Parliament supports collective redress mechanism
By Sophie Petitjean | Thursday 02 February 2012
The European Parliament supports the introduction of a European collective redress mechanism that would enable complainants from all 27 member states to take legal action as a group to denounce the same damage. While the European Commission is reluctant to propose common rules in this field, the EP called, on 2 February, for the creation of a legally binding horizontal framework specifically addressing - but not limited to - violations of the rights of consumers.
This framework could be accompanied by separate legal instruments on a limited number of rules that are relevant to consumer protection or the right to competition. Furthermore, MEPs suggest encouraging cooperation and injunctive relief for cross-border cases by improving the existing regulation
This own-initiative report, drafted by Klaus-Heiner Lehne (EPP, Germany), is the Parliament’s contribution towards a legislative proposal on collective redress, which was envisaged by the European Commission in its 2012 work programme.
MEPs are suggesting that the Commission put safeguards in place to avoid encountering the same problems as the US system – “abusive and unfounded litigation culture”.
“Europe must firmly must firmly oppose any wish to modify the legal traditions of the EU via the incorporation of unknown procedures opening the path to abusive litigations for collective claims,” the rapporteur warns in his explanatory statement.
To this end, the Parliament proposes limiting the eligibility of claims to clearly determined groups. Its members must be identified before a redress can be started and the member states should ensure that a judge or magistrate continues to have the discretionary power to pre-emptively verify the eligibility of any potential collective redress. MEPs also propose to ban punitive damages. The amount of damages awarded should be shared among the different victims proportionally to the injury suffered by each and the unsuccessful party should be ordered to pay costs.
The European Consumers’ Organisation (BEUC) welcomed this initiative, arguing that the EU could not afford to wait any longer to put in place a collective redress mechanism. “Seventy-nine percent of consumers say they would be more inclined to make an official complaint if the abuse was denounced by other victims. [...] It is now imperative that the Commission bridge this gap by addressing the fundamental right of victims to compensation,” said Monique Goyens, BEUC’s managing director.(1) Regulation N° 2006/2004 on cooperation on consumer protection and Directive 2009/22/EC on injunctions for the protection of consumers’ interests