National Consumer Agency

Towards a Coherent European Approach to Collective Redress

April 2011

1. Introduction

The National Consumer Agency (the Agency) welcomes this opportunity to contribute its

views to the EU Commission public consultation process on developing a “coherent

European approach to collective redress.”

The Agency will confine its views to the field of consumer law being mindful however of the

broader applicability of collective redress to other legal spheres where redress could be

better served by facilitating collective mechanisms.

The Agency recognises the efforts at Commission level to develop consumer collective

redress.1The issue continues to attract much discussion not alone by the developments at

EC level but also from practitioners and academics alike. Much commentary alludes to the

dangers of an envisaged collective redress mechanism allowing the development of a class

action system, “…that in other jurisdictions have demonstrated to be susceptible to abuse.”2

The Agency presumes that such ‘abuse’ relates to, inter alia, claims lacking in merit,

contingency fees, punitive damages, opt in/out issues and once such a mechanism is in

place the fear of a movement away from alternative dispute resolution (ADR) processes.

The Agency has a statutory role, under the Consumer Protection Act 2007, in the

development and promotion of ADR processes. At the outset the Agency would declare its

preference for mechanisms other than litigation to resolve consumer disputes and whilst

there is a growing awareness amongst consumers and businesses alike of the merits

associated with resolving disputes other than having to resort to litigation, it is the Agency’s

experience that there remains a cohort of traders within the business community who make

it exceedingly difficult for consumers to pursue bona fide complaints or disputes other than

resorting to litigation. On that basis the Agency accepts that there will always be a place for

litigation on the continuum of dispute resolution. 1 COM (2008) 794, 27.11.2008. 2 Opinion of the European Economic and Social Committee on the ‘Green Paper on Consumer Collective Redress’ at 1.4

The question therefore, from the consumer’s perspective, is whether there can be a more

efficient mechanism other than an individual pursuing a singular action with the attendant

risks and particularly where the value at issue is of a low order. Litigation in Ireland, as

evidenced by the development of Irish court procedures, has generally been considered as

involving two parties. The adversarial system in Ireland is characterised by the principle of

party autonomy. When such parties are evenly matched in terms of resources and capability

then it is difficult to argue the demerits of either party pursuing a litigious resolution to their

dispute.

The reality in consumer law is often much different. The business- to- consumer relationship

is, more often than not, imbalanced. This imbalance is recognised and has been addressed

by a number of safeguards in EU law3. The consumer may be at a disadvantage in terms of

awareness of his or her rights, he or she may not be in a position to finance litigation and

even where there may have been a clear breach of an obligation, the cost of the breach may

be so small that when compared with the cost of pursuing a legal remedy it may not make

economic sense to pursue such a solution.

A collective remedy whereby a number of consumers who had been subjected to the same

or similar breach could pool their collective resources and efforts would go some way

towards addressing the current shortcomings. The Eurostat publication, ‘Consumers in

Europe’ suggests the development of a European group action procedure could;

“…improve competitiveness as a result of changing the way the internal market functions,

giving consumers more confidence to shop abroad, facilitating access to justice, minimising

litigation costs, reducing discrimination and being generally advantageous to compliant

businesses.”4

3 Directive 93/13 on unfair terms in consumer contracts (given effect in Ireland by S.I. 27 of 1995) and Directive 99/44 on certain aspects of the sale of consumer goods and associated guarantees (given effect in Ireland by S.I.11 of 2003) are Directives which according to Weatherill, in EU Consumer Law and Policy, Elgar, 2005 challenge the very notion of contractual autonomy. 4 Eurostat, (2009) Consumers in Europe, Luxembourg, Office for Official Publications of the European Communities, p.125

Collective redress is becoming a recurring theme as we consider how best to address

consumer issues in the future. There have been considerable improvements in substantive

law as it relates to consumer rights. It is appropriate that consideration be now extended to

improving collective access to consumer justice.

Q.1 What added value would the introduction of new mechanisms of collective redress

(injunctive and/or compensatory) have for the enforcement of EU law?

