Representative Actions Act 2023 is signed into law
Representative Actions Act 2023 is signed into law
The Representative Actions Act (the Act) was signed by the President on 11 July 2023, having completed its passage through both Houses of the Oireachtas on 4 July 2023. This Act transposes the EU Collective Redress Directive (EU) 2020/1828 (the Directive).
This enactment represents a watershed moment in the civil justice and consumer protection landscape in Ireland.
For the first time in this jurisdiction, this legislation will allow groups of consumers, who have suffered material loss or adverse consequence due to a breach of a range of EU consumer protection laws (e.g., financial services, data, products, travel) to come together in a type of class action, known as arepresentative action, to seek redress. Actions will be brought by Qualified Entities (QE).
The identity of these QEs in Ireland is not yet clear.
The enactment of this legislation was brisk, given that the text of the bill was only published in March, following pre-legislative scrutiny throughout 2022. The passing of this Act is the result of what was clearly a concentrated effort on the part of the Irish Government to move forward with enactment, given that Ireland, and many other Member States, had failed to meet the transposition deadline.
Since our last update, the legislation completed Seanad Committee and final stages in one sitting on 4 July 2023. There was one final opposition amendment tabled, relating to the recurring theme of litigation funding, more specifically the abolition of maintenance and champerty for QEs, which was voted down.
Now that we have the Act in place, what can we expect to happen next, both in Ireland and across the EU?
The Act is subject to commencement orders. In addition, whilst there is now a framework in place in this jurisdiction, there are several operational matters which require secondary legislation by way of Ministerial Regulations. Most of these relate to the role of the QE. These include:
the form in which an application by an organisation to be designated as a QE is to be made
the form in which an applicant who is refused designation as a QE may request a review of that decision
the way in which a consumer who wishes to be represented by a QE shall notify the QE
how a QE shall notify a consumer of a determination by the Court in respect of which that consumer is affected
the type of notification to be made by a consumer to a QE when they no longer wish to be represented for redress
the maximum fee (described in the Act as a “modest fee”) which a QE may charge a consumer who requests to be represented in a representative action
Funding for QEs
We discussed in our end of June briefing, at the point when the then Bill cleared the Dáil and moved to the Seanad, the likely direction of travel on the question of the ability of QEs to source funding in order to bring representative actions. The legislation as passed does not provide any express provisions for QEs to access funding by a third party, simply leaving the door open for the possibility “insofar as permitted in accordance with law”.
The position here is, therefore, in a holding pattern until the overall policy review, awaited from the Law Reform Commission, is received by the Minister for Justice and is digested, leading to some real tangible outputs.
The publication of the Law Reform Commission report will be keenly awaited in the context of how representative actions will gain momentum in this jurisdiction. It is likely that the issue of third-party funding for QEs will be looked at.
On the wider European front, the European Parliament in September 2022 called on the European Commission to closely monitor and analyse the development of third-party litigation funding in Member States, with specific reference to the implementation of this Directive. Additionally, the European Parliament requested that following the expiry of the deadline for the application of the Directive and consideration of its effects, the European Commission submit a proposal for a Directive to establish common minimum standards on third party litigation funding at Union level.
The pan-European landscape
Ireland is now one of the earliest Member States to fully transpose the Directive, even if significant operational gaps remain. However, the transposition journey across the EU bloc is far from complete. The real “bite” in terms of impact of this Directive is somewhat hard to assess now when it is still getting off the ground in terms of Member State transposition.
Reporting mechanisms: QEs
The Directive sets out some information and monitoring requirements to be followed going forward.
The Directive (Article 5) provides that each Member State shall communicate to the European Commission (the Commission), “a list of the QEs that it has designated in advance for the purpose of bringing cross-border representative actions, including the name and statutory purpose of those qualified entities, by 26 December 2023”. The list is to be made publicly available and maintained to reflect changes.
Member States are to ensure that information about QEs designated to bring domestic representative actions is made available to the public. The Act provides that the Minister shall maintain a register of QEs.
Five - year analysis
The Directive (Article 23) provides that “no sooner than 26 June 2028”, an evaluation of the Directive be carried out by the Commission, to include an assessment of “the functioning and effectiveness of this Directive in cross-border situations”. For the Commission to do this, Member States must report back on certain key metrics one year in advance, by 26 June 2027, to include the number and type of representative actions concluded. Interestingly, one item to be evaluated before 26 June 2028 by the Commission, is whether a “European ombudsman for representative actions for injunctive measures and redress measures” ought to be established.
There is a lot more to come in this space and we will continue to monitor developments in this area.