Ireland Takes a Step Closer Towards the Protection of the Collective Interests of Consumers
The General Scheme of Representative Actions for the Protection of the Collective Interests of Consumers Bill 2022 has been published and proposes to give effect to the Representative Action Directive.

 

The General Scheme of Representative Actions for the Protection of the Collective Interests of Consumers Bill 2022 (General Scheme) has been published and proposes to give effect to the Representative Action Directive (EU 2020/1828) (Directive).  

The Directive gives protection to the collective interests of consumers in Europe by providing a means to bring redress and injunctive representative actions arising out of the infringement of consumer rights by traders located in a member state.  The Directive contains a list of 66 provisions of EU law that fall within the scope of the Directive, which the General Scheme replicates in full.  See our previous articles here and here for further commentary on the Directive.  

Competent Court 

Under the General Scheme, the High Court (Court) is the designated court for representative actions.   The General Scheme provides that the Superior Court Rules Committee will make rules of court in relation to the conduct of representative actions.  

Qualified Entities (QEs)

The Minister for Enterprise, Trade and Employment (Minister) is the national designating authority for Ireland.  The Minister may designate an organisation as a QE for the purpose of taking domestic or cross-border representative actions, if it satisfies specified conditions including that it is

  1. properly constituted under Irish law and can demonstrate 12 months of public activity in the protection of consumer interests;
  2. non-profit making;
  3. solvent;
  4. independent; and
  5. publishes certain information on its website in plain and intelligible language.  

Under the General Scheme, the designation will be of indefinite duration, but subject to a five-year periodic review.  The specifics in relation to the designation process will be dealt with under Ministerial regulations.   

Representative Actions

The General Scheme adopts the definition of "representative action" as set out in the Directive i.e., an action for the protection of the collective interests of consumers brought by a QE on behalf of consumers seeking an injunctive measure, redress measure or both.   Only a QE that represents consumers can bring a representative action.  

Cross border actions

Designated QEs from other Member States can bring cross-border representative actions before the Irish courts. The European Commission will maintain a list of QEs designated in each Member State as permitted to bring cross-border representative actions.  The Court must accept entry on this list as proof of the legal standing of a QE to bring a cross-border representative action before it.  

Parties

The plaintiff in a representative action will be the QE, not the consumer(s).  That QE will have all the rights and obligations associated with this position, including such rights and obligations relating to discovery, inspection, and interrogatories.   

Where several QEs bring a single representative action, one must be nominated to lead the conduct of the action.  The outcome of the action will bind all QEs. 

Opt-In 

The General Scheme requires that consumers affected by an alleged infringement of their consumer rights by a trader must opt-in to a representative action for redress against that trader.  Consumers must notify the QE of their wish to be represented before the defendant trader enters an appearance in the proceedings.  

However, in representative actions for injunctive relief, there is no requirement for consumers to opt-in to the action under the General Scheme.

Costs and Fees

The costs involved in bringing the representative action will be borne by the QE.  However, the General Scheme makes provision for costs orders to be made against an individual consumer where their conduct results in a party incurring costs. 

A consumer may be required to pay a "modest entry fee" to be represented by a QE.  The maximum amount of the entry fee will be prescribed by regulation.  

Under the General Scheme, the Minister for Justice may make regulations to remove Court fees for representative actions.  This provision transposes a mandatory provision in the Directive whereby member states must ensure the costs of representative actions do not prevent QEs from exercising their rights and for the provision of assistance to QEs.  

Time limits

The General Scheme provides for the suspension of relevant limitation periods under the Statute of Limitations from the commencement of a representative action. 

Injunctions & Pre-litigation steps 

The General Scheme provides that a representative action may seek injunctive relief in the form of a  provisional (i.e. interim) measure or a definitive (i.e. permanent) measure.  If appropriate, interim injunction applications can be dealt with on an ex parte summary basis by the Court.  Before an application for a permanent injunction can be instituted, the QE must engage in pre-litigation consultation with the trader to have the trader cease the alleged infringement.  This pre-litigation engagement can be by way of Alternative Dispute Resolution.  Where the trader does not engage, or the consultations are unsuccessful in resolving the matter, a representative action can be brought.  

Funding 

The Directive provides for third-party funding of representative actions, in certain cases where allowed under national law.  Currently, under Irish law, third-party litigation funding is unlawful, except where it comes within limited exceptions to the rules against maintenance and champerty. The General Scheme does not purport to alter the existing prohibition on third-party funding of litigation under Irish law.    Rather it provides that where the Court is assessing the admissibility of a representative action, it shall have regard to several matters, including the funding sources of a representative action. Where an action is funded by a third-party "insofar as permitted under Irish law", the Court must ensure that any conflicts of interest are prevented, and the funding does not divert the action away from the protection of the collective interests of consumers. 

Settlements

Settlements in representative actions are subject to Court approval.  Once approved, the settlement is binding on the QE, the trader, and the consumers.  

Publication of Information 

A QE is obliged to provide information on its website about representative actions it intends to bring, the fees chargeable to consumers who will be represented in the action, and the status and outcome of any such action before the Court. The information must be provided in a timely and appropriate manner to ensure consumers can opt-in to the action.  Fulfilment of these requirements is one of the criteria for a QE to remain designated.  

Conclusion 

The publication of the General Scheme is a step closer to providing a collective redress mechanism for consumers whose rights have been infringed under a broad scope of EU law provisions.  The General Scheme will likely be referred for pre-legislative scrutiny before beginning its passage through the Oireachtas.  How long this process takes is unknown, but the Directive is required to be transposed into Irish law by 25 December 2022 and applies from 25 June 2023.  

For further information on the General Scheme or representative actions please contact Lisa Carty, Paul Convery or your usual William Fry contact.  

 

Contributed by: Gail Nohilly

 

Key Contacts

Lisa Carty Partner

Paul Convery Partner

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