European Union Initiative: from Consultation to Legislation?

1
European Union Initiative from Consultation to
Legislation? Chair Gerard McDermott QC, Outer
Temple Chambers Speaker Katja Lenzing,
European Commission
2
Green Shoots for 2011 in Member States Chair
Gerard McDermott QC, Outer Temple Chambers
Speakers Netherlands Stijn Franken, Nauta
Dutilh Italy Massimo Todisco, Mogelli, Todisco
Carpentieri (CODACONS) Scotland Charles
Livingstone, Brodies LLP
3
Dutch approach

• BIICL, 27 June 2011
• Stijn.franken_at_nautadutilh.com

4
Act on Collective Settlement of Mass Claims (2005)

• Collective settlement
• Court certification (Amsterdam court)
• Opt out system (3 6 months)

5
All areas

• DES (2006) product liability
• EUR 38 mln, 20.000
• Dexia (2007) financial products
• 300.000
• Vie dOr (2009) professional liability
• EUR 45 mln, 11.000

6
All areas

• Shell (2009) shareholders
• USD 340 mln, 500.000
• Vedior (2009) shareholders
• EUR 4,25 mln, 2.000
• Converium (2010) shareholders
• 12.000

7
Foreign parties?

• Shell (2009)
• US settlement (2008)
• Amsterdam settlement (2009)
• Amsterdam settlement majority of the class
  members outside the Netherlands
• Art. 2 and art. 6 EU Regulation (44/2001)

8
Foreign parties?

• Converium (2010)
• US settlement (2008)
• Amsterdam settlement (2010)
• Amsterdam settlement
• Swiss company
• only 2 of the class members in the Netherlands
• preliminary judgment

9
Foreign parties?

• Proper notification
• Adequate representation

10
Foreign parties?

• Proper notification security cases
• Registered mail/ EU Service Regulation
  (1348/2000)
• Advertisements/ internet

11
Foreign parties?

• Adequate representation security cases
• Explicit endorsements by foreign institutions and
  foreign shareholder associations

12
Foreign parties?

• US developments
• US settlements in stead of world wide
  settlements
• Shell 2007
• Converium 2008
• US Supreme Court
• Morrison v. National Australia Bank (2010)
• Hoffmann-La Roche v. Empagran (2004)

13
New Act curse of blessing?

• Initiated by the pharmaceutical industry
• Simple and quick
• Contribution to EU alternative for US style class
  actions?

14
Green Shoots for 2011 in Member States Chair
Gerard McDermott QC, Outer Temple Chambers
Speakers Netherlands Stijn Franken, Nauta
Dutilh Italy Massimo Todisco, Mogelli, Todisco
Carpentieri (CODACONS) Scotland Charles
Livingstone, Brodies LLP
15
Italian class action
16
Consumers code clause 140 bis

• Class action can be filed since 1 january 2010
• Only for torts committed after 15 august 2009

17
Who may file

• Consumers as defined by consumers code clause 3
  (a physical subject who doesnt act for
  professional aim)

18
Types of claims that can be brought

• Contractual rights (identical position)
• Given product liability (identical rights)
• Unlawful business procedures and anticompetitive
  behaviours (identical rights)

19
Attemptable pronouncementes

• The court can condemn the defendant to redress or
  restitution
• The court can specify an uniformly applicable
  criterion to calculate each individual redress
• No punitive damage

20
Main differences between north american and
italian class action

• The american court checks every transaction
• The italian court doesnt have the power to check
  the transactions

21
Main differences between north american and
italian class action

• North america opt out mechanism, punitive
  damages
• Italia opt in mechanism, no punitive damages

22
Court of Turin 27/05/10

• The lead plaintiff sued Intesa Sanpaolo Bank
  claiming nullity of clauses containing charges
  for line of credit, named overdraft commission
  fee
• The defendant claimed that the actor could not be
  considered a consumer
• The bank claimed also that class action could
  only filed to claim redress or restitution

23
Court of Turin 27/05/10

• The court stated that the status of consumer is
  applicable whenever a professional use of the
  good or service is marginal
• The court stated that the actor had not the right
  to sue, only claiming the nullity of a clause,
  unless he is not damaged by the banks conduct
• The court stated inadmissibility of class action