A.1 The National Consumer Agency would suggest that the absence of any class action

remedy is a deficiency in the enforcement of consumer rights. The presence of a class

action remedy would offer individuals with claims of a small or minor nature an additional

practical opportunity to receive justice. In the US it is widely recognised that class action

procedures are required to enforce the rights of small claim plaintiffs. This particular issue

was recognised in the seminal US case of Amchem Products, Inc. V. Windsor5 where the

disadvantages of individual actions were recognised as resulting in;

“…long delays (are) routine, trials are too long; the same issues are litigated over and

over; transaction costs exceed the victims’ recovery by nearly two to one; exhaustion

of assets threatens and distorts the process; and future claimants may lose

altogether.”6

When the European dimension is considered then the problems become even more

magnified. A consumer when contemplating initiating proceedings in a cross-border

environment is faced with a number of additional obstacles. Language difficulties, accessing

national provisions and dealing with unfamiliar legal jurisdictions have the potential to

overwhelm even the most resolute of consumers. With consumer complaints, the practical

aspects of pursuing a course of action that is economically not viable are plainly obvious

when one considers that the litigation costs will often surpass the value of the claim.

The question posed refers to the enforcement of EU law. The obstacles to the enforcement

of EU law in the hands of private consumers that have been just detailed suggest that some

form of additional or supplementary measure is required. Directives such as 93/13/EC, which

5 521 U.S. 591, 617,117 S. Ct.2231, 138 L.Ed. 2d 689 (1997) 6 Report of The Judicial Conference Ad Hoc Committee on Asbestos Litigation 2-3 (Mar 1991)

has been alluded to, are recognition that particular breaches of consumer protection law are

not capable of being countered or tackled by reliance on private actions alone.

A class action mechanism would go some way to addressing deficiencies as outlined,

therefore the added value is self-evident.

Q.2 Should private collective redress be independent of, complimentary to, or subsidiary to

enforcement by public bodies? Is there need for coordination between private collective redress

and public enforcement? If yes how can this co-ordination be achieved? In your view are there

examples in the Member States or in third countries that you consider particularly instructive for

any possible EU initiative.

A.2 The creation of an integrated market lies at the heart of the EU’s objectives. However

as one commentator observes, “…there is no intent to set aside the existence of different

legal jurisdictions.”7 On the basis that many consumer claims will be small and therefore

there may be a reluctance to pursue a legal remedy and given the cross- border element

and the unfamiliarity with different legal systems, it is understandable that some consumers

may be dissuaded from progressing their efforts to access justice. Collective redress

mechanisms may be efficient because they provide an effective mechanism “… for

aggregating multiple small claims that would otherwise not be brought,” however “… the low

recoveries that consumers are likely to receive may minimise their value to individuals.” 8

Collective actions for minor claims may still prove too costly yet the Agency would not favour

a situation where such defects would go unchallenged because of the reluctance of

consumers to pursue a remedy through the class action procedure.

Other consumers may not be impeded by such barriers therefore it is the NCA view that any

such collective redress should be complimentary to enforcement by public bodies. It goes

without saying that any envisaged enforcement will be in the criminal arena. With respect to

co-ordination there is nothing preventing a civil action running in tandem with a criminal

prosecution however the question is vague as to what actions the co-ordination would be

directed towards. Does it refer to parallel proceedings? Or does it refer to individual actions

running in tandem with an envisaged class action? 7 Weatherill, S. EU Consumer Law and Policy, Elgar (2005), p.227 8 Gillette, C. 2006 ‘Rolling contracts as an Agency problem’ in Consumer Protection in the age of the ‘Information Economy’ ed J.Winn, USA, Ashgate, p.257

By way of illustration of the benefits that a co-ordinated approach could bestow on

consumers, the Agency is empowered under the Consumer Protection Act 2007 after having

secured a conviction against a trader under the Act to “…apply to the court for an order

requiring the trader to pay an amount of money the court considers appropriate

compensation in respect of any loss or damage to that consumer resulting from that

offence.”9 Furthermore such an order may be granted following either a summary trial or a

trial on indictment and may be made in addition to or instead of a fine that the court may

impose. For this provision to work effectively there is a requirement for co-ordination

between the private and public efforts due to the requirement for the consumer to provide

consent to the Agency’s application on their behalf. It is worth reiterating that the orders

referred to can only be granted after a criminal conviction has been secured under the

Consumer Protection Act 2007 and dos not apply to actions under other legislative

provisions or civil proceedings.

9 S.81(1), Consumer Protection Act 2007

Q.3 Should the EU strengthen the role of national public bodies and/or private representative

organisations in the enforcement of EU law? If so, how and in which areas should this be done?

