For The Defense, November 2012 - DRI Today

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