Types of class action mechanisms. General characteristics

Following in the footsteps of other European countries, Belgium has recently adopted a statute implementing a class action mechanism. The impulse for the change stemmed from the Commission Recommendation of 11 June 2013 no. 2013/396/EU on common principles for injunctive and compensatory collective redress mechanisms in the Member States concerning the violations of rights granted under European Union Law (OJ L 201/60).

On 28th March 2014 the Act on Claims for Collective Redress was passed, entering into force on 1st September 2014. It added a new Title “Group action” (De l’action en réparation collective) to Book XVII of the Belgian Code of Economic Law (Code de droit économiquee).

In June 2018 new regulations extending the subjective scope of the admissibility of group proceedings from only consumers to also include small and medium enterprises were implemented into the Code of Economic Law.

The Belgian group action is based mainly on an opt-out model, however, whether given proceedings are to be conducted in keeping with an opt-in or opt-out model is mostly left to the decision of the certifying court. Only in certain cases is the court obligated to apply the opt-in model, and namely where the case concerns pursuing compensation for non-property damage compensation or where consumers are not domiciled in Belgium or in cases related to small and medium enterprises. Making a decision on choosing the right model, the court should take the factual basis and type of demands of the parties to the proceedings, interests of consumers/small and medium enterprises and of the market, an estimated amount of damages, as well as the potential number of injured parties into consideration.

Conditions of admissibility and the procedure

The scope of the application of the new class action mechanism is strictly limited. It extends only to cases related to the violation of contractual obligations or obligations resulting from one of European or Belgian consumer law acts or other legal acts expressly indicated in the statute. They pertain, among others, to the protection of competition, market practices, prices, credit services, product and service safety, industrial property, insurance, transport of people, healthcare, or tourist services. In June 2017 the objective scope of the group action mechanism was extended to cases related to the violation of European competition laws, including the prohibition of cartel activities and the abuse of a dominant position.

The action may be instigated to the benefit of consumers and, as of 2018, also small and medium enterprises against an entrepreneur, whether a natural or legal person. The extension of the subjective scope concerning small and medium enterprises applies solely to cases instigated after 1st June 2018, provided that the violation occurred after 1st September 2014.

In order to pursue claims in group proceedings, claims must be homogeneous (although they do not have to be identical).

Moreover, a class action has to be more suitable in a specific case than an individual action. In assessing this criterion, the Court considers, among others, the potential size of the group, complexity and the effectiveness of a group action in a specific case.

The right to file a statement of claims on behalf of a group of consumers is reserved for certain entities, such as consumer protection organisations or non-profit organisations which comply with specific criteria.

At the stage of examination of the admissibility of group proceedings, the Court also assesses whether the organisation appearing on behalf of the group is appropriate. The act does not provide for any strict requirements in this respect, nevertheless, the Court should take the given organisation’s knowledge and experience in the area of consumer cases and class action procedure in this scope, the ability to finance the proceedings, the representative’s ability to act on behalf of a large group of consumers, etc. into consideration.

Should both consumers and small and medium enterprises participate in the same case, each of the groups must be separately represented.

The Belgian law does not provide for a precondition of a group size, meaning there is no limitation as to a minimal or maximal number of the group’s members necessary to pursue claims within single proceedings. The potential number of the group will, however, influence the applicability of a class action in a specific case.

A class action in Belgium consists of four main stages:

  1. the stage of admissibility of hearing the case, concluding in a decision on examining the case in group proceedings; according to the law, the first stage should conclude within 2 months as of the date on which the action was brought forth, however, the time limit is not strictly observed; deciding on the admissibility of the group proceedings, the Court authorises the group representative to act on behalf of the group; moreover, as mentioned before, at this stage the Court decides on the model of the proceedings;
  2. the mandatory negotiation stage (the so-called ‘cooling-off’ period) should conclude within 3 to 6 months as of the decision on the admissibility of the group proceedings; a possible settlement concluded by the parties has to obtain the court’s approval;
  3. the stage of the Court proceedings including i.a. the examination of the merits of the case, exchange of views before the Court, and the issuance of the judgment;
  4. the stage of enforcement of the judgment (dividing the compensation).

A type of relief (legal protection) that can be obtained (court decision)

In the Belgian group action allows only for the collective pursuit of compensation (restitution in natura or as pecuniary compensation). The main principle is to award full compensation for the actually sustained damages. This mode excludes awarding so-called punitive damages.

Costs and manner of financing the proceedings

Provisions on class actions do not provide for any special principles pertaining to the costs of the proceedings. This means that a group representative faces a risk of being charged with the costs incurred by the opposing party should it lose the case.

The main principle applicable to the costs of the proceedings is the ‘loser pays’ principle, which means that the losing party bears all the costs of the proceedings, including i.a. court fees, experts’ costs, translation costs etc. When it comes to the legal counsel’s remuneration, the reimbursement of those costs is limited by law.

Belgian law does not provide for a possibility of concluding a ‘no win, no fee’ agreement although an extra fee, the so-called success fee, is possible.

Practice and significance of the institution. Development trends

Since the entry of the new regulations into force in 2014, 10 class actions have been instigated.

Most of them were instigated by the Test Achats (Test-Aankoop) organisation, being one of the top consumer protection organisations in Belgium.

The first class action in the new mode was instigated in May 2015 on behalf of 44,000 passengers of NMBS, a Belgian railroad company, injured by delays and cancellation of connections as a result of labour strikes. The defendant company eventually satisfied most group members’ claims and the class action duly concluded in 2017. An action was also recently instigated against the Volkswagen group in the so-called Dieselgate case. Further class actions are, among others, proceedings instigated against Groupon in relation to the distribution of diapers offered by Luierbox as well as proceedings against Facebook linked to the Cambridge Analityca data scandal.