A.3 In answering this query it is worth considering the obligations under EC law to guarantee its

effective implementation. This implementation lies with the State. For infringements of specific EC

law there is not only a right to a procedural remedy but also as the European Court, commenting on

the effective implementation of EC Directives, stated that any sanctions must be effective,

proportionate and dissuasive.10 The Agency derives its enforcement powers from national legislation

giving effect to EC instruments and to date the Agency experience is that they are adequate. As to

the role of the Agency, it too is derived from the principal act. A difficulty in implementing any

legislative change is the lack of authority on the part of the EU in effecting or introducing changes to

national judicial process or procedural rules. That point is beyond the scope of this submission and

will not be developed.

The Agency would support an initiative that would provide, on a statutory basis, an authority for

representative bodies to pursue collective actions. Such bodies would be subject to requirements as

to establishment and accountability to ensure they have a legitimate interest or standing in the

proceedings and operate in a transparent manner.

10 Case 68/88 Commission V Greece [1989] ECR 2965

Q.4 What in your opinion is required for an action at European level on collective redress

(injunctive and/or compensatory) to conform with the principles of EU law, e.g. those of

subsidiarity, proportionality and effectiveness? Would your answer vary depending on the area in

which action is taken?

A.4 A Directive would be required at first instance. The accepted principle is that it is for national

authorities to decide how to implement and enforce the provisions of EC Directives. This would give

rise to the requirement for primary legislation at national level. Under Article 4 of the Treaty of the

European Union there is a duty imposed on Member States to take all appropriate measures to

ensure fulfilment of the obligations arising out of EU law. This would ensure that national procedural

rules would have to be effective with regard to the enforcement of the conferred rights.

The Agency is not convinced of the utility of any “private enforcement” mechanism, as experience

in the US to date would suggest that “…transactional costs are too high and conflicts of interests can

arise between consumers and intermediaries.”11 Any decision will have to decide whether the

priority is to provide a mechanism that will allow for individual redress in the shape of damages

through legal proceedings on behalf of a group or whether to provide the injunctive relief (cease and

desist orders) which would be more concerned with the broader consumer interest.

11 Hodges, C. Response to European Commission Green Paper on Consumer Collective Redress, Oxford (2009) , p.11

Q.5 Would it be sufficient to extend the scope of the existing EU rules on collective injunctive

relief to other areas; or would it be appropriate to introduce mechanisms of collective

compensatory redress at EU level

A.5 Under the Injunctions Directive 2009/22/EC, given effect here by S.I. No.555 of 2010, the scope

of the regulations are extended to 13 Directives. The Directives listed in the schedule are amongst

the primary provisions dealing with consumer protection. The Agency considers that the current

schedule adequately reflects those provisions that should benefit from the envisaged injunctive

procedure. When considering the operation of Directive 98/27/EC (the original Injunctions Directive)

the Commission itself recognised that, “… the injunctive procedure introduced by the Directive does

not provide for consumers who have suffered harm because of an illicit practice to obtain

compensation.”12 The appropriateness or otherwise of a collective compensatory redress

mechanism will be faced with the same difficulties.

There is a valid argument for introducing mechanisms of compensatory relief at EU level as this

would address the possible anomalies that may be present in national provisions. In Ireland, for

example under the Rules of the Superior Courts it is possible to initiate a representative action;

“…where there are numerous persons having the same interest in one cause or matter, one

or more of such persons may sue or be sued, or may be authorised by the court to defend, in

such cause or matter, on behalf or for the benefit of all persons so interested.”13

Whilst this technically allows a class action of sorts, it has one primary drawback in that it would

appear, from the case law to date14, that the litigant must satisfy the court that the parties referred

in the cause or matter have to have authorised the litigant to pursue the action on their behalf. This

results in obvious difficulties once a large number of potential litigants are identified.

12 http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2008:0756:FIN:EN:PDF, p.3 accessed on 10 March 2011 13 Order 15, rule 9, Rules of the Superior Courts 1986 14 see generally Madigan V Attorney General [1986] ILRM 136

Q.6 Would possible EU action require a legally binding approach or a non-binding approach (such

as a set of good practices guidance)? How do you see the respective benefits or risks of each

approach? Would your answer vary depending on the area in which action is taken.

A.6 The Agency is of the view that any approach should be on the basis of a Directive. The merits

associated with this have been outlined in previous answers. The question as to whether the

Directive would be a minimum or maximum harmonisation measure would have to be agreed from

the outset and would more than likely create its own difficulties.

In the interests of a consistent and coherent mechanism the Agency would favour a legally binding

approach.

Q.7 Do you agree that any possible EU initiative on collective redress (injunctive and/or

compensatory) should comply with a set of common principles established at EU level? What

should these principles be? To which principle would you attach special significance?

