Groups of citizens, businesses and consumer associations with grievances against companies will be able to collectively file a class action lawsuit, according to a draft law that will be published for consultation today.

The draft law, called Collective Proceedings Act, defines collective proceedings as “proceedings which are brought by a class representative on behalf of people whose claims raise common issues and which may be instituted as a group action or a representative action”.

The draft legislation will be launched today by Consumers and Fair Competition Parliamentary Secretary Chris Said and will undergo a six week consultation period.

One of the government’s electoral promises, the class action may be filed for damages in an alleged infringement of the Competition Act or the Consumers Affairs Act.

Collective action may be filed as a standalone, where the group asks the court to determine a breach of the law and award damages, or a follow-up action, where a lawsuit for damages is filed after a decision has been handed down, in separate proceedings, by the Office for Competition, Office for Consumer Affairs, European Commission or Courts.

This law would have come in handy, for example, in the court case initiated last year by the Labour Party on behalf of almost 18,000 people against VAT paid on car registration tax. A secretariat spokesman explained there were three main aims behind the proposed law which would increase the individual’s access to the justice. Due to the specific nature of the damage, together with high litigation costs and the complexity of competition cases, consumers and small businesses often opt not to take legal action on an individual basis, the spokesman explained.

At present, neither is it possible for registered consumer associations to file for compensation in court on behalf of consumers. Also, associations would not take up legal action if the litigation costs were too high, the spokesman added.

The draft law would give consumers and businesses the chance to seek compensation for claims that they would not have made individually.

It would also act as a deterrent; businesses would be readier to comply with the law because there was a greater possibility that victims would turn to legal action, the spokesman said.

“The possibility of collective proceedings addresses this vacuum, as businesses and companies are aware that victims may seek action collectively and that they may have to fork out money in damages they otherwise might have not paid because the victims were not ready to claim individually,” the spokesman said. The Bill provides for private individual group action, filed by a person who suffered a grievance or a registered consumer association, on behalf of consumers in disputes with businesses relating to goods and services.