24
Court of Appeal of Turin 15/10/10

• Class action is admissible only to claim
  pronouncements of redress or restitution

25
Court of Turin 28/04/11

• Is not admissible the simultaneous and direct
  presence of the consumers and of the consumers
  association in the trial
• Excluded consumers association from the trial
• Stated inadmissibility of the class action,
  because the lead plaintiffs were judged not
  eligible to act in the interest of the class

26
Court of Turin 28/04/11

• The Court assumed consumers association would be
  always able to properly act in the interests of
  the class

27
Court of Milan 20/12/10

• Ego Test Flu, marketed in Italy by Voden Medical,
  is a diagnosis test (to be performed at home)
  whose efficacy was in doubt
• It was promoted with a 99 safety profile test
• Even the Board of health had thrown some doubts
  on Ego Test Flu efficacy

28
Court of Milan 20/12/10

• The actor issued the class action against Voden
  claiming the rendering of the cost paid for the
  product

29
Court of Milan 20/12/10

• Does the actor have the power to modify the
  request advanced according to clause 140 bis?
• Judges in Milan reached a positive end on that
  point

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Court of Milan 20/12/10

• At what step of the trial this right can be
  exercised by the parties?
• The court established that the right to define
  and modify the request must be exercised within
  the first hearing, before the evaluation of
  admissibility

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Court of Milan 20/12/10

• Is the plaintiff a consumer?
• If the defendant claims that the plaintiff is not
  a consumer, he has to prove it (usually proving
  that the invoice was in the name of a person with
  a VAT number)

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In a reformist perspective

• Parliament should improve the law providing
  punitive damages, removing reference to service
  charters and reversing the path to join in from
  opt in to opt out

33
Green Shoots for 2011 in Member States Chair
Gerard McDermott QC, Outer Temple Chambers
Speakers Netherlands Stijn Franken, Nauta
Dutilh Italy Massimo Todisco, Mogelli, Todisco
Carpentieri (CODACONS) Scotland Charles
Livingstone, Brodies LLP
34
Collective Redress in ScotlandThe Gill Report

• Charles Livingstone
• Associate
• Brodies LLP
• charles.livingstone_at_brodies.com
• 44 (0)131 228 3777

35
Green Shoots for 2011 in Member States Chair
Gerard McDermott QC, Outer Temple Chambers
Speakers Netherlands Stijn Franken, Nauta
Dutilh Italy Massimo Todisco, Mogelli, Todisco
Carpentieri (CODACONS) Scotland Charles
Livingstone, Brodies LLP
36
Collective Redress in European Private
International Law Chair Alexander Layton QC,
20 Essex Street Speaker Professor Astrid
Stadler, University of Konstanz Discussant
Professor Linda Silberman, NYU
37
Collective Redress in European Private
International Law

• Prof. Dr. Astrid Stadler
• University of Konstanz, Germany

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Outline

• I. Situation of mass litigation in Europe today
• 1. Reform of collective redress mechanisms in
  EU Member States
• 2. EU Commissions Consultation Paper Towards
  a Coherent European Approach to Collective
  Redress
• II. Procedural problems arising out of cross
  border mass litigation
• 1. International jurisdiction under the
  Brussels I Regulation
• 2. Recognition and enforcement
• 3. Conflict of laws
• III. Revision of the Brussels I Regulation
• 1. Abolition of exequatur proceedings
• 2. Exception Art. 37 Commission Proposal

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Cross border mass litigation

• I. Situation of mass litigation in Europe today
• Existing mechanisms to compensate a group of
  victims harmed by an accident, defective products
  or illegal business practices vary widely within
  EU
• group actions (opt-in opt-out)
• representative actions by Ombudsmen, consumer
  organisations or other private associations
• test case proceedings
• representative actions for skimming-off illegally
  gained profits
• Dutch WCAM court proceedings to declare
  out-of-court settlement in mass disasters binding
  for all victims DES, Dexia, Shell, Converium
• EU initiatives
• DG Competition White Paper on damages actions
  for breach of EC antitrust rules (2008)
• DG Sanco Green Paper on consumer collective
  redress (2008)
• Feb. 2011 consultation paper Towards a Coherent
  European Approach to Collective Redress

