collective action given that the burden in terms of work and time related to the action’s collective nature would be so huge that the collective proceedings’ efficiency benefits would likely vanish).¹⁷³

In Lithuania, the Code of Civil Procedure establishes the following preconditions for collective actions¹⁷⁴:

• numerousity (“an action shall be lodged by at least 20 natural and/or legal entities that express their will to be members of the class and bring the action to the court in writing”),¹⁷⁵

• commonality (the action has to be “grounded on identical or similar factual circumstances” and to aim at “protecting natural or legal entities that set up a class and brought a claim, identical or similar substantive rights or interests protected by the law by means of the same remedy”),¹⁷⁶

• superiority (the “class action is a more expedient, effective and appropriate means of resolving the particular dispute than individual actions”),¹⁷⁷

• adequate representation (“the class shall be represented by an appropriate representative”¹⁷⁸ and “by an attorney-at-law”¹⁷⁹).¹⁸⁰

Spanish law does not specify the pre-conditions of collection actions in consumer matters, though, it attaches high importance to definability.¹⁸¹

Although representative proceedings are available under English law if more than one person has the same interest in a claim, they have been rarely used due to the strict judicial interpretation of the pre-conditions. While definability is not specified by the law, courts have been reluctant to endorse representative proceedings where group members were not readily ascertainable. In Emerald Supplies Ltd and Others v British Airways plc¹⁸² flower importers sued British Airways, because it participated in an anti-competitive collusion resulting in the increase of carriage fees. Emerald, who represented the plaintiffs, sued both on behalf of direct and indirect purchasers, and the court came to the conclusion that the procedure was not representative as at the moment when it was instituted group members could not be determined and did not have a common interest.

If the damages suffered by the group and the loss sustained by individual group members are not ascertainable, claims for damages may be pursued in a two-stage procedure. Accordingly, in the first phase, a declaratory judgment is requested in respect of the issues the group members have in common. Thereafter, individual group members may institute separate actions for damages, where they may rely on the judicial determination of the common issues.¹⁸³

In competition law, the Competition Appeal Tribunal (CAT) may certify¹⁸⁴ a collective action (collective proceedings order, CPO), if the claims arise from a competition law violation,¹⁸⁵ they “raise the same, similar or related issues of fact or law” (commonality), “are brought on behalf of an identifiable class of persons” (definability),¹⁸⁶ “are suitable to be brought in collective proceedings” (expediency)¹⁸⁷ and adequate representation is secured.¹⁸⁸

The certification of the first two collective actions was dismissed by the CAT.¹⁸⁹ However, in one of these, in Merricks v Mastercard Incorporated & Anor,¹⁹⁰ the case was remanded by the Court of Appeal, which held that the certification of a claim and the grant of a collective proceedings order (CPO) may not be refused merely because individual losses cannot be ascertained. The CAT refused certification because of “the absence of any plausible means of calculating the loss of individual claimants so as to devise an appropriate method of distributing any aggregate award of damages.”¹⁹¹ The Court of Appeal overturned the CAT’s decision, ruling that

The CAT is expressly required under Rule 79(2) to take into account whether the claims are suitable for an aggregate award of damages when considering whether to make a CPO but not whether such an award can be distributed in any particular manner. The making of an aggregate award does not (…) require the Court to calculate individual loss or importantly to assess the damages included in that award on an individual basis. Why, then, should they be distributed in that way?¹⁹²

More importantly, for present purposes, the CAT is not required under Rule 79(2)(f) for certification purposes to consider more than whether the claims are suitable for an aggregate award of damages which, by definition, does not include the assessment of individual loss. Distribution is a matter for the trial judge to consider following the making of an aggregate award: see Rules 92 and 93. We therefore consider that it was both premature and wrong for the CAT to have refused certification by reference to the proposed method of distribution: an error compounded by their view that distribution must be capable of being carried out by some means which corresponds to individual loss.¹⁹³

