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A typology of collective redress cases

Up to 2008, approximately 326 collective redress cases took place in Member States, of which approximately 10 per cent had a cross-border implication for the EU.[1] Interestingly, a close analysis reveals that a high number of the cases actually occurred in four broad areas of consumer law, described in this section.

A large number of collective redress cases (39 per cent) concerned financial services,[2] which were further increased by the financial crisis. An example in this sector is the Dexia case,[3] in which private investors lodged a mass claim in 2005 in the Netherlands against Dexia for losses suffered from a financial product. After the court trial, the consumer associations and the bank reached a settlement agreement, which was approved in 2007 by the Amsterdam Court of Appeal and declared binding.[4] This entitled around 300,000 investors to compensation for the shareholder losses of their share-lease contracts with Dexia. However, consumer claims with cross-border elements were excluded from the settlement indicating difficulties for individuals living outside the Netherlands to resolve the dispute. More far-reaching was the decision taken in the Dutch Shell case in 2009, where a US$ 352.6 million settlement agreement was approved by the Amsterdam Court, which included investors residing in 100 jurisdictions.[5] The Court therefore took jurisdiction over individuals residing outside the Netherlands. However, it remains to be seen if courts in other Member States will accept this decision.

A second category of large collective actions relates to telecommunications services (12 per cent).[6] An important example in this regard is the French mobile phone case. After the French competition board imposed a penalty for a collusive agreement among mobile phone operators in November 2005, a French consumer association created a website to help consumers calculate the individual damage they had suffered.[7] Despite this, only a very small number of consumers participated in the claim: eventually, only 0.6 per cent of the 20 million subscribers who could have been compensated subscribed to the webpage set up for complaints.[8] This may suggest that the law is poorly adapted to collective actions, and that dispute resolution could be simplified in France by allowing ‘opt-out’ procedures for specific types of actions.

A third area of law in which collective redress mechanisms have often been used are transport (8 per cent) and package tourism (7 per cent). A significant example of collective redress in the transport sector occurred in Sweden in 2003, following the bankruptcy of a travel agency.[9] Here, about

700 aeroplane passengers had to buy new tickets, as the travel agency could not comply with its obligations. Five hundred of these passengers chose to be group members of a collective redress action. For the first time, after this case, a collective redress mechanism was introduced in Sweden in order to deal effectively with multi-party cases. In another case, a group of Austrian tourists had fallen ill at the same time, because of food-poisoning in a holiday resort in Turkey in 2004.[10] A consumer association brought a test case against the Austrian tour operator, and the harmed tourists received compensation. However, here effective litigation was restricted, because of the lack of a wider collective redress procedure for cross-border cases. For example, a group of Swiss tourists who were harmed at the same resort in Turkey could not be represented by the Austrian association, because their tour operator was located in another country.

Finally, collective redress mechanisms are increasingly applied in product liability cases. This has been shown in the tobacco litigation cases in some Member States, as well as in product litigation cases in the pharmaceutical sector. For instance, the majority of Group Litigation Order claims in the UK involved pharmaceutical product liability claims.[11]

These cases show that, at a national level, collective redress procedures can effectively improve dispute resolution in certain areas of law. However, they also demonstrate that although a growing number of consumers in different EU countries may have the same interests in very similar claims, shortcomings may prevail when it comes to cross-border claims.[12] Furthermore, the areas in which consumers find it most difficult to resolve mass claims (such as financial services and package tourism) are precisely those where they are likely to engage in cross-border activities.[13] This indicates that a collective redress mechanism allowing consumers from different Member States to file or settle a claim jointly could be desirable and effective to improve access to justice.

Interestingly, a large number of cases concern recently privatized markets, such as those for telecommunications or energy, which are of essential importance to consumers. This raises the question of whether it would be worth introducing sector-specific collective cross-border mechanisms, or if a general redress tool could fit all cases.

Summing up, the lack of transnational collective redress provisions may make cross-border purchases less attractive for consumers, creating a gap in consumer protection, and, moreover, resulting in an indirect obstacle to inter-Community trade. How, then, can procedural consumer rights be improved at the EU level?

  • [1] According to the Collective Redress Study (n 31), pp. 42-4: on average, the value claimed wasbetween €10,000 and €99,000, with some countries also including cases of more than €5 million;the average individual consumer claim represented a value between €100 and €999.
  • [2] Collective Redress Study (n 31), p. 41.
  • [3] Dexia decision, Amsterdam Court of Appeals, 25 January 2007, LJN:AZ 7033.
  • [4] This settlement procedure was made possible by legislation that came into effect in theNetherlands in July 2005—the Dutch Act on Collective Settlement of Mass Damages (‘WetCollectieve Afwikkeling Massaschade’—WCAM).
  • [5] In this case investors were compensated for losses suffered after a decrease in the value of Shellsecurities and for allegedly incorrect information provided by the company about its oil and gasreserves: .
  • [6] E.g. in a Swedish electricity case, the Swedish Consumer Ombudsman filed a case for about7000 consumers against a company which supplied electricity under a fixed price contract. Theprice actually charged for the new supply of electricity was considerably higher than the pricepreviously agreed upon with the company, Oe 522-05 Court of Appeal.
  • [7] The association invested considerable financial means: about 21 employees and €300,000.
  • [8] A more successful example took place in 2004, against an overcharging telecommunication company in Portugal, which affected about 3 million consumers. The compensation to these consumerswas largely in kind and non-monetary, Proc. 781/95; Comarca de Lisboa, 5° Juizo Civel, 1a Sec?ao.
  • [9] Swedish travel agency case T 1281-07 B./E., filed in March 2003 in Stockholm (T 3515-03),01.04.2007.
  • [10] See Bezierksgericht fur Handelssachen Wien (BGHS), Case 17 C 1148/04d that was brought on09.12.2004.
  • [11] The medicinal products actions were, however, mostly unsuccessful in the UK; see C. Hodges,‘The Civil Litigation System in England and Wales’, in D. Hensler, C. Hodges, & M. Tulibacka(eds), ‘The Globalisation of Class Actions’ , Annals of the American Academy of Political and SocialScience, Special edition, vol 622 (Thousand Oaks, CA: SAGE Publications, 2009), pp. 109-10.
  • [12] In these circumstances consumers may be excluded from actions taken by a consumer organization or a public body. E.g., the Danish Ombudsman stressed that under the current regime itis difficult to represent consumers outside the country of their residence or to defend the rightsof foreigners who have suffered a loss from a company located abroad; see the Danish ConsumerOmbudsman website, at: .
  • [13] Green Paper on Consumer Collective Redress, European Commission, COM(2008) 794final, p. 4.
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