A. Group Actions in Consumer Law
A collective redress procedure for consumer claims was duly introduced in 2014 by virtue of the Act reforming consumer law (Loi n°2014-344 du 17 mars 2014 sur la consommation, also known as Loi Hamon). Class action proceedings in consumer law are now governed by Articles L.423-1 to L.423-16 and R. 423-1 to R.423-23 of Consumer Code (Code de la consommation).
Pursuant to Article L.423-1 of Consumer Code, an accredited consumer association which is representative at the national level can claim compensation before a civil court for individual damage suffered by consumers placed in similar or identical situations. The action de groupe is available where several consumers placed in similar or identical situations claim compensation for material damage resulting from a breach of statutory or contractual obligations committed by the defendants.
2. Procedural Framework
a. Competent Court
The tribunal de grande instance has exclusive jurisdiction over collective proceedings. In accordance with French civil procedure rules, the competent court is the court of the place where the defendant lives. If this location is outside France, the Tribunal de grande instance de Paris is exclusively competent.
Only associations have legal standing to bring collective actions.
- be representative at a national level
- must comply with the following conditions set out in Article R.811-1 and seq. of the Consumer Code:
- at least one year of existence,
- evidence of effective and public activity with a view to the protection of consumer interests, and
- threshold of individual members.
To date, 15 associations have satisfied these criteria and are thus entitled to file collective proceedings.
c. Availability of Cross Border collective redress
Currently no collective action involves foreign plaintiffs.
d. Opt-In / Opt-Out
According to the French group action regime, which follows a multi-stage approach (see below), a group is constituted via an opt-in system after the decision on liability has been reached. Under the French class action regime, the group as such is only constituted after the decision on liability has been handed down, which determines the shape and the scope of the group. Since individual claimants can join the group only after this first phase, the likely success of their claims is clearer and they are ultimately less exposed to the risk associated with the litigation. Claimants are therefore incentivised to take part in the action.
e. Main procedural rules
The general rules applicable to proceedings before the Tribunal de grande instance also apply to group action proceedings. This includes the mandatory requirement of representation by a lawyer and the case management by a specific judge (juge de la mise en état). Furthermore, ordinary French civil procedure rules apply.
A 'simplified collective action' (action de groupe simplifiée) is possible if claimants are identified and their damage is identical (Art. L623-14 Consumer Code). In these circumstances, the court can oblige the defendant to compensate claimants immediately and individually within a fixed period of time.
There is no discovery procedure under French law and the ordinary rules of French civil procedure apply. The judge in charge (juge de la mise en état) oversees disclosure of evidence and can order the production and timely exchanges of documents between parties and the court (Arts. 763 and seq. Code of Civil Procedure). The court is empowered to order the preservation of evidence and the production of documents, including those held by the defendant. (Art. R623-9 Consumer Code)
Single or multi stage process
The group action mechanism follows a three-step approach.
(1) First phase: the court decides on liability issues on the basis of test cases brought by the association(s). The court then circumscribes the scope of defendant(s) liability and clarifies the damage to be compensated. If liability is established, judges shape the collective action: they determine the criteria that claimants must meet to be included in the group, specify the damage to be compensated and the available remedies, they fix cut-off dates to join the group, and set the conditions for its announcement via mass media. The decision on liability can be appealed.
(2) Second phase: the group is constituted via an opt-in system. Claimants must fulfil the criteria set out by the court. The judge may intervene should difficulties occur.
(3) Third phase: a final ruling from the court terminates the proceedings. If needed, the court may deal with remaining issues or obstacles linked to the distribution of compensation.
Associations can settle the case on behalf of the claimants (Art. L623-22 and L623-23). Judicial approval is required for any out of court settlement agreement. The settlement agreement must specify the publicity process, the dates and the criteria for inclusion in the settlement and the court must verify that the settlement agreement correctly and sufficiently protects the claimants' interests.