A.7 “It is fair to say that cross-border disputes are more complex due to the different national laws

and jurisdictions involved, as well as practical matters like culture, language and costs. Even for

skilled mediators, mediating a cross-border dispute is tricky. As a result, all parties to a cross- border

dispute need common rules they can rely on.”15

A foundational set of principles has an obvious utility. The Agency concurs with the thrust of what is

presented as a set of common principles in the discussion document. Whilst a principle providing

that an appropriate level of financing is made available for citizens and SMEs is laudable, the Agency

is unsure as to how this would actually work in practice.

It is the Agency view that one of the primary retarding factors in a consumer pursuing an

appropriate remedy relates to costs. The costs sanction for a failed action is the primary

deterrent/obstacle to contemplated litigation. This can be particularly onerous where the plaintiff

party may have to lodge substantial costs at the outset. The costs issue is further reflective of the

significant imbalance between the parties to any potential collective action and therefore some form

of cost resolution is particularly significant.

15 http://www.mablaw.com/2010/08/european-mediation-update/ accessed on 16 March 2011.

Q.8 As cited above, a number of Member States have adopted initiatives in the area of collective

redress. Could the experience gained so far by the Member States contribute to formulating a

European set of principles?

A.8 Yes. The Agency would suggest that an examination of such initiatives would not be limited to

Member States. The recent Australian developments are significant. Historically Australia has

banned contingency fees and adopted an opt-out approach to representative actions however under

Australian law, the cost of litigation can be funded by a third party in return for a share of the

monies recovered and also there are now arrangements whereby a ‘closed class’ may take

proceedings. A ‘closed class’ being those litigants who have entered into litigation funding

arrangements. These developments have not been without their critics however they should be

considered to arrive at a more holistic view of what would be appropriate in the European context.

Q.9 Are there specific features of any possible EU initiative that in your opinion are necessary to

ensure effective access to justice while taking due account of the EU legal tradition and the legal

orders of the 27 Member States?

A.9 The Agency would support any initiative, which would facilitate ease of access to the different

legal systems. It is obvious that there are significant differences between common and civil law

traditions. The creation of an advisory system, accessible to all citizens of the EU, which would guide

any potential litigants through the legal requirements of each member state, would be a beneficial

initiative.

The Commission’s 1993 Green Paper16 refers to the practice in some Member States of allowing

representative bodies such as consumer organisations to take legal proceedings to counter illegal

commercial practices. Such a facility is laudable however the practical effect of trying to counter an

impugned practice when the trader is outside the State gives rise to difficulties. These difficulties

have been somewhat addressed by the Directive 98/2717 on injunctions for the protection of

consumers interests where any qualified entity from another Member State may bring the matter

complained of before a court or administrative authority designated pursuant to the Directive. A

similar mechanism relating to representative actions would be of considerable assistance in any

envisaged regime.

The Agency is also aware of the facilitative ease afforded by the general rule of recognition whereby

a judgement given in a Member State is to be recognised in another Member State without any

special procedure being required.18The Brussels Regulation however provides for derogations from

this general rule on a number of grounds, one of which (Art 34) relating to recognition of the

16 COM (93) 576 17 given effect in Ireland by S.I. No 449 of 2001 18 Regulation No 44/2001 on jurisdiction and recognition and enforcement of judgements in civil and commercial matters given effect in Ireland by S.I. No 882/2004

judgement being manifestly contrary to public policy in the Member State in which the recognition is

sought. The Agency is not aware of any instance whereby recognition was withheld on this ground.

Q.10 Are you aware of specific good practices in the area of collective redress in one or more

Member States that could serve as inspiration from which the EU/other Member States could

learn? Please explain why you consider these practices as particular (sic) valuable. Are there on

the other hand national practices that have posed problems and how/could these problems be

overcome?

A.10 The Agency has not had any dealings with collective redress practices in other Member States.

As regards national practices, Ireland does not have a tradition of redressing on a collective basis as

it relates to consumer issues. This submission has described recent developments in Australian law .

We see considerable advantages with a number of safeguards within the Australian scheme that

must be satisfied before a class action can commence. Section 33C of Part IVA of the Federal Court

of Australia Act 1976 provides:

(1) Subject to this part, where:

a. 7 or more persons have claims against the same person; and

b. the claims of all those persons are in respect of, or arise out of, the same, similar

or related circumstances; and

c. the claims of all those persons give rise to a substantial common issue of law or

fact;

a proceeding may be commenced by one or more of those persons as representing some or

all of them.

