In a week in which distressing images of Turkish lawyers being dragged by police out of a court building showed the importance of not taking the benefits of the rule of law for granted, here is some of Europe’s more traditional, everyday legal fare to distract you.
After years of consultation, analysis and lobbying, plus predictions of a US-style collective redress system which would wreck Europe - mood music increasing to the pitch of a thunderous orchestra - the European Commission has now produced its solution for European collective redress. When the smoke cleared, it was seen to be a squeaking mouse, hurrying over the floor of the European Commission, frightening no one. There will be no regulation or directive.
Instead there will be – wait for it, a recommendation. This contains non-binding principles to allow citizens and companies to enforce their rights under EU law, particularly in the fields of consumer protection, competition, environmental protection and financial services. The commission hopes for a coherent approach to collective redress without harmonising member states' systems. (The UK government must be displeased, because there will now be nothing to opt out of, renegotiate or complain about.)
Having said that, this particular mouse could turn out to roar. The recommendation includes much that is pretty obvious - procedures should be fair, equitable, timely and not prohibitively expensive; procedural safeguards should ensure there are no incentives to abuse collective redress systems (they are talking contingency fees here, and also that there should be no punitive damages). Interestingly, they do not rule out third-party financing, subject to certain conditions. But there are other parts which might prove more contentious. For instance, after long debate, they have gone for the ‘opt-in’ principle (claimant parties are formed through directly expressed consent of their members), unless otherwise justified by reasons of sound administration of justice.
But there is a provision regarding ‘Standing to bring a representative action’ which should be more critically scrutinised by lawyers. It says that member states should designate representative entities to bring representative actions on the basis of clearly defined conditions of eligibility. Among the conditions is that the entity should have a non-profit making character. This looks suspiciously like the system being introduced in France, heavily opposed by the French legal profession, which says that class actions have to pass through a representative entity in order to be submitted to court. The French legal profession points out that this is a novelty whereby for the first time a citizen is not able to have access to justice directly to the court with the assistance of a lawyer of choice, as has been the case to date in French class actions. Rather, the citizen has to pass through a filter first. We will need to examine this proposal closely to see what it means in the context of a European recommendation.
Member states are asked to put in place appropriate measures within no more than two years. After that, the commission will assess the yearly reports of the member states, to decide whether further measures are needed. It means that there might have to be considerable activity in a number of countries over the next two years, since at present, only 16 have judicial collective redress mechanisms: the UK, Denmark, Germany, France, Spain, Portugal, Italy, Greece, Poland, Hungary, Austria, Finland, the Netherlands, Sweden, Malta and Bulgaria. These take a variety of forms, such as court action, out-of-court settlements, alternative dispute resolution or the designation of a representative for the defence of rights in legal proceedings.
At the same time, as part of the same general package, the commission launched a draft directive and regulation on infringements of competition law. This will enable citizens and companies to claim damages in the future when they are victims of breaches such as cartels or abuses of a dominant market position. Unlike the system in use in the US, the proposal does not favour private litigation to repress or dissuade companies from certain behaviour – this will remain the competence of public authorities (the commission or national competition authorities). Its main objective is to allow victims to obtain fair compensation once the infraction has been identified and punished.
The commission says that in only 25% of all antitrust infringement decisions it has taken in the past seven years did the victims seek to obtain compensation. National rules diverge widely across Europe and, as a result, the chances for victims to obtain compensation greatly depend on which member state they happen to live in. The proposed directive aims to remove these practical obstacles.
So we have reading material for the beach this summer after all.
Jonathan Goldsmith is secretary general of the Council of Bars and Law Societies of Europe, which represents about one million European lawyers through its member bars and law societies. He blogs weekly for the Gazette on European affairs