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Author: Anders Schäfer

VIII. Data

The empirical data under this heading were gathered from the European Commission Report "State of Collective Redress in the EU in the Context of the Implementation of the Commission Recommendation". You can reach the report from the link: Collective Redress Study for the European Commission

The following empirical data was gathered from 4 respondents: one judge, a lawyer representing defendants, a lawyer with experience of representing both defendants and claimants and a legal advisor to the Danish government.

Their fields of expertise cover the following areas:

Areas that make up the 'other' category include EU and International Law, Land Law and general areas of law.

The empirical data demonstrate that the majority of respondents only had experience of compensatory collective redress. Stakeholders cited low cost and improved bargaining positions as motivators for their choice to use collective procedures to gain compensation.

Two out of 3 respondents were of the view that collective procedures were an effective method to obtain compensation. However, there does not seem to be a uniform agreement between respondents as to the extent of effectiveness. The respondent with experience of defendant work only was of the view that the procedure is not cumbersome or an obstacle to the resolution of a claim. However, the respondent with experience of both defendant and claimant work proffered that there are limitations to the effectiveness of the procedure. In particular, "there are drawbacks regarding the length of time it takes for the class action procedure to run its course through the courts. The substantive questions of interpretation of similarity of law and fact and the issue of funding hinder the effectiveness of the procedure." This latter view acquires support from the results outlined below.

Seventy-five per cent of the respondents found some difficulty in gaining compensatory collective redress. Of those who responded to this question, 66.67% were of the view that gaining compensatory redress was somewhat difficult.

How difficult have you found gaining compensatory redress in mass claims?

Stakeholders identified practical as well as substantive legal reasons as to why difficulties exist. One practical reason cited is the obligations placed upon a group representative in a class action in relation to the other members of the group.

Substantively, 50% of the total survey and interview respondents identified the additional time taken to resolve admissibility questions in the class action proceedings as a concern. One example given in the interview by the stakeholder representing defendants was a delay of 2-3 years to resolve preliminary questions before the core legal question could be answered. A respondent representing claimants was of the view that the restrictive interpretive approach of the court towards the admissibility requirements creates difficulties in bringing claims for claimants.

The stakeholders' response to the question of difficulty correlates to their response on the burden that collective compensatory redress has on the courts. Seventy-five per cent of the total respondents were of the view that the class action mechanism imposed more burden on the courts compared to non-representative, non-collective action.

Compared to non-representative, non-collective action, what burden does collective compensatory redress have on the court?

The empirical data demonstrate that collective out of court settlements and ADR settlements are possible with 2 respondents stating that 0-29% and 1 respondent stating 30-59% of their collective claims were settled. However, it is not clear from the data whether the range of 0-29% was selected because no settlements occurred. Similarly, the data does not clarify whether settlements were pursued/reached before the start of legal action or settlements reached following suspension of proceedings. The qualitative data indicate that settlements are part of the litigation culture with the frequency depending upon area of law and type of dispute. One lawyer representing both claimants and defendants highlighted that "in some cases, the negative press from public class actions motivated defendants to settle. Also, the uncertainty of trial and the wish to restrict subsequent actions influenced the decision to settle." For the respondent with experience of settlements, the rights and interests of all rights were respected. This respondent based his view upon the requirement for court approval and for each individual to accept the terms of the settlement.

Despite the deterrents outlined above, 66.67% of stakeholders were of the view that there are substantive legal benefits to the class action mechanism. In particular, 66.67% of respondents were of the view that the mechanism ensures fairness and enhances access to justice.

Do collective actions ensure fairness of proceedings?

A stakeholder who represents defendants commented that the court's approach to the current admissibility rules ensures that there is clarity in the case and that all parties are clear as to the scope of the claim. The requirement for the claims to have a similarity of law and fact allows a defendant to argue that there is a dissimilarity in the claims and therefore the claims should be dismissed. The defendant is granted extra security in this regard. Furthermore, a defendant is also given ample opportunity and time to present his views and objections in the proceedings.