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International jurisdiction

• II. Procedural problems arising out of cross
  border mass litigation
• 1. International jurisdiction
• collective redress cases consumer contracts,
  insurance contracts, illegal business practices,
  product liability cases, capital
  market/securities cases
• cross-border effects
• no significant number of cross border cases
  before courts
• difficulties of cross border organisation/informa
  tion
• representative organisations tend to act only on
  behalf of domestic consumers
• forum under Brussels I Regulation ?
• exception Dutch WCAM cases
• mechanisms of collective redress not available in
  all MS gt need for forum shopping
• 2. Brussels I Regulation
• group actions/representative actions court must
  have jurisdiction over all individual claims
  (including absent plaintiffs)
• basic rule Art. 2 (defendants domicile)
• gt forum may not offer instruments of collective
  redress

41
International jurisdiction

• special rules on international jurisdiction
• Art. 5 no. 1 contract cases gt place of
  performance
• Art. 5 no. 3 tort cases gt place where the
  harmful event occurred place where defendant
  comitted tort or place where claimant suffered
  injury
• Art. 15, 16 consumer contracts gt if consumer(s)
  sue place where defendant or consumer is
  domiciled
• Art. 6 ancillary jurisdiction for closely
  connected claims gt refers only to a plurality of
  defendants not plaintiffs
• gt pooling of claims only in Art. 2 forum
  domicile of defendant
• gt collective redress avaiable?
• gt We need a new jurisdictional concept for
  mass litigation!
• special rule on jurisdiction with respect to mass
  litigation criteria?
• forum must be predictable for the parties
• privileges of Art. 5 no. 3, Art. 15 and 16 to be
  maintained?
• What is the justification of the procedural
  privilege?
• Litigation before foreign courts is bothersome
  for consumers/tort victims foreign lawyers,
  burden of travelling, language problems .
• however privilege is not necessary for absent
  plaintiffs in mass litigation being represented
  by group plaintiff or representative organisation
• gt absent plaintiffs benefit from collective
  redress
• gt they can be expected to accept a forum
  different from that avaiable in individual
  proceedings

42
International jurisdiction recognition

• forum for mass litigation courts of the MS where
  a majority of victims is domiciled
• no disadvantage for the defendant
• place with the most significant relationship to
  the case
• gt new forum optional in addition to Art. 2 and
  Art. 5 no. 3 (place where tort has been
  comitted)
• 3. Recognition and enforcement the present
  system
• Recognition of res judicata effect of mass
  litigation important
• no parallel or subsequent mass proceedings in
  other MS
• absent plaintiffs precluded from bringing
  individual proceedings in other MS (important in
  case of proceedings based on opt-out)
• Recognition/enforcement of settlements
• settlement very likely in collective redress
  litigation
• court approved settlements (Art. 58 Brussels I
  Regulation)
• gt public policy objection only

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Recognition enforcement

• Grounds for non-recognition of judgments (Art.
  34, 35 Brussels I Regulation)
• public policy exception most likely to be raised
  in some MS against opt-out proceedings
• constitutional concern (right to be heard, fair
  trial with respect to absent plaintiffs)
• proper notification of absent plaintiffs/group
  members?
• is opt-out at least acceptable for trivial
  damages (Denmark, Norway group actions) ?
• Back door European Enforcement Order Regulation
  (EEO) applicable for settlements in mass
  litigation and WCAM cases?
• Art. 3 (1) (a) EEO settlement which has been
  approved by a court or concluded before a court
• ratio legis settlement (contract) in two party
  cases with explicit consent of parties
  applicable to settlements for absent plaintiffs?
• Conclusion
• no European wide public policy standards, no case
  law on opt-out mechanism
• major problems arise as soon as parallel mass
  proceedings in different MS become likely
• gt special rules for recognition enforcement
  necessary
• gt agreement upon basic concepts of collective
  redress in Europe !?

44
Cross border mass litigation choice-of-law rules

• 4. Conflict of laws
• cross border group actions include absent
  plaintiffs from different MS
• Rom I and II Regulations multiplictiy of
  substantive laws to be applied to the claims of
  absent plaintiffs
• new conflict rules necessary?
• options lex fori law of the defendants
  domicile law of the MS where majority of
  victims is domiciled
• gt choice-of-law rules should change the
  claimants position under substantive law for
  reason of procedural efficiency
• gt formation of sub-classes in mass litigation
• gt choice-of-law agreement between defendant and
  group plaintiff?

