Law no. 414/2023 on the conduct of representative actions for the protection of consumers’ collective interests – the first express regulation of the class action in Romanian law
Authors: Sorina Olaru, Mihaela Ceausescu
Recently[1] , Law No 414/2023 on the conduct of representative actions for the protection of the collective interests of consumers (hereinafter Law 414/2023 or the Law), transposing Directive 2020/1828/EU on representative actions for the protection of the collective interests of consumers and repealing Directive 2009/22/EC (hereinafter Directive 2020/1828), entered into force.
According to the statement of reasons of Directive 2020/1828, “Globalisation and digitalisation have increased the risk of a large number of consumers being harmed by the same unlawful practice. Infringements of Union law can cause consumer detriment. Without effective means to bring unlawful practices to an end and to obtain redress for consumers, consumer confidence in the internal market is reduced.”
Directive 2020/1828 seeks to ensure a uniform framework for representative actions at European level. To this end, the Directive requires Member States to ensure at least one effective collective representation mechanism for both injunctive measures and redress measures.
The new regulation reminds us of the 2010-2011 joint action cases brought before Romanian Courts of Law, when consumers who had concluded the same type of contract/clauses brought a joint legal action to reduce the costs of the procedure, but also to put more pressure on the defendant professional, who was suddenly sued by a very large number of clients and exposed to widespread negative publicity. In those cases, the courts examined each and every one of the contracts and ruled on the existence of the infringement and the possible redress for each individual consumer, so the judgment was not a judgment of principle.
Law 414/2023, however, regulates an action distinct from the classic joint action, establishing the right of consumers to be represented by a qualified entity (a consumer protection association that meets the requirements of the law) to seek an end to the breach of Union law, as well as redress measures whereby actual damages are covered by the professionals. The new regulation (class action) suggests a double legal nature: with regard to the elimination of the infringement, the representative action is of a public nature, the aim being to protect the general interests – which is why consumers’ express consent to be represented is not required – and with regard to the redress measures, the representative action is clearly of a private law nature, protecting the interests of a specific group of consumers who have always given their express consent to be represented.
Representative actions can be brought for any infringements of EU law, according to the annexed list of legislation, an exhaustive list which includes all EU regulated areas 0f activity with an impact on consumers[2] .
By way of example[3] we would point out that a representative action may be brought whenever there is an infringement of Union law affecting a homogeneous class of consumers, in areas such as: on-line and off-line sales of goods and services, consumer goods, food, medical services, electricity, natural gas, transport and passenger rights, insurance and reinsurance, payment services, credit, financial instruments, electronic money, media services, telecommunications, defective products, misleading advertising, unfair commercial practices, discrimination against consumers on grounds of nationality, protection of personal data, etc.
From a procedural point of view, Directive 2020/1828/EU reiterates the same two components of the class action under US law[4], namely the verification by the court that the conditions for the admissibility of the procedure have been met, a stage which is to include verification of the express or tacit consent of consumers to be represented, followed by the actual substantive analysis of the alleged infringement.
The procedural means chosen are left to the discretion of each Member State and, in the absence of relevant experience in the law of the EU Member States[5] , Law 414/2023 has not expressly provided either for the admissibility in principle of the collective action, nor for the conditions (at least illustrative, if not exhaustive) of the admissibility of the procedure.
However, a comprehensive analysis of the texts of Law 414/2023 leads us to consider that it will be up to the court seized with the representative action to assess, in order to establish the admissibility of the action, at least[6]:
- to what extent the consumers harmed by the alleged infringement of EU law are sufficiently numerous[7](a matter left to the discretion of the court) to form a group/class of consumers,
- the extent to which the alleged harm concerns the general interests of consumers and not just the interests of that group of consumers.
- the hypothesis of withdrawal of the designation as a qualified entity, (in which case the action is dismissed as inadmissible under Article 5(11) and (12) of the Law).
- If the representative action is brought against a defendant who is a competitor of the funder of the qualified plaintiff entity or against a defendant on whom the funder is dependent (Article 10(3)(b) of the Law), the court shall dismiss the action as brought by a person without standing (Article 10(6) of the Law). The legislative solution is debatable, the correct sanction being rather the dismissal of the action as inadmissible, given that what is being sanctioned is the diversion of the action from the purpose of the law (consumer protection) and not the lack of identity between the subject of the legal relationship and the plaintiff.
- Having prima facie verified the concrete subject matter of the alleged infringements, and having found that they are either unrelated or so unrelated that separate proceedings are superior to joint proceedings under Article 139 of the Civil Procedure Code, the court may order the severance of the individual claims of each of the members of the group, thus putting an end to the collective nature of the action.
Representative action for injunctive measures – procedural aspects: opt-out participation, provisional measures, definitive measures
Regulating the opt-out system with respect to representative action for injunctive measures, the Law 414/2023 states in Article 8(3) that “In order for a qualified entity to seek injunctive measures, individual consumers are not required to express consent to be represented by the qualified entity.” The judgment thus rendered is res judicata in respect of the members of the group represented by the claimant qualified entity, who may use that judgment as evidence of the infringement in a possible action for damages against the professional defendant (according to Art. 15 of Law 414/2023), in which they will only have to prove the extent of the damage suffered.