Interestingly, the collective proceedings order is not conditioned on numerousity: a collective action may be certified, if it combines “two or more claims.”¹⁹⁴ Furthermore, though the statutory language does not go beyond the requirement of suitability, the Competition Appeal Tribunal Rules of 2015 contain a list of factors to be taken into account as to the interpretation of the requirement of suitability and these suggest that collective proceedings may be certified only if they are more efficient than individual actions (superiority). Notably, the CAT takes into account not only whether the collective action is “an appropriate means for the fair and efficient resolution of the common issues” but also its costs and benefits, whether individual actions have already been commenced and the size and nature of the group.¹⁹⁵

Any person may be appointed as group representative, if he is capable of representing the group adequately. The representative does not need to be a class member, the CAT may appoint any person if it “considers that it is just and reasonable for that person to act as a representative in those proceedings.”¹⁹⁶ Concerning the adequacy of the representative, the CAT will take into account, among others, whether there is a conflict of interest, the representative’s ability to cover the defendant’s legal costs if ordered to do so,¹⁹⁷ whether the representative has a plan concerning the litigation strategy, the notification of group members, governance issues and estimated costs.¹⁹⁸

In Belgium, the law erects two requirements: superiority and adequate representation. A collective action may be certified only if it is more effective than individual litigation¹⁹⁹ and the judge considers representation to be adequate.²⁰⁰ Interestingly, as noted above, although standing is reserved for authorized non-profit organizations, adequacy of representation has to be inquired separately. As regards the superiority of collective litigation, the court may consider the following factors: size of the group, the relationship between individual damages and collective harm and the collective action’s complexity and efficiency.²⁰¹

5.4 Standing and Adequate Representation

According to the general opinion, contrary to the US pattern, in the European Union standing is reserved for public entities (administrative agencies, the attorney general etc.) and qualified non-profit civil organizations such as consumer protection NGOs. According to European thinking, conferring standing on these public and not-for-profit organizations with the exclusion of group members and for-profit entities mitigates the risk of abuse. It is argued that because these organizations are not profit-orientated, they are attentive to the public interest, furthermore, they are registered, regulated and supervised. However, in fact, while the heroes of class actions are certainly not group members (representative parties) but public entities and civil organizations, in quite a few Member States, their standing operates in parallel to that of group members and only a few European legal systems limit standing exclusively to public entities and non-profit organizations. Nonetheless, there is a clear tendency to reserve “hard cases” (which are difficult to manage or raise higher risks of abuse) to public entities and recognized civil organizations. Such cases involve opt-out proceedings and cases where it is difficult to define the group.

In Finland, solely the Consumer Ombudsman has the power to institute a collective action.²⁰² In France, only recognized civil associations whose object extends to the protection of the interests at stake may institute opt-out proceedings.²⁰³ In Belgium, only authorized consumer associations, SMEs’ organizations and non-profit organizations may launch collective actions. However, the law distinguishes between standing and adequacy of representation: the latter has to be examined independently. Interestingly, the Consumer Mediation Service (Service de médiation pour le consommateur”) may also launch collective proceedings but only for negotiating a collective settlement; if no settlement can be achieved, a consumer association has to step in to continue the procedure.²⁰⁴ In Germany, model declaratory claims may be submitted solely by qualified consumer protection organizations that—in addition to the conditions applicable to entities eligible to launch actions for injunction—meet five extra conditions: they have a membership made up of at least 10 associations or 350 natural persons, have been registered for four years as authorized to launch consumer actions for injunction, are engaged in non-professional educational or advisory activities, do not submit the model declaratory claim for for-profit considerations and do not gather more than 5% of their financial resources through company donations.²⁰⁵ The law suggests that in case of actions for compensation, the group representative needs to meet heightened requirements as compared to actions for an injunction. It is noteworthy that, legally speaking, no compensation is awarded in the German procedure, the court may merely establish that the pre-conditions of the defendant’s liability are met. In the same vein, in Greece, standing is conferred exclusively on certified consumer protection associations (“consumer unions”) that have at least 500 active members (if more than one association files the case, they need to have 500 active members jointly) and have been registered for at least one year.²⁰⁶ In Slovenia, standing is conferred on representative non-profit organizations and the attorney general.²⁰⁷

