With the Representative Actions for the Protection of the Collective Interests of Consumers Act recently signed into law, Peter Johnston, Dispute Resolution Partner, reviews the scope of the Act and set out next steps for consumer-facing businesses in the Life Sciences and Products sector.
The Department of Enterprise, Trade and Employment launched a public consultation in March 2021, seeking submissions as to how certain aspects of the EU Directive 2020/1828 should be transposed into Irish law. The Directive creates a new regime for representative actions for the protection of the collective interests of consumers. Speaking at the launch, the then Minister for Trade Promotion, Digital and Company Regulation noted that there was a “significant job of work” to be done to design a suitable procedural mechanism for collective representative actions in Ireland.
The output of that work was seen in last March’s publication of the Representative Actions for the Protection of the Collective Interests of Consumers Bill 2022. On 4 July 2023, the Bill was passed by both Houses of the Oireachtas. The President signed the Bill into law on 11 July 2023, thereby creating the Representative Actions for the Protection of the Collective Interests of Consumers Act 2022.
With this, Ireland takes one step closer to consumer class actions. The question is how will it impact consumer facing business?
The current position
Ireland has always been a good place to have a dispute. One area where Ireland has lagged behind other EU jurisdictions is in the area of class actions, and in particular collective consumer redress. That historic position is about to change.
The Collective Redress Directive was published on 4 December 2020. Ireland and the other Member States were required to adopt implementing measures by 25 December 2022, which the majority failed to do so, and the measures to apply from 25 June 2023. The signing of the Bill into law is well after the transposition date, and we await the Act coming into operation once commenced by Order of the Minister for Enterprise, Trade and Employment.
Once the Act comes into operation it will permit actions taken under 66 separate European directives and regulations. The net is cast wide to include a number of sectors such as technology, health and financial services. For the product and consumer sectors these include:
- The General Product Safety Directive
- The Sale of Goods Directive
- The GDPR
- The Directive on Liability for Defective Products
- Medical Devices Regulations, and
- EU Regulations on Medicinal Products for Human Use
Current avenues for consumers to bring proceedings against Irish consumer facing entities are somewhat limited, expensive and time-consuming, with limited potential benefit in terms of compensation by the end of the process. However, once the Act is commenced and other Member States have applied the measures of the Directive on representative actions, this is likely to greatly increase the enforcement of consumer rights across the EU.
The main features of the Act are as follows:
- Qualified entities: Each Member State can designate at least one “qualified entity” to bring actions on behalf of consumers. Private law firms cannot bring an action. In general terms, a qualified entity must be a non-profit organisation in the area of consumer protection, be independent, and have a legitimate interest in ensuring the provisions of the Directive are complied with.
- Consumer redress: Qualified entities can apply for injunctive relief and other redress, with injunctions potentially being granted on a preventative or prohibitive basis. Consumers do not have to opt-in to representative actions for injunctive relief. Consumers must however expressly opt-in to the representative action for monetary redress.
- Cross-border actions: A number of qualified entities can come together to bring cross border actions, which are on an opt-in basis.
- Statute of Limitations: Notably, limitation periods are suspended while the injunction is being determined to ensure that consumers’ rights to proceed to redress are preserved.
- Costs: Qualified entities must bear the cost of any action brought under the Act and costs of the action will be borne by the unsuccessful party; the loser pays principle. There is a provision for a partial costs order to be made against individual consumers if their intentional or negligent conduct results in a party incurring costs.
- Publication: Any settlement reached between the parties, after the injunction phase, must be approved by the court. A qualified entity is also required to publish information on its website on the outcomes of the representative actions it has brought.
With the signing of the Bill into law, the new Act presents a profound change in the rights available to consumers to bring collective and cross border actions in relation to a wide range of EU consumer protection legislation.
Two things however remain unclear.
First, it remains to be seen what Irish body or bodies will be designated as qualified entities, being the body entitled under the Act to bring the collective action on behalf of the consumers.
Secondly, is it not yet clear how qualified entities will fund actions. Where costs are awarded under the ‘loser pays’ principle, the question remains how qualified entities, who are not-for-profit organisations, will be able to fund large actions.
The Act provides for third party funding, “insofar as permitted in accordance with law” and that a qualified entity “shall disclose to the Court a financial overview that specifies the sources of funds used by it to support the representative action.” However, the Act does not alter the long-standing position under Irish law prohibiting the funding of litigation by third parties who have no interest in the dispute. The question remains how will Irish qualified entities fund large scale consumer redress actions? The Minister for Justice has asked the Law Reform Commission to conduct a review of the law governing third party funding of civil litigation in Ireland, whose report is expected in the coming months.
Leaving aside the current non-availability of litigation funding in Ireland, and the uncertainly of what Irish body will be designated as the qualified entity, the cross-border nature of the new regime will be of particular relevance to businesses. This is because qualified entities can potentially come together to bring cross border actions in Member States where third party funding is available.
For more information, 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.