BIICL has recently worked with the German public body, the Gesellschaft fur internationale Zusammenarbeit (GIZ) on a collective redress project....
Prof Dr Astrid Stadler
Private international law issues of collective redress
Mass harm situations very often include a cross-border element. Products, goods and services of all kinds are distributed and offered all over Europe. Damage arising from the violation of consumer contracts or defective products may thus entitle persons and tort victims domiciled in different Member States to claim compensation from the liable party. Also mass accidents such as a train or plane crash, naval accidents or incidents like the capsize of the Italian Cruise Ship "Costa Condordia" in January 2012 as well as cases of environmental pollution will often harm victims domiciled in various Member States. Cross-border collective redress proceedings offer the chance of pooling all or at least a large number of claims arising from the same tortious act or violation of legal regulations, but they raise complex issues of private international law.
As long as there is no uniform set of instruments of collective redress in Europe forum shopping is particularly important for plaintiffs. When looking for the most favorable forum among various court systems plaintiffs traditionally have considered conflict-of-laws rules, the applicable substantive law and - to some extent - the possible advantages of procedural law of a particular forum. In mass damage cases the situation is different. First of all, plaintiffs may look for an answer to the question of which jurisdiction will offer effective instruments of collective redress, either for contentious litigation or for court proceedings declaring out-of-court settlements binding like the Dutch Collective Settlement Act.
If the potentially liable party is domiciled in the European Union the Regulation 44/2001/EU on Jurisdiction and Enforcement on Civil and Commercial Matters (the so-called "Brussels I Regulation") will apply. The present jurisdictional system of the Brussels I Regulation requires that a court hearing mass claims in single collective redress proceedings has jurisdiction over all the claims. This results from the binding effect of a court decision upon all the claimants including "absent plaintiffs". According to Article 2, 60 of the Regulation the courts in the Member State where the defendant is domiciled have jurisdiction for all civil actions against the defendant. Depending on the nature of the underlying relationship between the parties it could also be the court where the contractual obligation had to be performed (Article 5 n. 1 Brussels I Regulation) or the courts for the place where the harmful event occurred in tort cases (Article 5 n. 3 Brussels I Regulation). Article 6 n. 1 of the Regulation allows claimants to sue several defendants in the Member State where only one of them is domiciled if the claims are closely connected and if there is a risk of irreconcilable judgments resulting from separate proceedings. There is, however, no corresponding provision for a situation where several plaintiffs intend to sue the same liable party.
In the absence of particular rules for mass litigation, international jurisdiction thus depends on the applicability of Articles 2 or 5 of the Regulation. Only in a few so-called single event tort cases (e.g. a train or plane crash) Article 5 n. 3 will establish the jurisdiction of the court of the place of the accident for all tort victims. If the tort victims sustain injury or damage in various places and at a different time as it typically happens in product liability, securities or competition cases, only the courts of the defendant's domicile or the courts where the tortious act was committed (which will often be the same as the domicile of the liable party) will have jurisdiction to adjudicate upon all claims. The chance of filing an action on behalf of all persons affected then depends on the availability of collective redress instruments in that particular Member State.
For collective settlement proceedings such as the Dutch Wet Collectieve Afhandeling Massaschade (WCAM) jurisdiction under the Brussels I Regulation depends very much on the question whether courts look at the settlement contract to be approved by the court or at the underlying obligations of the liable party. The Amsterdam Court of Appeals has established its jurisdiction based on Article 6 no. 1 Brussels I Regulation and on Article 5 no. 1 Brussels I Regulation in the Shell and Converium cases.
The recast of the Brussels I Regulation which will enter into force in January 2015 (Regulation 1215/2012/EU of the Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters) did not consider the issue of mass litigation and will not provide particular jurisdictional rules.
In the absence of uniform rules on the legal standing of representative bodies, there is a high probability that cross-border mass accidents or mass harm situations will be picked up by various representative associations or claimants in different Member States. As a consequence there may be parallel proceedings against the same defendant on behalf of different persons who have suffered injury or damage. The present rules of Articles 27, 28 of the Brussels I Regulation, which address the problem of parallel proceedings and irreconcilable judgments by giving preference to the courts where proceedings have been initiated first, cannot provide adequate solutions. In order to provide the necessary information for the courts and parties involved in these proceedings it will be necessary to establish a system of national registers for collective redress proceedings interconnected with each other or a register operated at the European level. See Commission's Recommendation on Collective Redress para 35.