45
Revision of Brussels I Regulation

• III. Revision of the Brussels I Regulation
  (Comm. Proposal Dec. 2010)
• 1. Abolition of exequatur proceedings
• Commissions main objective no exequatur
  poceedings in MS of enforcement
• exequatur proceedings time-consuming expensive
• however complete abolition of grounds for
  non-recognition not acceptable
• suggested compromise
• review of violations of right to fair trial (in
  MS of enforcement, Art. 44 Comm. Proposal)
• default judgements (service of documents? review
  in MS of origin, Art. 45 Comm. Proposal)
• judgment irreconcilable with other (earlier)
  judgments? (review by enforcement authorities in
  MS of enforcement, Art. 43 Comm. Proposal)
• gt objection to be raised only against
  enforcement not against recognition!
• Rationale behind the Commission Proposal
• no fundamental differences in substantive law of
  MS
• mutual trust and confidence in equivalence of
  judicial systems of MS
• (political wishful thinking, not reality!)

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Revision of Brussels I Regulation

• 2. Exception to the new concept Art. 37
  Commission Proposal
• exisiting concepts and mechanisms of collective
  redress vary considerably
• Commission required level of trust cannot be
  presumed at this stage
• even partial abolition of grounds for
  non-recognition not acceptable
• different standards of (procedural and
  substantive) public policy
• legal standing of representative organisations,
  opt-in/opt-out mechanism
• gt no review of proper notification or
  representation of absent plaintiffs
• Art. 37 Abolition of exequatur proceedings does
  not apply to judgments given in another MS
• (b) in proceedings which concern the
  compensation of harm caused by unlawful business
  practices to a multitude of injured parties and
  which are brought by
• i. a state body
• ii. a non-profit making organisation whose main
  purpose and activity is to represent and defend
  the interests of groups of natural or legal
  persons, other than by, on a commercial basis,
  providing them with legal advice or representing
  them in court, or
• iii. a group of more than twelve claimants.
• Definition of collective redress?
• compensation of harm actions for the recovery
  of damages only?
• unlawful business practices ?
• a group (iii.) applicable to joinder of
  parties or only to group/class actions with a
  group plaintiff?
• number of absent plaintiffs?

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Revision of Brussels I Regulation

• What are the consequences of the Art. 37 (3)
  exception?
• exequatur proceedings still necessary, grounds
  for non-recognition available with the exception
  of Art. 35 Brussels I Regulation
• gt international jurisdiction highly
  controversial issue in mass litigation
• Is the Art. 37 (3) exception necessary?
• collective redress recognition of res judicata
  effect is more important than enforcement
• gt exequatur is of minor importance in practice
• MS must have the chance to object to recognition
  of collective redress judgments/settlements
• grounds for non-recognition could be maintained
  without exequatur proceedings
• gt legal remedy of the defendant or an absent
  plaintiff in MS of enforcement
• gt proper definition of collective redress
  exception necessary
• Conclusion
• strictly no aboliton of exequatur proceedings
• standards for the handling of public policy
  objections in collective redress cases necessary

48
Collective Redress in European Private
International Law Chair Alexander Layton QC,
20 Essex Street Speaker Professor Astrid
Stadler, University of Konstanz Discussant
Professor Linda Silberman, NYU
49
Comments on Practical Aspects of Bringing and
Defending a Collective Claim - Finding the Right
Court, Evidence and Funding Chair Michael
Patchett Joyce, Outer Temple Chambers
Speakers Rob Murray, Crowell Moring
LLPDavid Burstyner, OmnibridgewayBert Foer,
American Antitrust Institute
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Comments on Practical Aspects of Bringing and
Defending a Collective Claim - Finding the Right
Court, Evidence and Funding Chair Michael
Patchett Joyce, Outer Temple Chambers
Speakers Rob Murray, Crowell Moring
LLPDavid Burstyner, OmnibridgewayBert Foer,
American Antitrust Institute
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Focus on Collective Redress - Website
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