In Lithuania, collective action may be launched by a group member, an association or a trade union “where the pleas laid in the class claim arise out of legal relations directly related to the objective and field of activity of the association or the trade union and where at least 10 members of the class are the members of the association or trade union. Members of the class may include not only the members of the association or the trade union and in the lawsuit proceedings the association or the trade union shall represent the interests of all members of the class.”²⁰⁸

In Hungary, the Competition Act confers standing on the Hungarian Competition Office and the Consumer Protection Act on public entities (consumer protection agency, public prosecutor) and consumer rights organizations. In opt-in procedures launched under the new Code of Civil Procedure, standing is conferred on group members, who, before submitting the claim, have to conclude a joint action contract which, among others, has to name the group representative.

Polish law confers standing on class members and the regional consumer ombudsman (a public body).²⁰⁹

In Malta, both registered consumers’ associations (and ad hoc constituted bodies) and group members may be approved as group representative. The law establishes requirements to ensure adequate representation: the court approves the group representative if it is satisfied that he “(a) would fairly and adequately act in the interests of the class members; and (b) does not have, in relation to the common issues for the class members, a material interest that is in conflict with the interests of the class members.”²¹⁰

In Sweden, collective proceedings may be initiated by group members (private group action), civil organizations (NGO action) and administrative agencies (public group action).²¹¹

Portuguese law also defines standing widely: citizens, associations, foundations and municipalities (for the protection of the citizens living in their territory) may institute an action.²¹²

In Bulgaria, standing is conferred on group members and civil organizations.²¹³

In Spain, standing is conferred on group members, consumer organizations and public entities. The Spanish Code of Civil Procedure distinguishes between general interests (intereses generales) and collective interests (interses colectivos). The former concern an undetermined number of consumers and can be protected in an injunctive class action. Public entities (such as the Public Ministry and entities named in special consumer legislation) and representative consumer organizations have standing to bring them before courts.²¹⁴ Collective interests are those where consumers are already identified or can be easily identified; these can be brought before courts by group members, representative consumer associations and public entities (such as the Public Ministry and entities named by special consumer legislation). In this case, a group action is launched. Special consumer legislation may also provide for the possibility to accumulate both types of actions.²¹⁵

In Denmark, the group representative is appointed by the court, who may be a group member, an association, a private institute or other organization or an administrative agency (e.g. the Consumer Ombudsman). As noted above, under Danish law, the court has the discretion to decide whether the case should be tried in the opt-in or the opt-out scheme. If the action follows the opt-out pattern, only an administrative agency may be appointed as group representative.

The Italian collective action may be initiated by any consumer. Albeit that the consumer may also authorize a consumer organization,²¹⁶ standing goes to the consumer who initiated the procedure.

In England, group litigation order and representative actions may be launched by group members, while (in the United Kingdom) competition law collective actions may be launched by a group member or a representative body.

5.5 Status of Group Members in Opt-in Proceedings: Liability for Legal Costs and Res Judicata Effect

Although opt-in collective litigation is based on group members’ explicit approval, in most systems members are, at least formally, not parties to the procedure and this quality is conferred on the group representative. As a corollary, group members are normally affected by the outcome of the case (that is, are covered by the judgment’s res judicata effects) but they are usually not liable for the prevailing defendant’s legal costs. This is a risk that is normally borne by the group representative. The rationale of this approach is more practical than doctrinal. As group members expressly join the group, it would be plausible, both doctrinally and constitutionally, to expect them to run the risks attached to failure. Nonetheless, as a matter of practice, it would be rather difficult to have them join in matters where the claim is small. The information asymmetry between the members and the group representative may warrant that this risk be placed on the latter.

