France

France has debated the introduction of class actions – commonly called “collective actions” or “collective redress” – into French law for many years. President Sarkozy’s administration has postponed its work on a draft bill, which has not been publicly circulated. The French Senate and the Chamber of Deputies (lower house) have also considered moving forward with their own proposals, but have yet to proceed. The class action debate may nonetheless resurface during France’s presidential and legislative elections in 2012.

Meanwhile, the French financial markets authority “Autorité des Marchés Financiers” (AMF) has been considering the introduction of U.S.-style securities class actions into French law. An AMF-led working group created last year and chaired by Jacques Delmas-Marsalet and Martine Ract-Madoux issued a report in January 2011 on issues related to securities litigation and investor compensation. [See report in French at www.amf-france.org/documents/9822_1.pdf and a partial translation in English here.]

The AMF subsequently launched a public consultation which closed on March 15, 2011. [See AMF Press Release in French at www.amf-france.org/documents/9823_1.pdf and a translation in English here.]

ILR filed comments to share its concerns that authorizing investor class actions would lead to significant abuse of the French litigation system, distort French financial markets, and impose significant competitive burdens on French companies. ILR’s comments note that investor class actions are fundamentally illogical from a compensatory perspective and that they impose substantial and unjustified costs on businesses, shareholders, consumers, and the economy as a whole. Finally, ILR’s comments stress the overwhelming evidence that public mechanisms for investor compensation are much more effective than class actions at compensating investors harmed by financial market fraud. [See ILR’s comments in response to the AMFReport on the Compensation for Damage Suffered by Savers and Investors.]