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The EU Directive on representative actions for the protection of the collective interests of consumers came into force on the 24th December 2020 and each member state, including Ireland, has until the 25th December 2022 to transpose the Directive into national law.
The new Directive will have a significant impact on the way multi-party litigation is run in Ireland at the consumer level. Under the current law in Ireland, if multiple people have been injured or affected by the same set of circumstances, such as the 2010 DePuy hip recall and the 2012 PIP breast implant controversy, then each individual person affected needs to instruct their own solicitor and bring their own case against the wrongdoer. A “test case” is heard before a court, and the result of the test case bears on the likely result of the remaining cases.
The main innovation of the new Directive is that it will enable Qualified Representative Entities (QREs) to bring collective actions and seek both injunctive relief and/or redress for consumers who have suffered as a result of illegal practices in breach of EU law. Redress may come in the form of compensation, repair, replacement, price reduction, contract termination, or reimbursement. QREs must be designated by the Member State and QREs will be distinguished into two categories – QREs who bring domestic representative actions in its own Member State, and QREs who partake in cross-border litigation. In large cases involving consumers in multiple EU Member States, QREs in different Member States will be able to come together and bring a joint action. The Directive also sets out the procedure for the approval by a court or relevant authority for the settlement of collective actions .
Several questions regarding how the Directive is to be implemented have been left to the Member States to decide for themselves, including the types of organisations that can be considered QREs, and whether claims brought by a QRE on behalf of claimants will operate on an opt-in or opt-out system. For cross-border actions, QREs will only be able to represent claimants on an opt-in basis. Member States will also be at liberty to set out rules according to which individual consumers may decline a settlement negotiated by the QRE and approved by a court.
In terms of legal costs, the Directive stipulates that the losing party to a claim is to pay the winning party’s costs, however individual consumers should not bear the legal costs of the proceedings save where, if provided for by the law of the Member State, the consumer deliberately or negligently caused unnecessary costs. This is a positive step for consumers who may otherwise be reluctant to join a collective representative action if they were concerned about the prospect of facing financial hardship in the event that the QRE did not bring their claim to a successful conclusion.
The Directive has restricted the use of third-party funding and QREs are required to disclose the source of their funds when bringing collective actions. When transposing the Directive into national law, Member States will need to ensure that measures are in place to prevent conflicts of interest arising and ensuring that decisions taken by QREs are not unduly influenced by funders in a way that impacts the protection of the consumers’ interests.
This Directive will bring significant changes to the Irish litigation landscape in respect of actions brought by multiple arising out of the same or similar circumstances. The Directive has been designed for situations such as claims arising out of large scale data protection breaches or claims against financial services, but it will also have implications for cases arising out of the provision of defective medical devices and products.
About the author: Mark Jones, Solicitor on the Medical Negligence Team