For The Defense, November 2012 - DRI Today
For The Defense, November 2012 - DRI Today
For The Defense, November 2012 - DRI Today
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Think Globally<br />
Another Step <strong>For</strong>ward<br />
European-Style Class Actions<br />
By Dr. Thomas Rihm<br />
<strong>The</strong> prospect of European- style class actions took<br />
another step forward recently when the European Parliament<br />
passed a resolution emphasizing the need to<br />
legislate a standard approach toward collective redress,<br />
that is, class actions. This column provides an overview<br />
of this recent resolution and an update on existing class<br />
action laws throughout the European Union.<br />
In this recent resolution, the European Parliament<br />
underscored the need for a judicial framework applicable<br />
to all legal entitlements that would ask courts in Europe<br />
to deal with mass claims according to a uniform, “horizontal<br />
framework” across the entire European Union.<br />
Earlier efforts by the European Commission on collective<br />
redress mainly focused on consumer protection<br />
and competition law and used different approaches in<br />
different sectors. In the recent resolution, the European<br />
Parliament also resolved that it should not introduce<br />
American- style, U.S. class actions through legislation<br />
that would adopt certain practices such as extensive<br />
pretrial discovery procedures, punitive damages, contingency<br />
fee arrangements, and the U.S. legal system<br />
tradition that parties must bear their own legal costs<br />
regardless of the outcome of litigation.<br />
<strong>The</strong> European Parliament emphasized in the resolution<br />
the importance of taking a opt-in approach that<br />
required an action for collective redress to identify and<br />
to make known all claimants seeking the collective<br />
redress when they filed a claim for collective redress, as<br />
opposed to the U.S. framework, which provides res judicata<br />
for all claimants who have not opted out before litigants<br />
agree to a settlement or a court hands down an<br />
award. <strong>The</strong> European Parliament resolution offers guidance<br />
to the European Commission in its further legislative<br />
work on collective redress in <strong>2012</strong> and the following<br />
years.<br />
While the “top-down approach” taken by the European<br />
Commission and the European Parliament has<br />
received well- deserved public attention over the last<br />
years, a majority of 27 European Union members countries<br />
had passed almost unnoticed collective redress legislation<br />
in the last two decades, including, among others,<br />
France in 1992, Portugal in 1995, the United Kingdom,<br />
■■<br />
Dr. Thomas Rihm is a senior partner with the mid-sized business law firm of<br />
Thouvenin Rechtsanwälte in Zürich with more than 20 years of experience in dispute<br />
resolution and arbitration, particularly focusing on shareholder litigation battles<br />
and disputes dealing with private company takeovers and D & O liability cases. Think Globally, continued on page<br />
in the French- influenced and Italian- influenced parts of<br />
81<br />
78 ■ <strong>For</strong> <strong>The</strong> <strong>Defense</strong> ■ <strong>November</strong> <strong>2012</strong><br />
without Scotland, and Spain in 2000, Sweden in 2003,<br />
Germany and <strong>The</strong> Netherlands in 2005, Italy and Greece<br />
in 2007, Bulgaria in 2006 and 2008, Denmark in 2008,<br />
and Poland in 2010.<br />
It does not come as a surprise that these collective<br />
redress regimes are as diverse as these European Union<br />
member countries. Significant differences exist, to name<br />
just a few, in terms of available legal reliefs, such as mere<br />
injunctive judgements as opposed to judgements also<br />
granting damage awards; in terms of how victims have<br />
the right to sue, such as only through consumer associations<br />
or as individual claimants grouped together in a<br />
class of claimants; in terms of procedures, such as optin<br />
as opposed to opt-out classes; or whether the regimes<br />
permit lawyers’ contingency fee arrangements or thirdparty<br />
litigation funders.<br />
<strong>For</strong> example the Swedish Class Action Act of 2003<br />
offers a collective redress system that comes close to U.S.<br />
class actions under rule 23 of the U.S. Federal Rules of<br />
Civil Procedures. <strong>The</strong>n there is France, which entrusts<br />
claim enforcement, including damage compensation,<br />
only to governmentally approved nonprofit associations<br />
in the consumer and financial market law areas.<br />
Austria has a system similar to France whereby not- forprofit<br />
associations can represent one or more claimants<br />
through an assignment of claims.<br />
<strong>The</strong> United Kingdom has taken yet another but rather<br />
innovative approach through its group litigation order<br />
(GLO) or GLO- system, a procedural judicial management<br />
mechanism that allows a judge to resolve certain<br />
factual or legal issues, or both, common to a variety of<br />
claimants by an award order, such as the illegality of<br />
certain market actions or the causality between illicit<br />
actions and resulting damages. However, claimants<br />
and claimants’ entitlements are not collectivized in any<br />
form, so claimants remain individual trial parties from<br />
the moment that they file their court actions until a dispute<br />
is resolved, though individual claimants may benefit<br />
from a positive GLO award.<br />
Switzerland enacted in 2011 a new Civil Procedural<br />
Code, thereby replacing the 26 civil procedural codes<br />
corresponding to the 26 different Swiss “cantons,” akin<br />
to federated states, in effect for more than a 100 years<br />
and under which particular difficulties existed in reconciling<br />
the trial systems of the Latin cantons existing