Q.11 In your view what would be the defining features of an efficient and effective system of

collective redress? Are there specific features that need to be present if the collective redress

mechanism would be open to SMEs?

A.11 A defining feature of any proposed system would be one where litigation was only engaged

with as a last resort. Most difficulties are resolvable through either negotiation or conciliation. At the

outset parties should be required to engage with an appropriate ADR mechanism, not simply to have

considered or been introduced to it.

Recent Irish developments relating to the use of ADR processes could be extended to any envisaged

collective redress scheme. Order 56A of the Rules of the Superior Courts which came into operation

on the 16th of November 201019is a good example. Order 56A provides that the Court may invite the

parties to use an ADR to settle or determine the proceedings or issue. ADR in this context includes

mediation or conciliation or ‘another dispute resolution process’ but does not include arbitration. Of

possibly greater significance however is the insertion of a rule 1B of Order 99 which provides that

the Supreme Court or the High Court in considering the awarding of costs of any appeal or of any

action, may, where it considers it just, have regard to the refusal or failure without good reason of

any party to participate in any ADR process. This is effectively a costs sanction, which could

potentially result in an adverse costs order for the declining party.

19 Inserted by S.I. No.502 of 2010 Rules of the Superior Courts (Mediation and Conciliation) 2010

Q.12 How can effective redress be obtained while avoiding lengthy and costly litigation?

A.12 Quite simply by endeavouring to keep a resolution mechanism outside the court system except

as a last resort. The Agency believes that the presence of an effective collective redress mechanism

may have the effect of forcing traders, who would not otherwise do so, to consider alternative

means of resolving the dispute. ADR mechanisms such as arbitration or mediation may accelerate

the resolution , at a relatively low cost, of the consumer’s complaint.

Q.13 How, when and by whom should victims of EU law infringements be informed about the

possibilities to bring a collective (injunctive and/or compensatory) claim or to join an existing

lawsuit? What would be the most efficient means to make sure that a maximum of victims are

informed, in particular when victims are domiciled in several Member States?

A.13 This may not be an insurmountable difficulty. Currently the RAPEX system is used to alert

Member States as to product safety issues. A similar system could be utilised to provide a European-

wide register of existing collective actions Solicitors have taken out advertisements in the national

press in the past, which is an effective way of alerting potential parties. Former Commissioner

Kuneva has suggested that information, networking, preparing and managing possible collective

redress actions would allow for effective bundling of individual actions.

Q.14 How (sic) the efficient representation of victims could be best achieved, in particular in cross-

border situations? How could cooperation between different representative entities be facilitated,

in particular in cross-border cases?

A.14 Currently there is an ECC-net facility for the provision of information to consumers on a cross-

border basis. In Ireland the European Consumer Centre (ECC) provides this facility. The CPC

regulations also provide a facility for inter Agency co-operation. The difficulty that the Agency would

see here is the locus of the party who would be entitled to take the collective action.

Q.15 Apart from a judicial mechanism, which other initiatives would be necessary to promote

recourse to ADR in situations of multiple claims?

A.15 There is a role for an ombudsman scheme, or for the deployment of regulatory agencies, which

could raise the profile of any considered scheme and would be a first port of call for an envisaged

action. Due to the expert nature of those agencies they will often be familiar with the technical

issues and therefore the parties will not have to retain their own expert witnesses. Expert

determination should not be confused with arbitration, as with arbitration the process involves a

degree of adjudication whilst the expert will reach a decision relying on his or her own skill which

will be binding on the parties.20

20See generally, Fenlon, L. (2010) ‘Expert Determination’ in Arbitration and ADR Review, Issue 2

Q.16 Should an attempt to resolve a dispute via collective consensual dispute resolution be a

mandatory step in connection with a collective court case for compensation?

A.16 The Agency would draw your attention to Order 63A of the Irish Rules of the Superior Courts

which created the commercial list in the High court and in particular to Rule 6(1)(xiii) which allows

the Commercial Court judge power to direct that proceedings be adjourned for a period not

exceeding 28 days to allow the parties to consider referring their dispute to a process of mediation,

conciliation or arbitration. The Hon. Mr Justice Peter Kelly is on record as stressing the importance of

the voluntary nature of the ADR in that if individuals are forced into mediating their dispute then it is

unlikely to be successful. The Agency has done some research in this area and our information

suggests that even though the process is voluntary, the fact that a judge has suggested it, as

opposed to directing, parties will feel under some compunction to engage. The Agency has

expressed a supporting view in Q.11

Q.17 How can the fairness of the outcome of a collective consensual dispute resolution best be

guaranteed? Should the courts exercise such fairness control?