Recognition and enforcement
The Brussels I Regulation has established a system of mutual recognition of judgments. Recognition and enforcement can be denied only based on a very limited number of grounds (Article 34, 35 Brussels I Regulation). With respect to mass settlements it is not so much a question of cross-border enforcement (settlements will normally be fulfilled on a voluntary basis). Instead, recognition of the preclusive effect of a settlement will be important particularly if a settlement has been approved by a court in opt-out proceedings. Members of the group of victims on whose behalf the settlement has been negotiated who did not opt-out (for whatever reasons), but do not accept the settlement either, may file an individual action for the recovery of a larger award of damages in another Member State unless the preclusive effect applies. For liable parties, however, the main incentive to enter into a settlement will be to "buy global peace". Recognition of court approved settlements is therefore pivotal for settlement negotiations. At present there is no ECJ case on that question and the public policy objection (Article 34 no. 1 Brussels I Regulation) may be raised in case of foreign proceedings based on an opt-out mechanism.
The Regulation on a European Enforcement Order (Regulation (EC) 805/2004 of the European Parliament and of the Council of 21 April 2004, creating a European Enforcement Order for uncontested claims) may also apply, if a particular mass settlement is deemed to be a "settlement which has been approved by a court or concluded before a court in the course of proceedings" in the sense of Article 3 (1) (a) of the Regulation. The European Enforcement Order Regulation, however, allows only enforcement of settlements in all Member States, it does not include the recognition and will thus not apply to the preclusive effect of court approved settlements (Article 24, 5 of the Regulation).
The applicable law
Conflict-of-laws rules have been harmonized in the Rome I - and Rome II Regulations. Both regulations do not address the issue of mass litigation and collective redress, but attempt to protect the individual expectations of consumers and tort victims with respect to the applicable law. According to the basic rule in Article 4 Rome II Regulation courts will apply a single set of substantive tort rules in case of mass accidents when all victims have suffered injury or damage in the same place. For product liability cases, Article 5 balances expectations of purchasers, producers and distributors. As a consequence, courts will have to apply different national tort regimes if defective products were distributed in several Member States. In cross-border mass litigation, courts then face considerable difficulties to handle the proceedings effectively. As long as neither the Rome I nor the Rome II Regulation provides particular rules for mass harm situations national legislation may improve the situation for their courts by allowing the formation of sub-groups or sub-classes according to the applicable law.
In its Green Paper on Consumer Collective Redress in 2008 the European Commission suggested to consider the application of the law of the defendant's domicile or the law of the Member State where a majority of group members reside. As the European Commission's collective redress policy published in June 2013 does not include the implementation of binding instruments but only a Recommendation to the Member States, cross-border issues of international jurisdiction or the applicable law have not been addressed.
- Duncan Fairgrieve, 'The impact of the Brussels I Enforcement and Recognition rules on collective redress', in: Extraterritoriality and collective redress edited by Duncan Fairgrieve and Eva Lein, (Oxford: OUP, 2012) Ch. 10
- Hélène van Lith, The Dutch Collective Settlement Act and private international law, Maklu, 2011
- Xandra Kramer, Enforcing Mass Settlements, in: Christopher Hodges and Astrid Stadler, Resolving Mass Disputes - ADR and Settlement of Mass Claims (Edward Elgar, 2013) Chapter 3
- Ianika Tzankova/Deborah Hensler, 'Collective settlements in the Netherlands: some empirical observations', in: Christopher Hodges and Astrid Stadler, Resolving Mass Disputes - ADR and Settlement of Mass Claims (Edward Elgar, 2013), Chapter 4
- Willem van Boom, 'Collective Settlements of Mass Claims in The Netherlands', in: Auf dem Weg zu einer europäischen Sammelklage?, edited by M. Casper, A. Janssen, P. Pohlman and R. Schulze, (Sellier 2009), p. 171
- Tomas Arons and Willem van Boom, 'Beyond Tulips and Cheese: Exporting Mass Securities Claim Settlements from The Netherlands', European Business Law Review (2010), p. 857
- Astrid Stadler, 'Conflicts of laws in multinational collective actions - a judicial nightmare?', in: Extraterritoriality and collective redress edited by Duncan Fairgrieve and Eva Lein, (Oxford: OUP, 2012), Ch. 11
- Astrid Stadler, 'Cross-border mass litigation - a particular challenge for European Law', in: Mass Justice - Challenge for Representation and Distribution edited by Jenny Steele and Willem van Boom (Edward Elgar 2011), p. 73