The Collective Proceedings Act – another step forward
The publication of the Collective Proceedings Act in the Government Gazette some days ago barely registered a whimper in the media. And, yet, this law marks a significant milestone because it provides for a process that can facilitate consumer redress.
Over the years, various positive measures have been introduced in the realm of consumer redress, notably the introduction of the Consumer Claims Tribunal as a consumer-focused adjudicative forum and the right of registered consumer associations to ask for the issue of a compliance order if there is breach of consumer law. The introduction of collective proceedings is another step forward in this regard.
What are collective proceedings all about and why are they necessary? One problem which has persistently undermined effective consumer redress is that many consumers decide not to pursue their claims because the amounts are relatively small and are disproportionate to the effort and cost involved in obtaining redress. This was precisely why way back in 1996 the Consumer Claims Tribunal was introduced, providing a forum whereby consumers at relatively low costs could seek redress without per force incurring the legal costs generally associated with litigation in court.
However, one aspect of consumer related litigation which was not adequately catered for was when consumers have similar claims yet cannot make a collective action to seek redress.
There have been various instances where consumers ended up making separate lawsuits even though the claims and the circumstances relating to those claims were similar, if not identical. Claims which come to mind include those relating to a package holiday whereby certain excursions promised on the brochure were not provided with the aggrieved consumers filing different lawsuits relating to the same issue.
The Collective Proceedings Act endeavours to provide a procedural solution precisely to such cases, enabling a group of persons who have claims arising from common issues to take collective action seeking redress, be it the cessation of an infringement, the rectification of the consequences of an infringement or compensation for harm suffered. In order to benefit from such common proceedings aggrieved, persons must consciously opt-in and sign up as claimants to the action.
This was an issue of disagreement whereby the Consumers Association argued in favour of an opt-out procedure whereby all consumers impacted negatively by the infringement should be considered as claimants unless these decide to opt out of the process. There are pros and cons in favour of either option. The association’s main concern is that many consumers, possibly due to lack of access to information, would end up missing on any payments or other forms of redress made in the case of a favourable outcome.
I consider the Collective Proceedings Act as only a positive first step. Currently, this law applies only to consumer and competition laws administered by the Malta Competition and Consumer Affairs Authority. It does not apply, for example, to infringements of package travel or financial services legislation. The law does, however, empower the Prime Minister to extend its application to other laws. Hopefully this will be rectified in the not too distant future and the application of the law be extended to other laws, which impact consumers.
One idea I suggest is that in a couple of years down the line a review of the effectiveness of this new procedure is undertaken in order to identify whether there is room for improvement.
(The author is a member of the Consumers Association. This contribution reflects only his views.)