3. Available Remedies
Only compensatory relief is available. However, under art. L621-9 of the Consumer Code, the association can intervene and ask the Court to apply, where necessary, interim measures provided for in art. L. 621-2: if the Court recognises a violation, it can order a cessation of the breach, if necessary under penalty in the case of non-compliance.
Compensation is limited to material damage suffered by consumers. Physical or moral harm is not recoverable. Punitive damages are currently prohibited under French law.
The court has a key role in determining the nature of the compensation awarded. The ruling on liability sets out the nature of compensation and the conditions of its distribution. Compensation can be in kind or in money. Art. L. 623-6 of Consumer Code provides that whenever the court considers compensation in kind to be more appropriate, the court must specify its conditions.
Under the standard procedure, each consumer of the class is individually compensated: they must provide evidence that they suffered the damage defined by the judge, who will then individually set the amount to be recovered.
Under the simplified procedure, the individuals will have suffered identical losses and therefore receive the same amount of damages.
Associations can settle the case on behalf of the claimants (Art. L623-22 and L623-23). Judicial approval is required for any out of court settlement agreement.
Legal costs (i.e. costs pertaining to proceedings, processes and enforcement procedures) are usually borne by the losing party (Arts. 695 and 696 of Code of Civil Procedure) unless the judge, by a reasoned decision, imposes the whole or part of it on another party.
The court may also order the losing party to pay the winning party's lawyer's and/or expert's fees. In these circumstances, the judge may take into consideration the rules of equity and the financial condition of the party ordered to pay (Art. 700 of Code of Civil Procedure).
5. Lawyers' Fees
Professional ethics rules apply to such fees. Contingency fees are prohibited under French law. Result-based fees are only possible, if they remain a complement to hourly-based fees.There is no judicial review of lawyers' fees.
The court can direct the defendant to provide the claimant association(s) with advance payments in respect of costs and expenses arising out of constitution of the group (Art. L. 623-12 of Consumer Code). The exact amount is left to the court's discretion, but should reflect the nature and the complexity of the diligences borne by the association. The current regime does provide for public support of group action proceedings. There is no specific provision relating to third party funding. To date, the associations bringing the claims have been funding the actions.
7. Enforcement of collective actions/settlements
The judge who ruled on liability also decides on difficulties which might arise during the implementation stage of the judgment (art. L623-19 of the French Consumer Code). He shall fix a period of time within which he can be seized of claims regarding the distribution of compensation the professional has not complied with (art. L623-11). Under Article R623-28 of the French Consumer Code, the association is deemed to be a creditor and, as such, can benefit from articles L. 111-1 and L. 111-2 of the French Code of Civil Procedure for the enforcement of judgments: interim and conservatory measures are available to compel the defaulting debtor to perform its obligation.
8. Number and types of cases brought/pending
Between October 2014 and December 2016, nine claims have been brought by associations. Eight of them are currently pending, and one was settled.
- Three relating to housing (one settlement)
- Three relating to financial investment
- One relating to electronic communications
- One relating to tourism
- One relating to the economic sphere
9. Impact of the Recommendation/Problems and Critiques
- Change in traditional case management rules: The management of information flows about the proceedings requires the court to consider publicity and dissemination of information about collective cases.
- Publicity campaigns undertaken by parties: it appears that associations have accompanied their filings with intensive outreach campaigns launched at the very first stage of the action. This creates reputational costs for companies. In reply, companies develop their own information strategies targeting individuals.
- A recurring criticism is the complexity of the procedure. Another is that it places a very heavy administrative and financial burden on consumer associations, which often do not have extensive resources.
- Lawyer-driven litigation: Some initiatives have encouraged the launch of web platforms aiming at informing individuals and at collecting complaints against companies (see for instance the site: www.actioncivile.com).
1. See N. Molfessis, "L'exorbitancede l'action de groupe à la française", Recueil Dalloz, 2014, p. 947.
BIICL has recently worked with the German public body, the Gesellschaft fur internationale Zusammenarbeit (GIZ) on a collective redress project....