Progress on The General Scheme of Representative Actions for the Protection of the Collective Interests of Consumer Bill 2022

Published 2 diciembre 2022

1.Recap

The introduction of Directive (EU) 2020/1828, foresees the creation of a new tool within the sphere of consumer redress: consumer class action, or rather EU-Style representative action. The Directive is set to be transposed into Irish law by way of The General Scheme of Representative Actions for the Protection of the Collective Interests of Consumers Bill 2020 (the “General Scheme”), and integrated into practice no later than 25 June 2023. The General Scheme will give effect to the Directive by creating a new civil litigation mechanism for representation by consumers who have opted into collective redress against a trader. All disputes under the General Scheme are to be commenced in the High Court.

2.Collective Representation vs. Class Action

Approaches to collective redress schemes in Europe have diverged considerably from those held by our transatlantic neighbours. The Directive does not propose to match the US class action system, rather it seeks to create a new tool for representative action. In contrast to the US class action suits in which consumers/claimants can be held responsible for costs, the EU scheme is a non-profit mechanism and there is no basis to hold consumers responsible for costs. Rather, Qualified Entities (“QE’s”) acting as the role of the Plaintiff bear the costs of the representative action. Any cost orders made by the court, apart from exceptional circumstances, will be made against the QE, or cross-jurisdictional QEs. Group action claimants will not be bound by an outcome unless they opt in.

3.Pan-European Homogeneity

EU Directive 2020/1828 is a maximum harmonisation directive, meaning that Member States have little discretion as to its implementation. When member states are given minimal discretion to a Directives implementation this results in a more homogenous procedural adoption. The only real discretion afforded to member states relates to the way qualified entities are funded and whether consumers should opt in or opt out of representative action.

4.The Rise of Multi-party Litigation in Ireland

With the implementation date of the scheme set for next summer, certain things should be borne in mind. Businesses in Ireland operating within the broad net of sectors subject to EU regulation should prepare themselves for a possible increase in representative action for breaches of consumer law. While roll out of the General Scheme does not create any additional consumer rights nor does it impose any new obligations on traders, it is a good time for businesses to ensure their governance and strategies toward consumer compliance and protection are in good working order.  

5.Conclusions

Concerns surrounding the General Schemes workability will remain speculative until the legislation is in actively in place. Whether Ireland can expect to see the designation of any suitable QEs will be eagerly awaited. It’s important to note that Ministers can refuse to designate an organisation as a QE. There is also a statutory basis for the Minister to revoke the designation of a qualified entity under the General Scheme, where the Minister receives credible information that the QE does not meet, or has breached in some way the designation criteria.

We will endeavour to follow developments in this area as they come to light, but for more information on the General Scheme please contact our Commercial Litigation team.