European Union

The European Commission’s Collective Redress Proposal

Collective redress or ‘class action’ models are proliferating across the European Union (EU), with a significant majority of Member States now having at least one collective redress mechanism available for consumers. 

At the EU level, a number of separate and sectoral initiatives have sought to make it easier to pursue collective redress in civil courts (e.g., in relation to competition, data protection, environmental law, financial services, and others).  The European Commission, the executive arm of the EU, is now seeking to introduce a mechanism for compensatory collective redress into existing consumer laws. This proposal is part of a broader legislative package focused on consumer rights, known as the “New Deal for Consumers”.

On June 11, 2013, the European Commission published a non-binding Recommendation on collective redress, which urged Member States to adopt collective redress mechanisms. The Recommendation specified that in doing so, Member States should implement key safeguards, 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 recognizes the need to put in place safeguards around third party litigation funding (TPLF).

The European Commission evaluated Member States’ implementation of the Recommendation and released a report in January 2018. The reports finds that the Recommendation has not had the desired effect, in particular that Member States failed to implement safeguards against abusive litigation.

Instead, the report finds that Member States have been developing diverse collective redress systems and unevenly applying safeguards, if at all. In general, this is in line with ILR’s findings from our March 2017 study, The Growth of Collective Redress in the EU. In ILR’s study, we were unable to identify any changes to any of the Member States’ laws introduced only because of the Recommendation. Some systems have been introduced since the Recommendation – such as the systems of the UK, Belgium and France – but none of these systems follow the Recommendation in all respects. 

In any future proposal on collective redress, the European Commission should ensure that the system it creates is consistent with best practices and is not open to abuses and commercial opportunism. It has already devised thoughtful and useful safeguards in its Recommendation, which it highlighted in its January 2018 report.  The European Commission should ensure that those safeguards are reflected in any legislative proposal, including in its proposed reform to the Injunctions Directive, which includes a redress component. 

Litigation safeguards are also important to European Consumers. In July 2017, ILR commissioned an independent polling firm to survey over 6,000 European consumers on the issues of collective redress and third party litigation funding. The survey results show the following:   

  • 85% of respondents support the introduction of safeguards for collective action lawsuits. Only 5% of consumers oppose the introduction of safeguards and 10% ‘don’t know’.
  • A further 69% of consumers do not support the introduction of collective action lawsuits in their country without safeguards.
  • Nearly 80% of consumers feel it is important that collective action safeguards are made consistent across the EU.

 The full survey can be found in Supporting Safeguards: EU Consumer Attitudes Towards Collective Actions and Litigation Funding,

The European Commission will release its comprehensive consumer protection policy package, a “New Deal for Consumers”, on April 11, 2018. This will include a consumer redress component. In advance of this proposal, ILR is continuing to share its extensive research and experience with U.S.-style and all forms of collective redress systems with the European Commission.

The EU and Data Privacy Legislation

At the end of 2015, European negotiators agreed on a new EU data privacy law, called the "General Data Protection Regulation" or GDPR. This legislation attempts to harmonize standards across the EU for dealing with and protecting digital personal data.

Among its many features and consequences, the GDPR text adopted by the European Parliament allows for the possibility of collective actions for damages. Filing a damages action on behalf of someone else could only happen (1) when there is a specific mandate from the relevant data subjects (opt-in), and (2) only where such actions are permitted in individual Member States. Consumers or trade associations also need to meet a list of requirements in order to bring an action. Opt-out class actions are explicitly excluded from the law, but some Member States are attempting to introduce or expand their collective redress systems to cover cases under the GDPR.

The GDPR is set to go into effect in May 25, 2018. However, the EU Observer reported in January 2018 that only two Member States, Germany and Austria, are ready for the implementation.

ILR’s memo on the GDPR can be found here.

Antitrust Litigation

In April 2014, the European Parliament adopted a Competition Damages Directive issued by the EU antitrust regulatory agency, DG COMP, without the inclusion of any language on collective redress.  While the proposal does not allow collective redress, EU member states could adopt antitrust collective redress systems at the national level, as England & Wales have done. The Directive also attempts to align member states’ legal systems by proposing common rules regarding discovery, limitation periods, the circumstances under which leniency documents should be handed over in litigation, joint and several liability for infringers, and other features. 

Alternative Dispute Resolution (ADR)

In March 2013, the European Parliament approved legislative proposals encouraging the use of ADR (for example, mediation or arbitration) for consumer disputes. ADR mechanisms present a viable alternative to class actions for resolving disputes.

Additional resources on European ADR can be found here.