The EU Directive on Representative Actions for the Protection of the Collective Interests of Consumers ("the Directive") entered into force in December 2020 and was to be transposed into Irish law by 25 December 2022 and to come into effect from 25 June 2023. The Irish government has now published the Representative Actions for the Protection of the Collective Interests of Consumers Bill ("the Bill") and a first reading of the Bill has now been completed. (See previous PILA Bulletin Article on transposing the EU Directive on representative actions for the protection of the collective interests of consumers into Irish law)
Background
Until now, Ireland has been a relative outlier within the EU as it does not have a compensatory collective redress procedure, and there is no legislative framework to facilitate class actions. Instead, there is currently a narrow range of procedural options available to allow multiple claims arising from the same wrong to be litigated as private actions.
The EU Directive was part of “A New Deal for Consumers” initiative launched by the European Commission in April 2018 to enhance the protection of consumer rights and to facilitate coordination from national consumer authorities at EU level. Recent high-profile mass consumer rights breaches by private companies, such as the 2017 mass flight cancellations and the 2015 ‘Dieselgate’ scandal, highlighted gaps in consumer rights law across the EU’s internal market.
The Bill
The national measures transposing the Directive into Irish law will include several new mechanisms for collective actions, which are not dissimilar to class actions. This will represent a significant change in consumer protection and in civil litigation procedures for consumer claims. This legislation will significantly alter the civil litigation landscape in Ireland by enabling consumers to be represented collectively by "qualified entities" in claims concerning a wide range of consumer-facing industries, including financial services, technology and health.
The Bill applies to representative actions brought on or after 25 June 2023 in respect of infringements by traders occurring on or after that date that harm or may harm the collective interests of consumers. Under the Bill, claims may only be pursued by a "qualified entity". A qualified entity acts as the claimant on behalf of consumers whose collective interests are alleged to have been harmed. It may pursue domestic or cross border representative actions against a party who is alleged to have breached specified EU or Irish consumer protection law. Representative actions can be pursued for claims in, amongst other areas of consumer protection law, financial services, food safety, health, data protection, technology, energy, and telecommunications.
A "representative action" is defined as an action for the protection of the collective interests of consumers brought by a qualified entity as a plaintiff on behalf of consumers. The qualified entity shall have all of the rights and obligations of a plaintiff. A qualified entity can seek in one single action either relief by way of injunction or redress, or both. A qualified entity will have to provide information to include the source of funding of the representative action. The High Court must deem the action admissible and can also decide to dismiss an action as manifestly unfounded.
Qualified entities are required to be non-profit organisations and must apply to the Minister for Enterprise, Trade & Employment to be designated as such, providing that the criteria and standards as set out in the Bill are met. Only a registered qualified entity may bring a representative action in Ireland or in other EU member states. A qualified entity must be a recognised legal organisation with 12 months of actual public activity in the protection of consumer interests and which has a legitimate interest in protecting consumer interests in order to be registered.
The success of the legislation will, however, depend on the ability of the qualified entities, who are required to be non-profit, to fund mass actions on behalf of consumers. The funding of litigation by third parties remains largely prohibited in Ireland and this was a key concern raised during the pre-legislative scrutiny of the General Scheme of the bill. It remains to be seen how such consumer actions will be funded.