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Collective redress, or class actions, have been subject to controversy, both on national and on EU level. After years of deliberation on the subject, on June 30th 2020, the Council of the EU published the text for a proposal for a collective redress directive (the “CR Directive”) available here.
The purpose of the CR Directive is to allow for “effective and efficient representative actions available at national and the Union level” in order to “boost consumer confidence, empower consumers to exercise their rights, contribute to fairer competition and create a level playing field for traders operating in the internal market” (recital 2b).
Essentially, the CR Directive will, if (or when) adopted, require each member state to take measures ensuring that its collective redress mechanisms meet the directive’s minimum standards.
The scope is however limited. Basically, the CR Directive is applicable only to
1. Claims brought on behalf of consumers; it does not cover claims on behalf of legal entities.
2. Claims related to breaches of the Union law listed in Annex 1 to the draft CR Directive. This include areas such as data protection, financial services, travel and tourism, energy and telecommunications, as well as general consumer law.
Member states are however free to apply the CR Directive outside this scope. The CR Directive may therefore pave the way for a wider collective redress regime.
Some key features of the CR Directive are:
All thought the CR Directive certainly could lead to a pan-European harmonisation; several procedural issues will still be left to the member state’s discretion, inter alia when it comes to possible certification mechanisms and the destination of unclaimed sums. The latter is an important issue, particularly in opt-out systems.
In Norway, the system of civil justice was overhauled at the beginning of this century, and a new Civil Procedure Act was adopted 17 June 2005 entering into force 1 January 2008. As part of the reform, class actions both opt-in and opt-out, were introduced. American and Swedish rules served as inspiration for the specific regulations devoted to class actions.
The Civil Procedure Act includes the possibility for both opt-in and opt-out class actions. According to the preparatory works (travaux préparatoires), the main rule for class action is deemed to be opt-in. However, which of the two procedures that is most suitable for a specific class action ultimately is left to the court to decide, as part of the certification procedure.
The adoption of class action rules was preceded by considerable debate in Norway. Essentially, advocates for consumer interest deemed class action as an important instrument to ensure justice, while advocates for business interest warned against adopting class action rules and feared that class action would be used as “blackmail”.
The Norwegian class action legislation is now in its early teens. Like teenagers most, the rules, or rather the application of the rules, seem to have become more mature. Class actions are now a natural part of the Norwegian legal habitat. We continuously see cases being brought in where there may be a real benefit in applying the rules.
A prominent example is perhaps the opt-out class action instigated in 2016 by the Norwegian Consumer Council against the largest Norwegian bank, alleging that some 180 000 customers had been paying excessive fees for management of their savings. The group was ultimately successful and the Supreme Court ruled that the members of the group were entitled to a “price reduction”. The average “price reduction” for each member was about EUR 160, but the total amount to be refunded was in the range of EUR 35 000 000.
Adoption of the CR Directive does not seems to call for major reforms from a Norwegian perspective. Norwegian law, at least on some areas, seem to have gone beyond the minimum requirements of the CR Directive. Nevertheless, it will be interesting to follow the debate going forward.
The CR Directive fits into a broader picture of members states adopting collective redress mechanisms as a means to promote access to justice in cases involving small claims and to obtain more efficient and effective justice in such cases.
Andreas Nordby is head of the dispute resolution and litigation group at the Oslo office. He is also the co-author of a commentary to the Norwegian class action rules.