Under Swedish law, the cost-shifting burdens those who launched the action (group representative) and not group members, who are not considered to be parties to the proceedings. Accordingly, if the litigation is successful, group members receive their net claim; if the litigation is unsuccessful, the defendant’s legal costs are shifted on the group representative.²¹⁷ Likewise, in Finland, the traditional “loser pays” principle applies also to group proceedings but group members are not parties to the proceedings, hence, if joining the action, they do not run any risk in terms of legal costs.²¹⁸ Italian law’s two-way cost-shifting rule is maintained also as to collective actions. However, in case the court decides against the plaintiff, it orders the group representative (and not group members) to reimburse the defendant for his reasonable legal costs. In Germany law, the model declaratory claim is submitted by the organization representing the group, which qualifies as a party and runs the risks related to legal costs.²¹⁹

The mixed regime available in Slovenia maintains the two-way cost shifting rule,²²⁰ nonetheless, group members are, formally, not parties to the collective action²²¹ and have no right to claim reimbursement and are not responsible for reimbursing the defendant.²²²

Nonetheless, a couple of opt-in systems do stick to the full application of the “loser pays” principle, insisting on the notion that if someone wants to have a chance for a favorable award, he also has to carry the risk of being liable for the expenses the action generates.

In Malta, although the “costs may be awarded in favour or against the class representative, but may not be awarded in favour of or against a represented person who is not the class representative”,²²³ the collective proceedings agreement, which is an agreement between the group members and the group representative and which is accepted by group members when joining the proceedings, “may also include provision for the pre-payment and, or reimbursement of any judicial costs incurred by the class representative, [p]rovided that every class member shall only be liable for costs in proportion to his claim.”²²⁴

Danish law did not discard group members’ liability for legal costs in opt-in proceedings. The court may provide that the group representative and joining group members have to bestow a security for legal costs; if the court decides so, no additional financial contribution may be requested from group members; that is, this sum functions as a cap on individual group members’ liability for legal costs.²²⁵

Likewise, group members (and not the group representative) are liable for the legal costs in the opt-in scheme established by the Hungarian Code of Civil Procedure. Before launching the action, group members have to conclude a “joint action contract”, which lists, among others, the plaintiffs, names the representative plaintiff and its deputy and contains provisions on the advancement, bearing and split of costs, the preparation of the action and legal costs, the responsibility of the representative plaintiff, including its liability for damages.²²⁶ The “joint action contract” also has to determine the conditions of adhesion and withdrawal,²²⁷ it has to contain provisions on settlement, that is, whether a settlement may be concluded or not, and if it may, it also has to establish the minimum amount and other related conditions,²²⁸ it has to make provision for whether the representative plaintiff’s declarations have to be approved by the parties (group members).²²⁹ Sections 586(1)(l) and 586(2) of the Hungarian Code of Civil Procedure expressly provide that the parties’ share from the money awarded by the court or provided for in the settlement has to be commensurate to the proportion represented by the value of the individual party’s claim and the parties may not agree otherwise. As it is banned to agree to a division that departs from the proportions of the values of the claims, the parties may not enter into arrangements where some members take higher risks in exchange for a higher share in the money awarded. Hungarian law follows the “loser pays” principle and, at the end of the day, group members run the risk of being responsible for the successful defendant’s legal costs. Although legal costs are awarded to and against the representative plaintiff,²³⁰ as noted above, in the joint action contract, group members have to reach an agreement as to the advancement, bearing and split of these costs.

