The Commission has found that, currently, EU consumers face material barriers to claiming in the shape of access to justice, effectiveness and affordability. Collective redress mechanisms currently vary between EU member states (including representative actions, group actions, test case mechanisms, if, indeed, there is any mechanism at all). As a result, there are diverse results. Consumers also lack awareness of the redress tools that are available to them, particularly in cross-border cases. There is also a general lack of faith in the current systems.

Although there are already some instruments specifically designed to aid consumer redress at the EU level, the Commission believes these are unsatisfactory. However, the Commission has not done much more than float possibilities: by itself, the Green Paper does not advance the debate substantively.

The Green Paper puts forward the following four options:

No EC action at all. This has the advantage of not imposing any additional implementation costs for member states or businesses but would, obviously, not address the identified concerns and would leave an uneven system.

Co-operation between member states. This envisages the Commission encouraging co-operation between member states to make it easier for EU consumers to use the various different collective redress mechanisms available in member states, either via a Recommendation and/or a Directive.

Member states with existing collective redress mechanisms would have to open them to consumers from other member states and member states without such a mechanism would have to establish one. In parallel, a Recommendation could lay down a set of minimum standards which all member states’ systems should satisfy.

However, for this option to work, an equitable mechanism for bearing the costs of proceedings would have to be introduced and there would be issues as to jurisdiction and applicable law in cross-border cases.

Mix of policy instruments. This would involve a mix of binding and non-binding policy tools that together would enhance consumer redress by circumventing the existing barriers to claims (high litigation costs, complexity and length of proceedings, consumers’ lack of information on the available means of redress). These might include measures to improve or establish alternative dispute resolution mechanisms that would be accessible to consumers from other member states, to extend the scope of small claims procedures to mass claims, or to ensure that all businesses have an internal complaint-handling system and other self-regulatory measures.

Judicial collective redress procedure. This is the most controversial and radical option. It would involve a centralised solution: an EU measure (whether binding or non-binding) to ensure that broadly equivalent collective redress judicial mechanisms exist in all member states. This would create effectively, a pan-European “class action”.

The Commission highlights several factors for consultation (which in many cases are already “in play” at a national level), including:

The Commission wants to avoid elements which encourage a “litigation culture”, such as punitive damages and contingency fees.

Meanwhile, in December 2008, the Civil Justice Council (CJC) in England published its final recommendations on the issue of collective redress, including detailed draft procedural rules which have been submitted to the government. A response is expected in spring 2009.

The CJC’s key recommendations for England are:

A point which ties in with the Commission’s thinking is that it would be possible to have a sub-class of non-resident claimants opting in to proceedings in England, giving the collective action scope beyond this jurisdiction.

The issues of collective redress and litigation funding are closely related, as the Commission recognises. The CJC recommendations in England come hot on the heels of its report on contingency fees. It supports damages-based contingency fees in England should the current system of conditional fee agreements (supported by “after the event” insurance) fail, and concludes that properly regulated contingency fees in England and Wales would not lead to perceived US style “excesses”. This is at odds with the Commission’s view.

The Green Paper is rather general and does not recommend particular outcomes. The Commission even concedes that the four options, as well as different elements within the options, could be combined. However, if the fourth option were to be adopted, it would be very significant for EU consumers. And member states, many of whom have just completed, or are in the process of introducing, reforms of their own collective redress mechanisms at home would have to revisit the changes made (or in progress), to ensure that the national and EU mechanisms would sit together.

With so much activity at a national level, one wonders whether now is the right time for the Commission to be looking to create an EU answer to the same issues. Member states are already alive to the fact that consumers from other countries may have legitimate claims in their jurisdiction (as shown by, for example, the foreign sub-class which the CJC envisages may opt-in to the new English action).