In the name of us consumers

The electoral manifesto put forward by my party in 2008 provided the government with a clear and strategic way forward in various fields, particularly so in consumer affairs. In three and a half years we delivered on all fronts: from the reduction in the prices of medicine to the setting up of an overarching authority to enhance the welfare of consumers and to strengthen the trust between consumers and traders. Another achievement will be the intro­duction of a law providing for class actions.

Point 286 of the Nationalist Party’s electoral programme proposed the introduction of consumer class actions whereby legal proceedings initiated by a plaintiff, on behalf of a class of persons having claims with common issues, was to be made possible. The draft Collective Proceedings Act was published in late last month. We are now at consultation stage.

The fundamental purpose of collective proceedings is to efficiently address cases of alleged mass tort and to improve access to justice for those whose claims might not otherwise be pursued on an individual basis. One of the major aims behind the draft Collective Proceedings Act is to increase individual access to justice for those who would otherwise not pursue their claims for compensation for breaches of the law.

Due to the specific nature of the damages suffered, in combination with the high litigation costs and the inherent complexity of competition cases, consumers and SMEs often do not take legal action on an individual basis. Furthermore, it is presently not possible for a registered consumer association to access courts in order to claim compensation on behalf of consumers.

In principle, undertakings that have breached the law are always liable for the payment of damages to those who have suffered the loss. Some undertakings, aware of the fact that consumers or SMEs are not willing to engage in litigation individually and that consumer associations are handicapped in seeking redress on behalf of consumers, may abuse of this situation. The Collective Proceedings Act addresses this vacuum in access to justice, making undertakings more willing to comply with the law.

In terms of the draft Bill, both consumers and businesses can benefit from collective proceedings. Individual group proceedings may be commenced by a person who is a member of the group. This means that the class representative must have a claim within the collective proceedings lawsuit. Morever, a member of the class must actively choose to be included in order to be a represented person. Only those class members who opt in the proceedings will be bound by any judgement delivered by the court.

Collective proceedings may also be filed by a representative body that has no claim in the proceedings. For the first time, proceedings may be instituted by a registered consumer association on behalf of consumers in dispute with an undertaking relating to goods and services offered by the undertaking. The registered consumer association may claim damages for all the represented persons who opted into the collective proceedings.

The proposed law provides that representative proceedings may also be instituted by a constituted body acting in the interests of undertakings. This means that representative actions can also be brought on behalf of businesses.

The draft Bill is only applicable to claims arising under competition and consumer law. It makes it possible for the class representative to ask the court to determine whether there was a breach of the law and to award damages or provide an injunction on the basis of that finding.

An action for damages can also be instituted after breach of the law has been found in separate proceedings by the Office for Competition, the Office for Consumer Affairs, the European Commission, the Competition and Consumer Appeals Tribunal or the courts.

The draft Collective Proceedings Act provides for a balance on the payment of litigation costs. It makes special provision on costs with respect to frivolous and vexatious claims and also adheres to the “loser pays principle” in order to ensure that collective proceedings are only brought when claims are objectively grounded, thus avoiding abusive litigation.

However, in order not to act as a disincentive for a registered consumer association to institute collective proceedings, the draft provides for a reduction in costs against the registered consumer association by 10 to 50 per cent. Moreover, a registered consumer association is exempt from the payment of Court Registry fees upon filing.

In a few weeks’ time we will be able to go to Parliament for the first reading of the Collective Proceedings Act. Until then, I shall be meeting stakeholders, including social partners, the Consumer Association and all interested parties to underscore the importance of this legislation and to listen to their proposals on how we can improve it. I hope to receive a good number of submissions with proposals for a general improvement of the draft we have in hand. After all, it is in the interest of all of us to strengthen the remedies available at law.

Dr Said is Parliamentary Secretary for Consumers, Fair Competition, Local Councils and Public Dialogue