TITLE:
Collective Actions in the European Union—American or European Model?
AUTHORS:
Verica Trstenjak, Petra Weingerl
KEYWORDS:
Access to Justice, Collective Redress Mechanisms, Injunctive Relief, Compensatory Relief, Consumers, Investors, Opt-In, Opt-Out, The European Commission’s Recommendation
JOURNAL NAME:
Beijing Law Review,
Vol.5 No.3,
September
12,
2014
ABSTRACT: Collective redress is a procedural mechanism that allows for reasons of
procedural economy and efficiency of enforcement many similar legal claims to
be combined into a single court action. Consumers and investors encounter
problems with the enforcement of their rights through the individual redress,
especially in times of the financial crisis. If a substantial number of harmed
individuals decide not to pursue their, usually low, claims, the unduly gained
profits of the opposite party can be extremely high. Thus, collective redress
mechanisms can represent better option for consumers and investors, as their
claims tend to be much less burdensome in case of the collective action.
However, such mechanisms can trigger the abuse of the procedures, with the most
commonly quoted threat being the example of American regulation of class
actions. Negative characteristics of American model are the reasons that EU
decided to shape its own concept of collective redress mechanisms. The binding
act in this field in the EU is directive on injunctions for the protection of
consumers’ interests; however, there is no binding act yet regarding
compensatory actions. In June 2013, the European Commission published the
Recommendation on common principles for injunctive and compensatory collective
redress mechanisms in the Member States concerning violations of rights granted
under Union Law. It is not binding on Member States, however, it can serve as a
guideline to improve their existing legislations, especially the regulation of
collective compensatory actions. In so doing, consumers and investors might be
given the possibility to use more efficient mechanism to compensate the harm
suffered.