A.17 There must be an acceptance or realisation that no system can ever guarantee absolute

fairness. However the Agency would accept the requirement for some judicial oversight. This may

fall foul of the role of the courts under particular provisions such as the Arbitration Act 2010 where

unless the Court has been accorded a specific role under the UNCITRAL Model law then it cannot

intervene. It may also prove problematic under the EU Directive on certain aspects of mediation in

Civil and Commercial matters where one of the directives five main provisions is that mediation

confidentiality must be assured and mediators cannot be compelled to give evidence. Those two

examples are indicative of the oversight difficulties in the current ADR regime. Currently under the

Rules of the Superior Courts any award to a minor can only be finalised with the consent of the

Court. This may have some use in terms of the Court giving its blessing to any agreement in a

collective dispute case.

Q.18 should it be possible to make the outcome of a collective consensual dispute resolution

binding on the participating parties also in cases which are currently not covered by directive

2008/52/EC on certain aspects of mediation in civil and commercial matters.

A.18 The Directive was published on 21 May 2008. Ireland has 36 months to give effect to this

Directive. The Agency cannot therefore give an objective assessment of the Directive’s practical

application until it is given effect here. Unless there were compelling reasons not to include

particular issues within its scope then the Agency is not aware of any reason which would suggest

that the Directive should not be extended to other cases.

Q.19 Are there any other issues with regard to collective consensual dispute resolution that need

to be ensured for effective access to justice.

A.19 Once again the Agency would point to the issue of security for costs. Under the Arbitration Act

1954 it was possible for a party to apply to the High court for an order for security for costs. This is

no longer the case under the new regime where there is an express prohibition, unless the parties

agree otherwise, from the High Court making such an order21. The Agency feels that this was a very

progressive provision and recognises that the adjudicatory party should have control over the

process including the issue of security for costs

21 Arbitration Act 2010, Section 10(2)

Q.20 How could the legitimate interests of all parties adequately be safeguarded in (injunctive

and/or compensatory) collective redress actions? Which safeguards existing in Member States or

in third countries do you consider as particularly successful in limiting abusive litigation?

A.20 There will always be the concern that by allowing a collective approach to litigation, that the

rights of individuals may be somewhat infringed or subjugated. This risk could be addressed by

requiring a court approval stage in order to allow for the exclusion of those cases, which would not

be suitable for collective redress action. Central to any such envisaged scheme would be a process

that would alert members to the application and allow members to either opt-in or out-out as the

case may be.

Q.21 Should the “loser pays” principle apply to (injunctive and/or compensatory collective actions

in the EU? Are there circumstances, which in your view would justify exceptions to this principle?

If so should these exceptions rigorously be circumscribed by law or should they be left to case-by-

case assessment by the courts, possibly within the framework of a general legal provision?

A.21 In Irish law the “loser pays” principle is provided for in S.I. 15/1986, Rules of the Superior Courts

Order 99 which states that costs will follow the event. Whilst accepting that the Courts do retain

discretion in deciding the costs issue, the Agency is also aware that in 2007 the Commission referred

the State to the ECJ for failing to address the requirement that access to a review procedure under

Directive 2003/35/EC not be prohibitively expensive. The Courts have been particularly clear on the

circumstances in which they will depart from this principle and the following dictum from Sinnot V

Martin is particularly illustrative:

“The proceedings did not fall within the truly exceptional category whereby the court could

award on the basis that the proceedings involved issues of public importance, as the parties

participated in the proceedings in order to protect their own private interests and stood to

gain some possible advantage.”22

Whilst the Agency recognises that the “loser pays” principle is part of the fabric of the Irish system, it

is also worth considering what some call the “American Rule” where a successful litigant is not

generally allowed recover the costs of his legal representative as damages or reimbursable costs.23

Q.22 who should be allowed to bring a collective redress action? Should the right to bring a

collective redress action be reserved for certain entities? If so, what are the criteria to be fulfilled

by such entities? Please mention if your reply varies depending on the kind of collective redress

mechanism and on the kind of victims (e.g. consumers or SMEs)

A.22 The Agency see considerable merit in introducing locus standii concessions along the lines as

that introduced for Environmental NGOs in the Planning and Development (Strategic Infrastructure)

Act 2006. If it is to be reserved for particular entities then the Agency would suggest that such

entities would have the relevant expertise to pursue the action. Under Norwegian law an action may

be commenced by anyone who belongs to the actual collective class of persons who have suffered

the detriment complained of. The right is also extended to associations or public bodies if the action

falls within what is termed, ‘the scope of their purpose and field of activity.’ The Agency would

consider it preferable that the entity should be of some standing and at least be in existence prior to

the event that gives rise to the contemplated action.