In European opt-in systems, the res judicata effects extend to those group members who expressly join the group. In Sweden, the judgment covers those group members who expressly join the group and, accordingly, the judgment covers the claims of these persons (res judicata effect).²³¹ Similarly, settlements, which are to be approved by the court, bind only those who join the group.²³² In Finland, the group consists of those persons who get their declarations of accession to the Ombudsman within the deadline established by the court.²³³ The judgment’s legal effects cover solely those group members who opted in.²³⁴ In Malta, the collective judgment on the common issues binds only those group members who joined the proceedings.²³⁵ In Germany, courts have no power to award damages, instead, the purpose of the action is to establish that the claim’s or legal relationship’s factual and legal pre-conditions exist or do not exist.²³⁶ Group members may seek monetary relief, on an individual basis, after the pre-conditions of the defendant’s liability are established. The final declaratory judgment is binding on courts in matters between consumers who opted in and the defendant, provided these concern the same aims and the same fact pattern as the collective declaratory judgment.²³⁷ In Italy, the final judgment is binding on all group members who joined the proceedings (and the lead plaintiff and the defendant obviously). While those who failed to join are not bound, the class action has a preclusion effect as to future collective actions in the same subject: consumers not part of the group do retain their rights to launch individual law-suits but may not start another collective action against the same defendant on identical grounds.²³⁸ In UK competition law’s opt-in scheme, if the CAT carries out the procedure according to the opt-in principle, the CAT’s judgments and orders will be binding only on those group members who opted in.²³⁹ In Lithuania, final court decisions are binding on group members who opted in. The court may adjudicate the pleas common to all class members in a “common ruling”; in case class members have individual pleas, the court may adopt an “intermediate ruling” and “individual rulings.”²⁴⁰

5.6 Status of Group Members in Opt-Out Proceedings: Liability for Legal Costs, Res Judicata Effect and the “Only Benefits” Principle

As noted above, due to doctrinal and constitutional reasons, European opt-out collective actions have been impregnated by the “only benefits” principle: the encroachment on party autonomy may be justified if only benefits accrue to group members. European systems have been struggling remarkably with the implementation of this principle, producing innovative and idiosyncratic solutions.

The major risks related to collective litigation in Europe are the liability for legal costs and being bound by an unfavorable judgment in case the group representative fails.

Due to the two-way cost-shifting rule, the prevailing party has to be compensated for his reasonable legal costs. It is evident that in opt-out proceedings group members may not be liable for any legal costs (except the ones they caused). Likewise, the possibility of introducing the American rule as to collective actions was also generally rejected—it would have been inconsistent to do away with an entrenched principle of European civil procedure as to collective litigation, while preserving it as to individual actions. These two factors determined that it should be the group representative who carries the risk of legal costs.

In the Greek consumer collective action, group members are not liable for legal costs if the collective action proves unsuccessful.²⁴¹ Likewise, in Portugal, it is the group representative (collective plaintiff) and not individual group members who carries the risk as to legal costs.²⁴² The same approach prevails in Spain. In order to promote collective actions, Article 37(d) of Royal Legislative Decree 1/2007 laid down the right of consumer associations’ to legal aid. In Hungary, in opt-out proceedings, group members are not liable for legal costs, contrary to the opt-in scheme of the Hungarian Code of Civil Procedure. In the United Kingdom’s opt-out scheme available (subject to the CAT’s discretion) in competition matters, the risks related to legal costs are, in principle, run by the group representative: “costs may be awarded to or against the class representative, but may not be awarded to or against a represented person who is not the class representative.”²⁴³ In Bulgaria, group members are not liable for legal costs if the collective action proves unsuccessful—the main burden is assumed by the group representative, who is required to prove his financial capacity at the outset of the procedure.²⁴⁴ However, group members who expressly opted in would be also liable together with the group representative. Once they opt in, they become parties to the proceedings with the pertinent rights that allow them to influence the course of the case, which, in turn, allows the imposition of liability in case of failure.

Danish law subjects group members to partial liability for legal costs, while trying to preserve the “only benefits” principle: if the proceedings are conducted in the opt-out pattern, group members cannot be obliged to pay more for legal costs than the money actually awarded to them.²⁴⁵ In other words, group members run the risk of losing money with the group action only if the opt-in scheme is used and they join the action.²⁴⁶

Legal costs are not the only risk where the need of the “only benefits” principle has been claimed. While most European opt-out systems simply extend the judgment’s res judicata effects to group members who did not opt-out, a few Member States were influenced by the argument that party autonomy is restricted also if individual group members could have achieved a better result than the one the group representative did (they could have won in a case where the collective action failed or could have obtained a more favorable remedy). As it is virtually impossible to assess this on a case-by-case basis, some European systems (Hungary, Portugal, France) have developed various practices to ensure the judgment’s res judicata effect without formally extending it to group members and made the judgment’s binding force limping.

