The European Commission (the "Commission") has published a draft Directive1 which, if implemented, would introduce, for the first time in Ireland, a style of class action litigation by consumers against corporates. This would increase litigation risk in Ireland for industry sectors which are subject to EU regulation in areas such as product liability, data protection, financial services, travel and tourism, energy, telecommunications and environment. The draft Directive forms part of a wider legislative package which is referred to as 'A New Deal for Consumers'.
Representative action, the European way
The draft Directive proposes a new type of 'representative action, the European way'. This would allow a 'qualified entity' take a representative action before a member state Court on behalf of a group of consumers who have been affected by a breach of consumer protection laws to seek redress for the affected group. The consumers concerned would not be parties to the proceedings.
The Commission has for many years been critical of the disharmonised patchwork of collective redress mechanisms available to consumers among member states, particularly following 'mass harm' situations. At present consumers in certain member states have the ability to seek redress on a collective basis, whilst this is unavailable to consumers in other member states. The draft Directive, if it becomes law, would introduce the first European-wide collective redress mechanism.
What is the current position in Ireland?
Unlike some other European member states, there is currently no legislative framework, or formal procedure, to facilitate class actions or collective redress in Ireland.
While multi-party litigation can take place before the Irish Courts, this is usually dealt with by way of either one of the parties or the Court itself choosing a 'test case' which then serves as a pathfinder for other similar cases. The absence of a procedural structure for multi-party actions was criticised in 2005 by the Law Reform Commission in Ireland, who recommended the introduction of a formal procedural structure for such cases. However, despite this recommendation, no steps were taken by the legislature and the issue of multi-party litigation is now one of the topics under review by a specialist Review Group established in 2017, at the request of the Irish Government, in the context of a broader review of the Administration of Civil Justice in the Courts of Ireland.