Collective Redress

The benefits of collective redress

Collective redress is increasingly recognised as having two key advantages. First, it allows greater access to justice for individuals who would not have the resources and time to take their cases themselves. Second, it is a more efficient way to resolve multiple similar disputes for all parties involved.

Collective redress is particularly suitable to consumer law, where it gives consumers an effective and efficient way of enforcing their rights. Collective redress also allows for private enforcement of competition law and environmental law.

How does the new collective redress system work in Europe?

The Representative Actions Directive 2020/1828 empowers certain approved bodies to bring representative actions on behalf of consumers. These “Qualified Entities” must be non-profit, independent organisations with a history of working in the area of consumer protection. They must also demonstrate a legitimate interest in ensuring compliance with the Directive. Qualified Entities may take actions seeking compensation or injunctive relief.

The Directive provides for domestic collective action cases as well as cross-border cases involving Qualified Entities in more than one Member State. Member States were given the deadline of 25 December 2022 to implement the Directive into national law.

How does the new collective redress system work in Ireland?

The Representative Actions for the Protection of the Collective Interests of Consumers Act 2023 is intended to give effect to the Directive in Ireland. The Act was signed into law in July 2023, however it has not yet been commenced by the Minister for Enterprise, Trade and Employment.

Under the Act, litigation would be commenced and managed by Qualified Entities on behalf of Irish consumers. Consumers would not have to opt-in to applications for injunctive relief but would have to opt-in to any cases claiming monetary compensation.

How will litigation be funded?

It is not yet clear how litigation taken by Qualified Entities will be funded. Currently, third parties are prohibited from funding litigation in Ireland if they do not have an interest in the dispute.

The Law Reform Commission is carrying out a review of third-party litigation funding in Ireland. This is expected to recommend a relaxation of the rule prohibiting third party funding.

What happens when a collective redress case is decided?

The Act requires that when a court decides a case or approves a settlement proposal from the parties to an action, the court must order the defendant to publish information about the decision. The defendant must also inform represented consumers of what the decision means for them.

Qualified Entities must also publish details of all representative actions they take. They must maintain a list on their website of all actions they are involved in, the status of these actions, and the results of each concluded action.

What will happen next?

First, the Act must be commenced by order of the Minister for Enterprise, Trade and Employment. The Minister will then designate one or more Qualified Entities to take actions on behalf of Irish consumers.

Conclusion

Collective redress has the potential to significantly alter the way consumer protection litigation is taken in Ireland. Once the Act comes into effect, Qualified Entities will be empowered to challenge businesses on behalf of consumers who would not otherwise engage in litigation. However, in order for the Act to have full effect, the rules prohibiting third-party litigation funding will need to be relaxed.

For more information and expert advice on related matters, please contact a member of our Dispute Resolution team.

The content of this article is provided for information purposes only and does not constitute legal or other advice.