We are waiting for the approval of the proposal presented in April 2018 by the Commission, to introduce a uniform representative action to protect consumers' collective interests, as there is no common regulation on class action in Europe. In view of the increasing need to give voice to consumers damaged by various financial scandals and striking cases (such as Dieselgate and Cambridge Analytica), many reforms have been implemented in various European countries in order to render faster and more efficient class action, which has not really taken off in terms of quantity or quality if compared to the experience of the US.
The first main difference is represented by the protected rights. The beneficiaries in many European countries are consumers only or specific categories of damaged individuals. The Commission also appears to be moving in such a direction. In the US, UK and, with the reform under approval in Italy as well, the protection is widened to protect individuals' rights in general, with substantial widening of the audience of interested individuals. We can consider a case of environmental disaster or even the discrimination of a certain category of employees.
Second point: Who can claim such rights? The common trend in Europe is to leave qualified and credited associations to act in Court without the need to represent a significant number of people. In Italy, the decision is not to reserve this right to the possibility to start a class action to associations only but also to individuals. In the US, an individual can be the speaker of a class interest and thus become the representative. The true difference between European and US class actions lies in the class mechanism. In the US there is the opt-out system, that is to say all possible interested individuals belong to the class, if they do not expressly opt-out to claim their rights separately.
In Europe, on the contrary, the system uniformly adopted is the opt-in system, that is to say the individuals must expressly join the class action to benefit from it. Let's look at one of the most controversial issues of the Italian reform (which is still based on the opt-in system): the deadline within which an individual can join the class action. According to the draft law under approval, in Italy individuals may decide whether to join the class action even after the decision on the responsibility of the defendant company. It is clear that such a long joining window determines a great uncertainty for a corporation on its potential future liability. Theoretically an undetermined number of individuals may decide to "join the winner" without having participated actively in the first phase of assessment of liability. The scenario is different in the UK and Germany (excluding class actions promoted by investors) where the joining is precluded if individuals do not join the class action within a fixed deadline. In France, Holland and Spain the joining may take place even after the decision.
However, the true point of weakness of the European class actions is represented by the compensation of damages. In the US (and in the UK) the decision, which ascertains the liability, directly sentences the corporation to compensate damages. In Europe, on the contrary, in the majority of cases, a phase two takes place, where associations on behalf of individuals (for example in France) or individuals (in Holland, Spain and Germany) must act for the compensation of the individual damages. The solution adopted in Italy represents a piece of news: A common representative with the functions of a public official, but paid in proportion to the amount of damages to be paid, will manage phase two on behalf of individuals. The commons limit of European systems is indeed represented by the complexity of the procedure and by the length of time.
Article published on "Il Sole 24 Ore" – 15 October 2018
Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.