Under the opt-out system, all persons who are theoretically part of the group are presumed to be part of the class, and in order to avoid the procedure and, by implication, the authority of res judicata, they must explicitly so express themselves within a given time limit.
An important novelty in terms of the collective action procedure is the regulation of the provisional measures for the cessation of the infringement – according to the injunction procedure (see the provisions of Article 8 (1) (a) of Law 414/2023, which refers to the common law provisions of the Civil Procedure Code concerning the conditions of admissibility of the injunction (Article 997 et seq. Civil Procedure Code), thus respecting the principle of equivalence.
As for the final injunctive measures, according to Article 8(2) of Law 414/2023, the court may order:
- A finding that the practice constitutes an infringement as referred to in Article 2(1);
- An obligation to publish the decision on the measure, in whole or in part, in a form deemed appropriate by the court in Romania or an obligation to publish a statement of rectification.
Representative action for redress measures – procedural aspects: opt-in participation, settlement by judicial settlement
Law 414/2023 establishes the opt-in participation of consumers in the proceedings, the qualified plaintiff entity being obliged to request, within 30 days of the filing of the action for redress measures, the explicit and written consent of consumers to be represented in such action (Article 9(2) of the Law). This consent shall be expressed within 30 days of the request for consent. (Article 9(3) of the Law).
The request for the express consent of the consumers in a group and their representation in the dispute by a qualified entity means in Romanian procedural law an action with a plurality of plaintiffs, who have a common representative, an eminently private law action, in which the court is called upon to verify legal relationships in concreto and to eliminate violations of the law from each and every one of the legal relationships submitted to judgment.
In its proposed form (actual expression of consent within 60 days from the filing of the action, with related publicity), the regulation creates serious image damage for the defendant, who is being sued by a qualified entity (possibly on the instructions/with the express funding of a direct competitor) which does not represent anyone and advertises its representative action by inviting consumers allegedly harmed by the alleged infringement to participate in the proceedings.
In order to protect all the rights of the litigants, and especially those of the defendant (professional), against whom there is no presumption of fault, but rather he is presumed by law to have acted in good faith in the performance of his contractual obligations towards consumer clients, we consider it necessary to modify the time at which the qualified entity requests the express consent of consumers, i.e. prior to the commencement of the representative action, while maintaining the possibility for other consumers to join the proceedings at a later date – within the same 30-day period.
The absolute novelty in the field of consumer protection brought by Directive 2020/1828/EU and by the implementing law is, however, the regulation of the possibility of amicable settlement of the representative action for redress measures by judicial settlement, under the conditions of common law – Article 438-441 Civil Procedure Code (see Article 11 of Law 414/2023).
Directive 2020/1828/EU thus establishes, somehow contrary to the settled case-law of the CJEU, that consumer protection is not strictly a matter of public policy, since the effective redress to which the consumer is entitled cannot be protected by public policy measures, the right to redress being an eminently private right of the consumer concerned or of the group of consumers and not a right of the whole society.
[1] Published in M.Of. 1158 of 20.12.2023
[2] defective products, unfair terms, air transport, consumer goods, information society services, e-commerce, medicinal products for human use, general product safety, electronic communications networks and services, processing of personal data and protection of privacy in the public communications sector, distance marketing of consumer financial services, food safety, unfair commercial practices, misleading and comparative advertising, services in the internal market, rights of disabled persons and persons with reduced mobility, rail transport, consumer credit agreements, holiday products, classification, labelling and packaging of substances and mixtures, undertakings for collective investment in transferable securities, electricity, natural gas, electronic money, eco-design for energy-related products, insurance and reinsurance, accident liability of carriers of passengers by sea, cross-border payments, labelling of tyres, cosmetic products, audiovisual media services, EU Ecolabel, rights of passengers travelling by sea and inland waterways, alternative investment funds, rights of passengers travelling by bus and coach, credit and direct debit transfer in euro, roaming on public mobile communications networks within the Union, alternative dispute resolution for consumer disputes, online dispute resolution for consumer disputes, credit agreements offered to consumers for residential immovable property, non-automatic weighing machines, electrical equipment, markets in financial instruments, comparability of payment account fees, switching payment accounts and access to payment accounts with basic services, individual structured and insurance-based investment products, European long-term investment funds, open internet access and retail tariffs for communications within the EU, travel packages and associated travel services, payment services in the internal market, insurance distribution, processing of personal data and the free movement of such data, medical devices, in vitro diagnostic medical devices, cross-border portability of online content services in the internal market, money market funds, prevention of unjustified geo-blocking and other forms of discrimination based on citizenship or nationality, domicile or establishment of customers in the internal market, contracts for the provision of digital content and digital services, contracts for the sale of goods.
[3] See list annexed to Directive 2020/1828/EU
[4] Class action has its origins in American law
[5] which hardly knew the form of collective action envisaged by Directive 2020/1828 – for example, Law 193/2000 contains in Art. 12 – Art. 13 some form of collective action, but it is substantially different from the “class action” in American law which was the inspiration for the representative action. The same is true of most Member States, especially those with a continental system of law
[6] the law applying only to infringements of the collective interests of consumers and not to infringements of their individual interests
[7] Art. 2 lit.h) collective interests of consumers – general interests of a group of consumers aiming at the recognition of a right provided by this law;