22 Sinnot V Martin [2004] 1 IR 122 23 Grace V Ludwig 484 F.2d 1262, 1267 (2d Cir.1973)

Q.23 What role should be given to the judge in collective redress proceedings? Where

representative entities are entitled to bring a claim, should these entities be recognised as

representative entities by a competent government body or should this issue be left to a case-by-

case assessment by the courts?

A.23 Are we presuming that a judge will sit in deliberation of the proceedings? If this were so and

outside an ADR (non-judicial) mechanism then it would seem obvious that the judge will determine

the issue and make the relevant orders to redress the grievance. There is also a benefit in allowing

the judge (or the court as the case may be) in approving the commencement of the action as well as

the extent of the class members.

The Agency has expressed an opinion in the prior question (Q.22). Additionally, The Agency feels it

may be possible to consider the locus standii question on a case-by-case basis. It may not be that

difficult to provide a preliminary procedure whereby the court could determine if the entity had the

sufficient interest and/or expertise to pursue the matter. I have reproduced Article 10(a) of Directive

2003/35/EC below and what should be noticeable is the level of flexibility given to Member States in

deciding the question of access to justice;

1. Member States shall ensure that, in accordance with the relevant national legal

system, members of the public concerned:

(a) having a sufficient interest, or alternatively,

(b) maintaining the impairment of a right, where administrative

procedural law of a Member State requires this as a precondition, have

access to a review procedure before a court of law or another

independent and impartial body established by law to challenge the

substantive or procedural legality of decisions, acts or omissions subject

to the public participation provisions of this Directive.

2. Member States shall determine at what stage the decisions, acts or

omissions may be challenged.

3. What constitutes a sufficient interest and impairment of a right shall be

determined by the Member States, consistently with the objective of giving

the public concerned wide access to justice. To this end, the interest of any

non-governmental organisation meeting the requirements referred to in

Article 1(2) shall be deemed sufficient for the purposes of subparagraph (a)

of this Article. Such organisations shall also be deemed to have rights

capable of being impaired for the purpose of subparagraph (b) of this

Article.

4. The provisions of this Article shall not exclude the possibility of a

preliminary review procedure before an administrative authority and shall

not affect the requirement of exhaustion of administrative review procedures

prior to recourse to judicial review procedures, where such a requirement

exists under national law.

5. Any such procedure shall be fair, equitable, timely and not prohibitively

expensive.

6. In order to further the effectiveness of the provisions of this article,

Member States shall ensure that practical information is made available to

the public on access to administrative and judicial review procedures.

Q.24 which other safeguards should be incorporated in any possible European initiative on

collective redress?

A.24 If any envisaged initiative was primarily predicated on an opt-out basis, then the option should

be exercised within a relatively short time frame to ensure some level of certainty as to the size of

the class concerned. All those who had not opted out within the time allotted will be deemed to

have been bound by the settlement. Such a time frame would be at the discretion of the judge.

Q.25 How could funding for collective redress actions (injunctive and/or compensatory) be

arranged in an appropriate manner, in particular in view of the need to avoid abusive litigation.

A.25 With great difficulty! Under the Irish Civil legal Aid Act 1995 which is the primary civil legal aid

scheme (along with the civil legal aid regulations) collective redress/representative actions are

generally excluded from assistance. The funding mechanism of last resort would, in the Agency view,

be contingency fees. The Agency has outlined the more recent developments in Australia relating to

third party funding.

However if security for costs issues, which we have dealt with earlier, were to be adequately

addressed so as to remove the costs threat then it might prove less burdensome. Certainly the

presence of an ‘open account’ may prove counter productive. It may be worth considering whether

an ADR system could be industry funded.

Q.26 are non-public solutions of financing (such as third party funding or legal costs insurance)

conceivable which would ensure the right balance between guaranteeing access to justice and

avoiding any abuse of procedure?

A.26 The Agency has reservations concerning access to justice being in any way contingent on the

chances of a ‘victory’. Third party funding decisions will be based upon commercial considerations

whilst legal costs insurance may be prohibitively expensive and not even available for some sectors.