The majority of European opt-out regimes uses a straight approach and provides that the judgment’s res judicata effect covers all group members but those who opted out.

In Bulgaria, group members may opt-in but the judgment will extend to all group members who did not opt-out.

The judgment of the court shall have effect in respect of the infringer, the person or persons who have brought the action, as well as in respect of those persons who claim that they are harmed by the established infringement and who have not declared that they wish to pursue a remedy independently in a separate procedure. The excluded persons may avail themselves of the judgment whereby the class action has been granted.²⁴⁷

In Spain, group members may participate in the procedure.²⁴⁸ Once the court confirms the collective action, this fact has to be announced.²⁴⁹ The court’s judgment has to give a detailed definition of the features and requirements that are to be met to qualify as a group member. The judgment rendered as a result of a collective action and its res judicata effects cover all group members, eventually also those, who did not opt in. If the court decides for the plaintiffs, the judgment has to determine the consumers and users benefiting from the judgment individually. When group members cannot be identified, the judgment has to set out the conditions of group membership and establish the data, characteristics and requirements that are to be met for claiming payment or requesting enforcement.²⁵⁰ If consumers are not determined individually in the judgment, a writ has to be issued in the enforcement stage to establish whether a particular person, on the basis of the data, characteristics and requirements set out there, is covered by the judgment.²⁵¹

In Denmark, as noted above, the court has the power to decide whether to carry out the proceedings in the opt-in or the opt-out scheme. The parties of the procedure are the group representative and the adversary party (defendant); group members are not parties in the conventional sense.²⁵² Nevertheless, in the opt-out procedure, the judgment’s res judicata effects extend to the members who failed to opt out.

A similar scheme prevails in Belgium: the court has the power to decide between the opt-in and the opt-out scheme. The final judgment extends, accordingly, to those who opted in or opted out, depending on the scheme chosen by the court.²⁵³

In the United Kingdom, in competition matters, it is up to the CAT to decide whether the procedure will be carried out in the opt-in or the opt-out scheme.²⁵⁴ In case the opt-out system is used, the CAT’s judgments and orders will be binding on those who did not opt out.²⁵⁵ Class members domiciled outside the UK, to be covered by the CAT’s judgments or orders, have to opt in, even if the opt-out scheme is used. The CAT is not required to individualize the damages awarded: “[it] may make an award of damages (…) without undertaking an assessment of the amount of damages recoverable in respect of the claim of each represented person.”²⁵⁶

As noted above, in a few Member States, judgments adopted in collective actions have limping res judicata effects.

In Hungary, it is not obvious if in opt-out proceedings available in competition and consumer protection law the judgment’s res judicata effects extend to group members. The statutory text does not provide for this specifically. It deals only with the case when the group representative wins, not addressing the case of plaintiff failure. More importantly, group members are not parties to the collective action, hence, absent a specific provision, they should not be covered by the res judicata effects. Last but not least, the law provides that the collective action does not affect the consumer’s right to pursue his rights individually.²⁵⁷ All these suggest that while group members may “use” the judgment if the group representative prevails, they are not necessarily covered by the res judicata effect. However, this question has not been tested in judicial practice.

