Across Europe, many countries, as well as the European Union, are considering the adoption of harmful new legal procedures.
In the EU, the European Commission has considered over time that its Member States adopt collective action regimes for claims based on consumer rights, competition, environmental violations, personal data privacy, financial services and investor protection. In 2013, the Commission released a Recommendation on Collective Redress that invited Member States to adopt some form of redress by July 2016. The EU's recommendation also urge the adoption of key safeguards in any collective redress regime, including restrictions on contingency fees, requiring class members to “opt-in” to a case rather than “opt-out,” and a prohibition on punitive damages. The recommendation also includes limited safeguards relating to the use of third-party litigation funding. In addition, the European Parliament approved ILR-supported legislative proposals in March 2013 that encourage Alternative Dispute Resolution (ADR) as an alternative to litigation.
A significant EU policy decision may be made in 2017 as the European Commission evaluates how Member States have, or have not, implemented its 2013 Recommendation.
To contribute to this evaluation, ILR released a study in March 2017 on the growth of collective redress mechanisms and troubling litigation trends in key EU Member States, including Austria, Belgium, Bulgaria, France, Germany, Italy, the Netherlands, Poland, Spain, and the UK. The ten countries studied represent 82% of the GDP and 79% of the population of the EU.
ILR's study shows that collective redress systems are growing across Europe, with almost evry Member State now having at least one was for claimants to combine their claims and sue for damages before national courts. Member States have been accelerating the introduction of policies to facilitate lawsuits and reduce or eliminate traditional litigation safeguards. The report also finds that Member States have failed to implement or maintain important safeguards for collective redress, despite being called for by the EU Recommendation.
There are also troubling developments at the EU Member State level.
In the UK, contingency fees are now available for some types of claims, the longstanding loser pays system has been curbed for some litigation, and the Department for Business Innovation and Skills introduced "opt-out" private actions for damages based on competition law violations. The Netherlands and Germany are also considering the creation of collective litigation regimes. Belgium, France, Italy, Poland, Portugal, Spain, and several other European nations already allow collective actions.
Developments in the next few years will go a long way towards determining future legal trends in Europe. A 2013 study by NERA Economic Consulting found much lower liability costs in continental Europe when compared with the United States, Canada, and the UK. This advantage could erode, however, if Europe continues to adopt problematic U.S.-style legal procedures.
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