Q.27 Should representative entities bringing collective redress actions be able to recover the costs

of proceedings, including their administrative costs, from the losing party? Alternatively, are there

other means to cover the costs of representative entities?

A.27 Any discussion on recovery of costs would benefit by considering the effect of Protective or

Pre-emptive Costs Orders. These orders provide a potentially effective legal mechanism for

quantifying the risk of costs at the outset of proceedings and thus ensuring that the review

procedure is not overly or unduly expensive. These orders can either limit or remove costs liability

for the party in whose favour the order is made, irrespective of the outcome of the challenge. The

protective costs order jurisdiction emerged in the context of public interest litigation. Essentially, a

public interest case is one that raises issues of wider public importance, beyond the interests of the

parties, so that the public interest is served by resolution of those issues. The Agency is not aware of

a protective costs order being made by the courts in this jurisdiction however in principle they have

been approved. Taxation of costs remains as a facility to contest the quantum of a costs order

however this is something that happens after the event.

Q.28 are there further issues regarding funding of collective redress that should be considered to

ensure effective access to justice?

A.28 The Agency is aware of a facility in the UK’s Legal Services Act 2007, section 194 that provides

for payments in respect of pro bono representation. The provision is deserving of further

consideration where it could be extended to similar financing arrangements.

Q.29 are there to your knowledge examples of specific cross-border problems in the practical

application of the jurisdiction, recognition or enforcement of judgements? What consequences did

these problems have and what counter –strategies were ultimately found?

A.29 N/A to the Agency

Q.30 Are special rules on jurisdiction, recognition, and enforcement of judgements and/or

applicable law required with regard to collective redress to ensure effective enforcement of EU

law across the EU

A.30 If a consumer chooses to pursue a court action, complicated questions relating to choice of law

and choice of forum are triggered. For EU Member States, the Brussels Regulation 24 which for these

purposes replaces the Brussels Convention 25 and the Rome Convention26 primarily governs such

questions in relation to consumer contracts. Article 5 of the Rome Convention allows for a choice of

law in consumer contracts, although this by no means clarifies the matter. Where a contract was

concluded by the consumer in his or her own country and was induced by advertising or specific

invitation, the laws of that country will apply and its courts will have jurisdiction. This will be

24 Council Regulation (EC) No. 44/2001 of December 22, 2000 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters. 25 The European Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters, Brussels, 1968 26The European Convention on the Law Applicable to Contractual Obligations, Rome, 1980.

irrespective of whether there is a choice-of-forum clause in the contract. If there is a choice-of-law

clause in the contract, the consumer will still be afforded the mandatory protections of their

domestic legal system. Any revised process should have as its primary focus a simplification of the

system as it currently pertains to consumers.

Q.31 Do you see a need for any special rules with regard to collective redress in cross-border

situations, for example for collective consensual dispute resolution or for infringements of EU

legislation by online providers for goods and services?

A.31 Online Dispute Resolution is worthy of a study in itself however the Agency would make the

following brief observations. The Internet Corporation for Assigned Names and Numbers (ICANN)

has a uniform dispute resolution policy where third parties who would otherwise have to go to Court

to resolve domain name infringements. This has proved spectacularly successful. A similar system

could be applied for collective infringements with ramifications for the domain name should the

trader decide not to engage with the dispute resolution mechanism.27

Q.32 Are there other common principles, which should be added by the EU?

A.32 The Agency has given its view on this area in earlier questions.

Q.33 Should the Commission’s work on compensatory collective redress be extended to other

areas of EU law besides competition and consumer protection? If so, to which ones? Are there

specificities of these areas that would need to be taken into account?

A.33 The Agency would restrict its views to the area of consumer protection.

Q.34 Should any possible EU initiative on collective redress be of general scope, or would it be

more appropriate to consider initiatives in specific policy fields?

27 I have literally scratched the surface with this. For more I would refer you to Internet Law and Regulation (Smith & Bird) Third edition (2002) 3-069 to 3-077

A.34 The Agency is of the opinion that a generic collective redress procedure could operate in

tandem with a sector specific initiative as would be required in the field of consumer protection. By

way of example, if an envisaged generic system did not deal with the ‘costs-following-the-event’ rule

that we have referred to earlier then it would be of little use to consumer claims which when taken

collectively can be considerable but as individual claims may be of a low value. Therefore a sector

specific provision on costs would be required.