Collective action

There is another alternative for (individual) small claims litigation : collec-tivisation through group actions and class actions. Most EU Member states already allow collective actions. In the Netherlands this has been codified

57 W.D.H. Asser, H.A. Groen, J.B.M. Vranken, I.N. Tzankova, Een nieuwe balans / Interimrapport Fundamentele herbezinning Nederlands burgerlijk procesrecht, The Hague : Boom, 2003, pp. 263-268.

58 This suggestion has met with much criticism and will most probably not be repeated.

59 Harald Koch argues in favour of a specific consumer civil procedure in Germany in “Brauchen wir ein eigenes Verbraucherprozessrecht ?”, in : Hans W. Micklitz (ed.), Verbraucherrecht in Deutschland – Stand und Perspektiven, Baden-Baden : Nomos, 2005, pp. 345-353.

60 In March 2004 the European Commission submitted a proposal for a European payments procedure.

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in Art. 3 : 305a/bBurgerlijk Wetboek(Civil Code) ; collective action on unfair terms in consumer contracts is regulated by Art. 6 : 240Burgerlijk Wetboek. Al-though both provisions seem to offer consumer organisations widespread access to such actions, the contrary is the case. Two explanations may be sug-gested, one legal, the other financial. Thefinancialexplanation lies in the cost of litigation. When the Hobby Computer Club (HCC) won an unfair contract terms case against Dell Computers,⁶¹the court’s award left some issues un-answered, or answered in an unsatisfactory way according to HCC. But an appeal to the supreme court proved to be financially impossible.⁶²Thelegal drawback is that damages awards are not envisaged in these procedures.⁶³ This is, however, enabled by a recent Dutch act on collective damages, inspired by the DES case.⁶⁴It has also been suggested as a solution for the Legiolease case,⁶⁵which has left some 700,000 Dutch investors with some-times severe losses.⁶⁶It is interesting to note that in other European coun-tries, investors’ problems have also led to new legislation. In Austria, a case brought by 3000 investors against a bank in Salzburg – and other notorious examples – have led to strident demands for new legislation.⁶⁷In Germany, several thousand investors filed a claim against Deutsche Telekom for pro-spectus liability, leading to the adoption of theGesetz zur Bewältigung von Mus-terverfahren im Kapitalanlegerrecht, which came into force in November 2005.⁶⁸ How to cope with collective damages is something which most Europe-ans still have to learn. Hitherto in the Netherlands, when companies were confronted with collective damages claims, they would appoint a three-member commission to deal with all complaints. Thus the Planta case, which

61 Gerechtshof (Court of Appeal) The Hague 22 March 2005, Tijdschrift voor Consumentenrecht 2005, p. 150 (Notes M.Y. Schaub and M.B.M. Loos).

62 The only option left in such cases is “cassatie in het belang der wet”, which may lead to revision of the court of appeal’s award, but only on principle, without changing the existing rights and duties of the parties (which is what HCC requested), but the problem here is that only 1-2% of all applications are accepted.

63 Niels Frenk, Kollektieve akties in het privaatrecht, PhD Utrecht, Deventer : Kluwer, 1994, 383 pp.

64 See P.N. van Regteren Altena, “De collectieve afwikkeling van de DES-zaak in Nederland”, in : A.I.M. van Mierlo and others, Het wetsvoorstel collectieve afwikkeling massaschade, The Hague : Boom, 2005, pp. 27-35.

65 See Hans W. Micklitz and Astrid Stadler, in : Gabriel/Pirker-Hörmann, Massenverfahren/Reformbe-darf für die ZPO ?(2005), pp. 139-140.

66 N. Frenk, De wet collectieve afwikkeling massaschade en de aandelenlease-affaire, Weekblad voor Privaatrecht, Notariaat en Registratie 2005, nr. 6630 ; Frenk, Vie d’Or, aandelenlease en de reikwijdte van het collectief actierecht, Nederlands Tijdschrift voor Burgerlijk Recht 2005, pp. 296-300.

67 See Tamara Gabriel, Beate Pirker-Hörmann, Massenverfahren/Reformbedarf für die ZPO ?, Vienna : Verlag Österreich, 2005, 452 pp.

68 See Hans W. Micklitz and Astrid Stadler, in : Gabriel/Pirker-Hörmann, Massenverfahren/Reformbe-darf für die ZPO ?(2005), p. 111 ff.

Towards a European Small Claims Procedure ? affected some 300,000 Dutch citizens in the 1960s, was settled by the owner of the company that made Planta margarine, Unilever. Not a single complainant went to court. When the authorities sought to solve the Legiolease case in a similar way, it did not work. And when at a later stage the former President of the European Bank, the late Wim Duisenberg, came up with a compromise proposal, it was applauded by some, but criticised by others.⁶⁹

The regulation of collective damages brings us close to the class action.

