“European consumer action lawsuit” – legal sin on the way to a “collectivist legal action”?

1. Basic content, concerns

The draft “Directive on a representative action to protect the collective interests of consumers”, Commissioner Vera Jourová on 11 April 2018 presented is said to be a “new deal for consumers” (cf. zpo-blog of 22 April 2018, www.zpo-blog.de). Consumer protection associations and qualified institutions should be able to file claims as a representative action for a large number of consumers if these associations or institutions

• are duly established in accordance with the rules of the Member State and

• are registered in a public register. For this,

• they must demonstrate that they have an interest in ensuring compliance with EU law, and

• must not have a profit-making intent.

Also ad hoc designations for a specific collective action should be possible.

The objective of the Directive is to apply to infringements of 59 enumerative legal acts listed in Annex I. These include consumer protection (product liability directive, directive on sales of consumer goods and related guarantees, pricing, compensation for flight passengers), telecommunications (universal service directive, data protection directive for electronic communication), environment, energy, financial and insurance services (UCITS, cross-border payments ), traffic and pharmaceuticals.

1. Existing portfolio of collective legal right

A representative action is commonly understood as the claim of a legal person (association or federation) to assert rights of members of the association and not only of the association itself. In particular, it serves to assert and enforce interests, which the association has set in their statutes as their assigned task.

Traditionally, people in Germany tend to be suspicious of this possibility of action or even suspect it as a “witches’ brew”, as has already been pointed out (cf. blog of April 22, 2018, www.zpo-blog.de). However, the consumer action lawsuit would not be a procedural-law sin in Germany, let alone a first one. Because the collective action (“Verbandsklage”) is not new in German law:

A representational “collective” action is well-known in particular  in the field of unfair competition (UKlaG / Act on “Verbandsklagen” and pursuant to UWG / German Act on Unfair Competition), in environmental and nature conservation law, but also in social law

1. In competition law, not only competitors but also associations with legal capacity for the promotion

    of commercial or self-employed professional interests are allowed to file law suits. Qualified institutions may be included in the list pursuant to § 4 UKlaG or the list of the Commission of the EU pursuant to Art. 4 of RL 98 / 27 /  EC are registered as well as Chamber of Commerce and Chamber of Crafts sue business  participants for unfair competition. In concrete terms, this extends the UKlaG to ineffective  provisions according to §§ 307 – 309 BGB (German Civil Law Code), violations of other consumer protection laws or § 95 b Abs. 1 UrhG (German Act on Copyrights).

2. Earlery on, a corresponding legal remedy was already provided for in the Federal Nature

    Conservation Act. Since 2006 pursuant to § 64 BnatSchG (Act on the Preservation of Nature Conservation Law), an association recognized in accordance with

• 3 UmwRG (Umweltrechtsbehelfsgesetz / Act on Legal Remedies in Environmental Matters) can lodge legal remedies under the VwGO (Act on Procedural Law in Administrative Law Matters). These are in particular legal remedies against waivers of bids and prohibitions for the protection of protected marine areas and against decisions of derogation in the meaining of § 34 para. 3-5 BNatSchG as well as planning approval notices concerning projects that are linked to nature and the landscape – which will usually be the case – as well as planning permission, if a public participation is provided for by law.

This corresponds to a dispensation in § 42 Abs. 2 VwGO of the requirement to be affected in one’s own rights (“Unless otherwise provided by law, the action is admissible …”). §§ 4ff. UmwRG provide additional requirements for the admissibility of such action.

The impetus for these changes compared to the administrative rights protection based on the infringement in individual rights in Germany were decisions of the ECJ:

• In the “Trianel” decision (judgment of 12 May 2011, case C-115/90), the ECJ reprehends

               that the requirement of a national rule, that a substantive law rule must be at least also be enacted to protect “individual rights”, does not comply with European Union Law requirements: Recognized environmental associations be able to bring to court violations of any and all rules that are relevant for the approval of a project and that are based on European Union Law, even     

               if they have been issued for the protection of the environment or general public, but do not                   

               provide third party protection.

• Therefore, it was also consistent that the ECJ in the “Altrip” decision (judgment of 7

               November 2013, Case C-72/12) held, that according to the former version             

               of the UmwRG only the absence of Environmental impact assessment,

               but not its incorrect implementation could be brought to the courts.

• The BVerwG extended the possibilities to file an action to air pollution control plans in a ruling of 5 September 2013. Although there is no explicit right to such filing, German law must – in line with the case law of the ECJ on so-called extended collective actions (judgment of 5 September

               2013, case C-240/09 – “Slovakian Brown Bear”) – in conformity with European law that it is

               possible to lodge an action by environmental organizations.

• Finally, in its ruling of 15 October 2015 (case C-137/14), following the 5th Conference of the

               Parties to the UN ECE Aarhus Convention (decision V / 9h), the ECJ held the German

Rule, pursuant to which objections raised during the trial are prejudiced, which have not already

               been raised during the administrative permission procedure, in

               breach of EU law.

3. In social law, there are also exceptional possibilities for an association, without being violated in

    their own rights, to bring a claim to court, § 15 para 1 BGG (Disability Equality Act). The association must be   recognized, whereby the recognition of those are designed comparably to the nature conservation associations: The federation must by its by-laws promote interests of handicapped people, be not profit-orientated, exist three years and be

    active and is, by its composition (members / member associations), suitable to represent the interests of people with disabilities at the federal level and to offer them according to type, extent, circle of members and guarantee for a proper performance of their duties. Also according to § 63 SGB IX (Social Code IX) associations can complain, but this right is granted in the place of  one for affected disabled people.

4. There is also a special regulation in § 17 (1) sentence 5 KHEntG (Code on Financing of Hospitals) for the association of private health insurance, if a charge for non-medical elective benefits is deemed to be too high.

5. In addition, § 8 (4) of the HandwO (Rule on Crafts) provides, in connection with the exception to be entered in the trade role, not only for the claimant, but also for the Chamber of Crafts, the action to the administrative court.

III.            Evaluation

“US conditions” are – especially in the particularly suspicious field of environmental law – probably not yet to be feared. According to a survey of the Federal Environmental Agency of 2014 (“Evaluation of use and effects of the association action possibilities according to the Environmental Right Act”, see https://www.umweltbundesamt.de/publikationen/evaluation-von-gebrauch-wirkung- der) the collective action did not lead to deluge in collective actions, but only to a moderate figure of about 12 procedures / year, esp. for rather large projects. The effect of this possibility of action is more likely to be an anticipatory effect, namely the improved consideration of the effects on protected goods and the involvement of associations in the planning phase of the project.

Even a “lawsuit industry” should not be promoted by this new directive, but rather limit it. Because such industry does already exist, on the basis of assignment models in which affected potential plaintiffs assign their rights in order to more effectively assert them pooled with other claims.

The consumer claims lawsuit is not a legal sin, but already extends the scope of similar rights of appeal to the area of consumer protection.

 

               Christoph Just LL.M., specialist lawyer for tax law and specialist lawyer for administrative

                    law, is a partner in the Frankfurt law firm Schulte Riesen-kampff Rechtsanwaltsgesellschaft

                    mbH. His practice focuses on litigation (state and arbitration) as well as regu latory

                    (environment, energy, awarding).