Ireland publishes Bill to implement Collective Redress Directive
Ireland publishes Bill to implement Collective Redress Directive
On 13 March 2023, the Representative Actions for the Protection of the Collective Interests of Consumers Bill 2023 (the Bill) was published. This Bill will now make its way through the parliamentary process and there will be a number of phases in this journey. Ireland and other Member States received infringement notices from the European Commission at the end of January, on account of their failure to meet the transposition deadline of the end of 2022 (see our previous briefing). Therefore, it is not surprising to see draft laws implementing the EU Collective Redress Directive (the Directive) progressing in a number of Member States, not just in Ireland.
There is no doubt that the publication of this Bill marks a critical and significant moment in the evolution of the Irish civil justice landscape. There will be plenty to track in the months ahead, but as of now, what does the draft Irish Bill clarify – and what does it not?
The Bill applies to representative actions brought on or after 25 June 2023 in respect of infringements by traders occurring on or after that date that harm or may harm the collective interests of consumers.
It applies to both domestic and cross-border infringements including those which ceased before a representative action was brought, or where those infringements ceased before a representative action is concluded.
An "infringement" is defined as an infringement of a "relevant enactment". A relevant enactment can be an EU provision as specified in Annex 1 to the Directive or domestic legislation, specified in the Schedule to the Bill. The Bill is intended to operate without prejudice to provisions of any relevant enactment, or any existing rules contained in those enactments relating to remedies available to consumers. How this will play out in practice remains to be seen.
There is a detailed breakdown as to the interplay between the Minister for Enterprise, Trade and Employment (the Minister) and Qualified Entities (QEs) in terms of the designation of a body as a QE, refusal of designation, the ability of the Minister to ask a QE for information and to issue a directions notice for failure to provide required information – however certain aspects remain subject to the making of regulations by the Minister. The Minister may also refuse or revoke designation – however an applicant may seek a review of this decision. This review has to be carried out by an independent person (to be appointed by the Minister).
The same criteria for designation apply whether the QE intends to take domestic or cross-border representative actions.
The Minster must review, at least once every five years, the designation of a QE, to ensure that designation criteria continue to be satisfied. A review must also be undertaken where concerns are raised by another Member State or the European Commission. A register of QEs is also to be maintained by the Minister. The Directive provides that each Member State is to communicate the list of QEs it has designated to the Commission, by 26 December 2023. The Commission is also to maintain a list of QEs.
There are also obligations on the QE to publish certain information, such as the status and outcomes of representative actions it has brought, in a "timely manner and by appropriate means."
The process for becoming a QE involves an application being made in the "prescribed form". This means that the detail around the application will take shape once the relevant Ministerial Regulations are published – which cannot happen until after the Bill is enacted.
What is a representative action: injunction or redress – or both?
A "representative action" is defined as an action for the protection of the collective interests of consumers, brought by a QE as a plaintiff on behalf of consumers. The QE shall have all of the rights and obligations of a plaintiff.
A QE can seek in one single action either relief by way of injunction or redress, or both. A QE will have to provide information to include the source of funding of the representative action. The High Court (HC) must deem the action admissible and can also decide to dismiss an action as manifestly unfounded.
If the action is cross-border i.e. the QE is bringing the action in a Member State other than where the QE was designated, then the HC shall accept the inclusion of the name of the QE in the Commission's list as sufficient evidence of entitlement to bring the action.
Where there are a number of QEs bringing a representative action, one "lead" qualified entity shall be nominated and inform the Court – all of the QEs will be bound by the outcome.
An injunction can be sought which may be interim or permanent in effect and will relate to the cessation or prohibition of a practice which constitutes an infringement. For permanent injunctions, consultation must be held with the trader. If, following a period of two weeks there has been no resolution regarding the infringement, the QE may proceed to seek an injunction. An extension of the two week period may be mutually agreed. Alternative dispute resolution is also provided for as an option for the QE to pursue, but is not mandatory. Importantly, where injunctive relief is sought, an individual consumer shall not be required to notify the QE that they seek to be represented – so this is not an opt-in measure.
For redress measures, a consumer (ordinarily resident in the State or habitually resident in another Member State) must notify the QE that he or she wishes to be represented in an action. The form of this notification remains to be prescribed but it has to be provided before the HC will deem the action to be admissible. Due to the opt-in nature of redress actions there are a number of safeguards built into this part of the Bill, including the signing of a declaration by a consumer which will bind the consumer as to the outcome of the action and will preclude any other action against the trader for the same cause of action. Redress measures might include compensation, repair or replacement. However, the HC has a discretionary power in relation to the redress remedies which it might require a trader to provide. There are provisions for settlement to be jointly proposed to the HC by the parties or for the HC to invite the parties to propose a settlement within a certain time limit.
There are provisions in the Bill around the scrutiny to be given by the HC to representative actions for redress measures which are funded by a third party "insofar as permitted in accordance with the law". This is done to prevent conflicts of interests and to ensure the protection of the collective interests of the consumers. This issue was given detailed consideration during the Bill's pre-legislative scrutiny and in the subsequent report published by the relevant Oireachtas Committee. Given the current almost total restriction on third-party funding of litigation in this jurisdiction, this aspect of the Bill would seem to have to progress alongside wider civil justice reforms, which are not yet apparent. The timing of those measures will be material to the full operation of the Bill.
Statute of Limitations
For claims for redress based on infringements that occurred on or after 25 June 2023, there are provisions around the reckoning of time for the purposes of the Statute of Limitations. This effectively stops the clock for a period of time plus 60 days so the limitation periods in the case of individual consumers can be analysed.
The Explanatory Memorandum to the Bill describes this section as dealing with "the matter of reckoning time for the purpose of interrupting the Statute of Limitations."
The fee that a consumer will be charged by a QE, so that the consumer can participate in a representative action, falls to be prescribed by the Minister. The Minister may take into account the class of representative action or class of consumer, which suggests that it may not be a one size fits all approach. Importantly, it should be noted that the fee shall be "modest" and shall not discourage a consumer from seeking to be represented in the action.
In the context of redress measures, as a general principle, the consumer is to be shielded from costs and shall not be liable to pay the costs of the proceedings. However, there is some discretion given to the Court to depart from that position. There is also scope for a successful party to recoup the costs of providing information to consumers for the purposes of the action.
There are provisions relating to the disclosure of evidence by the parties in the representative action along with third parties, in accordance with rules of court.
The final settled text of this legislation may well look different to the text just released. It will be considered by both houses of the Oireachtas and signed into law by the President. It will also be subject to commencement orders.
On a practical level, whilst the scaffolding around this new system will be put in place once the Bill is law, there are still some pieces of information which remain to be prescribed before we have a fully operational system in this jurisdiction. The language on funding in the Bill does not signal that any stand-alone system is likely to form part of this new representative action process and so overall reform in that space continues to be key in this context. We will be monitoring developments closely in the months ahead.