This is a phenomenon which perhaps is best known for its occurrence in the United States of America, but it also exists in other common law jurisdic-tions :, witness the excellent analysis of the federal class acjurisdic-tions in Australia and the US and the Canadian provincial class action of Ontario and British Columbia by Rachael Mulheron.⁷⁰This book has three parts. In the first part the author analyses the characteristics of modern class actions⁷¹and the aims of legislation.⁷²Part II is devoted to the commencing of class actions, ⁷³and Part III to their conduct.⁷⁴What strikes the reader is the number of things that can go wrong : the number of class members may be too small, for instance,⁷⁵ or the class representative may be unauthorised⁷⁶ or the claim may be de-barred under the statute of limitations.⁷⁷

There is increasing interest in class actions outside the common-law jurisdictions. Finland and Sweden were the first two continental coun-tries to introduce the class action. In Sweden, Per Henrik Lindblom, who pioneered this type of legislation, has described his experiences with two years ofgrupptalan, as the Swedes call this model.⁷⁸Only five cases have so far been brought, so the floodgates argument does not appear well founded.

In Finland, the Consumer Ombudsman has published a file on the internet.

And in France, class actions are already being prepared, as we may read on

69 N.J.H. Huls, Is de Duisenberg-regeling royaal genoeg voor alle legitieme Dexiaclaims ?,Nederlands Juristenblad 2005, pp. 1386-1390. See also Erica Verdegaal, Leasebelegger slijpt messen / Alter-natief om “magere” Duisenberg-regeling aan te vechten, NRC Handelsblad 18 September 2005.

70 Rachael Mulheron, The class action in common law legal systems – A comparative perspective, Oxford : Hart, 2004, 535 pp.

71 Ibid., pp. 23-45.

72 Ibid., pp. 47-111.

73 Ibid., pp. 115-318 : which cases are suitable (pp. 115-164), commonality (pp. 165-217), superiority (pp. 219-273) ; assessing the class representative (pp. 275-318).

74 Ibid., pp. 321-479 : shaping the class membership (pp. 321-366), potential impediments to con-tinuance of the case (pp. 367-388), monetary relief (pp. 389-434) and costs and funding of class actions (pp. 435-479).

75 Ibid., pp. 115-130.

76 Ibid., pp. 275-318.

77 Ibid., pp. 373-385.

78 Per Henrik Lindblom, Lagen om grupprättegang – bakgrund och frantid, Svensk Juristtidning 2005, pp. 129-191.

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le site français des actions collectives.⁷⁹This is in accordance with a universal tendency ; witness the OECD Report on “consumer dispute resolution and redress in the global marketplace.”⁸⁰A comparative survey, with proposals for the future, has been published by Micklitz and Stadler.⁸¹

VIII. Conclusions

The European Commission’s proposal to introduce asmall claimsprocedure invites stakeholders to reconsider policy on the adjudication of consumer claims. In those countries which have hitherto favoured out-of-court settle-ment of consumer complaints, the introduction of a small claims procedure may compensate for some weak points of private complaints tribunals. In establishing a small claims procedure it may be advisable not to consider this a catalyst for a wholesale reform of civil procedure. The scope of application should rather be drawn narrowly. It may even be advisable to start with a pilot project in a number of districts. A small claims procedure should not replace the consumer complaints tribunals. A competition between the two systems cannot be harmful.

79 Le site français des actions collectives, <www.classaction.fr/>.

80 OECD, Workshop on consumer dispute resolution and redress in the global marketplace, <www.

oecd.org/dataoecd/59/21/34699496.pdf>.

81 Hans W. Micklitz, Astrid Stadler, Das Verbandsklagerecht in der Informations- und Dienstleis-tungsgesellschaft, Schriftenreihe des Bundesministeriums für Verbraucherschutz, Ernährung und Landwirtschaft, Münster : Landwirtschaftsverlag, 2005, 1488 pp. The report not only de-scribes the situation in Germany but also includes national reports by Holger Beuchler (France, pp. 57-157, Greece, pp. 169-236, the United Kingdom, pp. 795-938, the United States, pp. 941-1125), Andreas Mom (Netherlands, pp. 343-496, Spain, pp. 655-793, Sweden, pp. 497-654) and Julia Müller (Italy, pp. 237-342), as well as a comparative report (pp. 1127-1437). See also Astrid Stadler, Individueller und kollektiver Rechtsschutz im Verbraucherrecht – Wege zu einem aus-gewogenen Verhältnis, in : Hans W. Micklitz (ed.), Verbraucherrecht in Deutschland – Stand und Perspektiven, Baden-Baden : Nomos, 2005, pp. 319-343.

Towards a European Small Claims Procedure ?