In the Greek consumer collective action, the judgment’s res judicata effect extends to all (including absent) group members but only if the consumer association is, fully or partially, successful. In case the defendant does the comply with the judgment voluntarily, a consumer may request the court to issue a payment order for him.²⁵⁸

In Portugal, once a popular action is initiated, the court, after an appropriate public notice, sets a deadline for adherence or refusal of adherence. The popular action follows the opt-out principle²⁵⁹: silence infers adherence. However, the law shelters group members in various ways from the potentially detrimental consequences of res judicata. First, group members may opt out very late, until the end of the evidentiary procedure.²⁶⁰ Second, the law erects two exceptions to the principle that the final judgment’s res judicata effects extend to all group members who have not opted out: group members are not covered by the judgment’s res judicata effects if the claim was rejected for lack of evidence, furthermore, the judge may decide to exempt group members from this effect considering the special characteristics of the case.²⁶¹

Judgments in collective actions have limping res judicata effects also under French law, which has been above average creative as to the purview of res judicata in opt-out proceedings. The scheme appears to be a de facto opt-out system, although the consumer’s right to opt in is retained and can be exercised after the judgment is made. Accordingly, the judgment’s res judicata effects extend to group members on the condition that they accept the award and get compensated: the judgment’s res judicata effects cover only those group members who, after having been duly informed, expressly accept the judgment and the compensation.²⁶² Notwithstanding the conditional nature of the res judicata effects on individual group members, the judgment adopted at the end of the group action has a general preclusion effect against subsequent group actions initiated in the same case.²⁶³

5.7 Enforcement

Interestingly, although, as a matter of practice, this appears to be of crucial importance for the success of collective actions, in the vast majority of the systems, collective awards come under individual enforcement.²⁶⁴

Nonetheless, a handful of Member States made provisions for the collective enforcement of the judgment accruing from the collective action. In Malta, if the court awards compensation, it “may order the defendant to credit the amount due to a specific account held by the class representative and may give such orders, as it deems necessary, to the class representative for the effective distribution of that compensation among the class members.”²⁶⁵ In Belgium, collective awards and settlements are enforced under the supervision of a “collective claims settler”, who can claim his costs and fees from the defendant.²⁶⁶ In Slovenia, enforcement is carried out with the help of a collective redress manager.²⁶⁷ In France, the money has to be paid directly to group members; however, the representative plaintiff may be authorized to enforce the award and distribute it among the members.²⁶⁸ In the United Kingdom, in opt-out collective proceedings available in competition matters, the CAT may order that the damages be paid either to the representative plaintiff or any third person the CAT determines.²⁶⁹ In opt-in proceedings, the damages are, in principle, to be paid directly to group members unless the CAT decides otherwise (in which case they will be paid to the representative plaintiff or any third person the CAT determines).²⁷⁰

In Bulgaria, enforcement is managed by the group representative under court supervision. The court may require that the indemnification be collected in the name of one of the representatives or in an escrow account.²⁷¹ Furthermore, the court may convene a general meeting of all injured parties, which can decide on the manner of allocation or expenditure of the indemnification amount. This meeting is chaired by the judge and can adopt valid decisions if more than 6 injured parties attend.²⁷²

Normally, individual claims not enforced within the term of limitation remain with the defendant. However, for instance, in Portugal, if group members do not enforce the compensation awarded to them within three years, the claim accrues to the Ministry of Justice who is expected to use it to promote access to justice.²⁷³ In securities law, the non-distributed part of the global compensation accrues to the respective financial sector’s guarantee fund.²⁷⁴ In case of antitrust damages actions, the non-distributed part may be used to pay for the promoters’ costs of litigation, which would otherwise go uncompensated.²⁷⁵ In the United Kingdom, in competition law opt-out collective actions, provision is made for unclaimed moneys: if the CAT “makes an award of damages in opt-out collective proceedings, any damages not claimed by the represented persons within a specified period must be paid to the charity for the time being prescribed by order made by the Lord Chancellor”²⁷⁶ or the Secretary of State²⁷⁷; however, the CAT “may order that all or part of any damages not claimed by the represented persons within a specified period is instead to be paid to the representative in respect of all or part of the costs or expenses incurred by the representative in connection with the proceedings.”²⁷⁸

5.8 Summary

Interestingly and counter-intuitively, 10 out of the 17 EU Member States that have adopted collective litigation schemes created systems based fully or partially on the opt-out principle (Belgium, Bulgaria, Denmark, France, Greece, Hungary, Portugal, Slovenia, Spain, and the United Kingdom) and only 7 of them stuck to the opt-in principle (Finland, Germany, Italy, Lithuania, Malta, Poland and Sweden). Accordingly, while it is true that in the vast majority of the Member States no opt-out collective litigation is available, more than half of the countries that decided to create a special regime allowed representation without authorization in general or in given sectors.