Is access to justice enhanced by collective redress?

The respondents to this question take the view that access to justice is enhanced because it provides an avenue for claimants with the same claims to resolve their dispute. The pursuance of small claims is encouraged as the costs of bringing claims to the courts are shared by class members. Small claims can "piggy back" or benefit from the claim of another claimant who may have a larger amount to claim and has incurred a larger level of costs. Additionally, time is saved on instructing lawyers and making decisions as the group representative does this on behalf of the group.

Whilst these benefits to access to justice are achieved, the structure of the Danish class action mechanism has undermined the full achievement of access to justice. Fifty per cent of respondents highlight the negative financial effect that the opt-in process has on access to justice.

If an opt-in regime is available, has it caused any particular problems in relation to?

The stakeholder which represents both claimants and defendants highlights that the high costs of bringing proceedings narrow the scope and types of claims that can be brought via the class action mechanism. However, this consequence is not widespread across all areas. The stakeholder with experience of defendant work was of the view that the impact of increase in costs in-state/government-related cases is mitigated by the availability of public funding for the proceedings.

Notwithstanding the positive appreciation of the class action mechanism, 66.67% of stakeholders shared a concern that the class action mechanism creates a risk of abusive litigation.

Are there risks of abusive litigation?

One stakeholder who represents defendants commented that, procedurally, the process to sign up to the group is easy and the minimum requirement of 2 individuals to form a class amplifies this abusive risk. However, whilst there is a risk, the data demonstrate that the manifestation of the risk is low. Of the 3 respondents who answered the question on instances of abusive litigation, 66.67% responded no instances of abusive litigation existed. The empirical data suggest that this may be a result of the impact of the costs of proceedings.

As to the costs of proceedings, 2 out of 3 respondents reported that lawyers' fees are usually charged at hourly rates. However, it remains the case that the court decides costs and costs are usually awarded at 3% of the case value. The respondent with experience of both claimant and defendant work commented that this discourages claims being brought where the award amount is likely to be small. There is a correlation between the approach to costs and the answers to the questions on the loser pays principle.

Loser pays principle: the party that loses a collective redress action reimburses necessary legal costs borne by the winning party, subject to the conditions provided for in the relevant national law.

Two out of 3 respondents were of the view that the loser pays principle is a deterrent to the bringing of a collective claim. For the respondent with both defendant and claimant work experience, this is "due to the high costs involved" which "can be overwhelming to the defendant when facing a choice to fight a claim." However, this impact is not universal across all sectors. The stakeholder with experience of defendant work comments that in public law-related cases, the costs of the case is manageable due to the availability of legal aid for such cases and therefore there is no deterrent effect.

The data suggest that the respondents see advantages of relying on an injunctive order in a subsequent individual and collective action for damages. The respondents cited the lowered costs involved in the subsequent follow-on action, the decrease in the length of follow-on proceedings and the ease of establishing liability in those cases.

As to avenues for information, the empirical data support the view that sufficient information is available that a collective procedure exists in Denmark. However, interviewee comments highlight a concern about the currency of such sources of information, particularly those on the internet. However, the empirical data suggest that for 2 out of 3 respondents, information about ongoing collective proceedings is unavailable. However, one respondent who is a member of the judiciary comments that, as it concerns potential class members, the "court has to decide how the group representative is to inform the public. The court needs to approve the way the claimant advertises. There is a requirement of efficiency and practicality. In the interviewee's case, there were adverts on TV, cinema and newspapers about the intention to commence a class action."

General remarks and recommendations proffered by Danish Interviewees are that the opt-out mechanism should be made available to all types of claimants and that courts should be granted a wide discretion to allow opt-out where a class/group of claimants can convince the court that opt-out is warranted in their case. This, in the respondent's view, would benefit claimants with small claims. Additionally, one stakeholder recommends the addition of fast track rules to the class action procedure. These fast track rules would require a defendant to submit his responses or arguments in a set time. Thereafter, the court will have to answer the formalities questions raised in a set time.


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