Across Europe, many countries, as well as the European Union, are considering the adoption of harmful new legal procedures.
In the EU, the European Commission has considered over time that its member states adopt collective action regimes for claims based on consumer rights, competition, environmental violations, personal data privacy, financial services and investor protection.
There are also troubling developments at the EU member state level. In the UK, contingency fees are now available for some types of claims, the longstanding loser pays system has been curbed for some litigation, and the Department for Business Innovation and Skills introduced "opt-out"private actions for damages based on competition law violations. The Netherlands and Germany are also considering the creation of collective litigation regimes. Belgium, France, Italy, Poland, Portugal, Spain, and several other European nations already allow collective actions.
For the time being, EU level measures on collective redress will be limited to a non-binding recommendation adopted by the Commission.
The EU’s collective redress recommendation urges the adoption of key safeguards in any collective redress regime, including restrictions on contingency fees, requiring class members to “opt-in” to a case rather than “opt-out,” and a prohibition on punitive damages. The recommendation also includes limited safeguards relating to the use of third-party litigation funding. In addition, the European Parliament approved ILR-supported legislative proposals in March 2013 that encourage Alternative Dispute Resolution (ADR) as an alternative to litigation.
Developments in the next few years will go a long way towards determining future legal trends in Europe. A 2013 study by NERA Economic Consulting found much lower liability costs in continental Europe when compared with the United States, Canada, and the UK. This advantage could erode, however, if Europe continues to adopt problematic U.S.-style legal procedures.
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