Though a few countries have regimes of general scope, most European collective litigation systems have a limited ambit (such as consumer matters), reflecting the notion that collective actions should be limited to cases where they are highly needed. Some systems have used “leapfrogging” to extend the scheme to further sectors demonstrating the precautious approach of European legal systems as to collective litigation.

European collective litigation is normally subject to more stringent requirements than US class actions. The pre-conditions of collective litigation normally embrace those of US class action (numerousity, commonality, typicality and adequate representation) but quite a few systems go beyond these and require that collective litigation be expedient or superior to individual litigation and that the group be definable and group members identifiable by means of the group definition (especially in case the opt-out scheme is used).

The heroes of European collective litigation are governmental and non-governmental not-for-profit organizations (such as administrative agencies, the attorney general and consumer protection NGOs). Although standing is not reserved solely for them (in fact, in several Member States their standing operates in parallel to that of group members and only a few systems limit standing exclusively to public entities and non-profit organizations), they are expected to be the authors of collective actions (as law firms are in the US). There is a clear tendency to reserve “hard cases”, which are difficult to manage and present a higher risk of abuse, to public entities and recognized civil organizations. According to European thinking, governmental and non-governmental not-for-profit organizations are assumed to be more attentive to the public interest than for-profit enterprises.

Although in opt-in systems group members expressly join the action, contrary to the group representative, they are formally not parties to the procedure. They are bound by the final judgment but in most systems, instead of them, it is the group representative who is liable for the prevailing defendant’s legal costs.

Due to doctrinal and constitutional reasons, European opt-out class action legislation has been impregnated by the “only benefits” principle: the encroachment on party autonomy is justified by the fact that only benefits accrue to group members. European systems have been struggling remarkably with the implementation of this principle, producing innovative and idiosyncratic solutions. First, it is evident that in opt-out proceedings group members may not be liable for legal costs and the group representative should carry this burden. Second, it has been argued that party autonomy is restricted also if the individual group member is bound by an unfavorable judgment. Hence, in some European opt-out systems, the res judicata effects are limping in relation to group members. For instance, in France, group members are bound by the judgment only if they expressly accept the compensation. In Hungary, it is dubious if in opt-out proceedings available in competition and consumer protection matters the judgment’s res judicata effect extends to group members. In Portugal, if the court decides for the defendant due to lack of evidence, the judgment will not be binding on group members; furthermore, as a general rule, if justified, the court may exempt group members of the judgment’s res judicata effects.

Interestingly, although, as a matter of practice, this appears to be of crucial importance for the success of collective actions, in most systems, collective awards come under individual enforcement and only a handful of the Member States have made provision for collective enforcement.

The above modelling is crowned with the recent European proposal for a consumer collective action. In April 2018, the Commission proposed the adoption of a “representative action” in the field of consumer protection law.²⁷⁹ The proposed directive is, in essence, based on the above common principles identified as the common core of the existing European mechanisms. Given that one third of the Member States has no collective action scheme, it is a significant virtue of the proposed directive that, if adopted, it will make consumer collective actions available in each and every Member State. On the other hand, at the present stage of the legislative process,²⁸⁰ as a simple codification of the “collective action traditions common to the Member States”, it is supposed to entail no landslide conceptual reform: it has a sectoral approach (consumer protection), rigorous pre-conditions, confers standing on qualified representative entities, maintains the “loser pays rule”, rules out financial incentives, such as contingency fees and punitive damages and, last but not least, evades the dilemma of opt-in and opt-out through leaving the choice to Member States.²⁸¹