Directive (EU) 2020/1828, which came into effect on December 24, 2020, is the latest development in the European Union’s (EU) efforts to protect consumers. It focuses on the introduction of representative actions for consumer protection, similar to class actions in the United States, in EU Member States. The primary goal of this directive is to improve consumer access to justice in cases involving mass damages and discourage future misconduct by companies operating within the EU.

Under Directive 2020/1828, EU Member States are mandated to incorporate representative actions for consumer protection. This directive grants legal standing to “qualified entities,” which are organizations or public bodies designated by Member States to represent consumers’ interests in initiating representative actions. These entities are crucial in safeguarding consumer rights and must meet requirements such as transparency, supervision, and a strong focus on consumer protection.

Representative actions, as defined by Directive 2020/1828, are available to individuals who are not acting within their trade, business, craft, or profession. This definition ensures that consumer rights are safeguarded and that the actions primarily benefit those who have suffered damage.

The directive distinguishes between two types of representative actions: those seeking injunctions and those seeking compensation for damages. For injunctions, affected consumers are assumed to benefit without individual notification, but they can pursue individual relief if the representative action falls short. In contrast, for redress actions, consumers must opt in and express their willingness to be represented. Those who haven’t decided can still pursue individual actions.

While Directive 2020/1828 provides guidelines for representative actions, it does not offer explicit guidance on the relationship between representative actions and subsequent individual actions brought by affected consumers. Member States are responsible for adapting their procedural laws to address issues such as lis pendens (the rule that prevents the same case from being simultaneously heard in multiple courts), related actions, and res judicata (the principle that a matter cannot be re-litigated once it has been conclusively decided) to avoid conflicting court decisions. However, the directive emphasizes that Member States must recognize final decisions on infringements harming consumer interests as evidence in subsequent actions against the same trader for the same practice.

The directive also introduces regulations for third-party funding (TPF) in representative actions, allowing third-party funders to invest in legal actions. This funding can be beneficial when the party seeking representation lacks resources or prefers to allocate them elsewhere. To prevent conflicts of interest, the directive includes measures to ensure that funded entities act in the best interests of consumers.

Settlement agreements are another aspect covered by Directive 2020/1828. Parties involved in a representative action can propose or be encouraged by the judge to enter into a settlement agreement, subject to the judge’s scrutiny and approval. While the settlement is binding upon the qualified entity, trader, and affected individual consumers, Member States may allow consumers the option to accept or refuse the settlement, thereby protecting their right to pursue individual actions.

In order to ensure transparency and facilitate information sharing, the directive emphasizes the need for adequate information on representative actions in each Member State. Qualified entities are required to effectively communicate the actions they will undertake, and the European Commission establishes a database to collect relevant information.

In Greece, the transposition of Directive 2020/1828 has been realized through the enactment of Law 5019/2023. This incorporation aligns Greece with the EU’s efforts to enhance consumer protection and strengthen legal remedies available to consumers in cases involving mass damages.

The Editorial Team