Agnieszka Trzaska-Śmieszek
Magdalena OsmędaFor over a month now (since 25th June 2023), provisions implementing Directive (EU) 2020/1828 of the European Parliament and of the Council of 25th November 2020 on representative actions for the protection of the collective interests of consumers and repealing Directive 2009/22/EC (hereinafter: “Directive 2020/1828”) should have been in force in the Polish legal system.
The deadline for implementing Directive 2020/1828 expired on 25th December 2022 and as of 25th June 2023, each Member State was required to apply the implementing provisions. Poland failed to meet these obligations. Although Poland was not alone in this regard,1 as many other countries also missed the deadline.
Work on the draft act implementing Directive 2020/1828 has been ongoing since at least the last year autumn. The first draft of the act, dated 6th December 2022 met with numerous comments and objections. In response to the submitted remarks, the President of the Office of Competition and Consumer Protection (Prezes Urzędu Ochrony Konkurencji i Konsumentów; herinafter: „President of UOKiK”) prepared a new draft act of 5th July 2023, which was published on the website of the Government Legislation Centre (Rządowe Centrum Legislacji) on 2nd August 2023 (hereinafter: “Draft of 05.07.2023”). The Draft of 05.07.2023 was adjusted to the amendments to the Act on pursuing claims in group proceedings (herinafter: „Class Action Act”) introduced by the Act of 1st December 2022 amending the Act on the handling of complaints by financial market entities, on the Financial Ombudsman and certain other acts, which granted the Financial Ombudsman the right to initiate group proceedings.
As with the previous draft, the main objective of the Draft of 05.07.2023 is to implement Directive 2020/1828 by introducing amendments to three acts:
Although we are still dealing only with a draft bill that is in the course of legislative work – before being submitted to the Parliament (Sejm), and therefore still the subject may be significantly changed – it can be assumed that the final government bill will broadly correspond to the Draft of 05.07.2023 presented by the President of UOKIK. It is thus time to take a closer look at the proposed solutions – this post marks the beginning of a series dedicated to the Draft of 05.07.2023. In the upcoming posts, we will present the most important novelties and changes proposed in the Draft of 05.07.2023.
We can say that once the amendments to the Class Action Act enter into force in the form proposed in the Draft of 05.07.2023, a new “category” of group proceedings will emerge, or rather a “special procedure” within the framework of group proceedings. Until now, group proceedings in their classic form – classified as a sui generis type of civil proceedings – so far has been uniform in its structure/ model (the action is brought by a group representative acting in their own name but on behalf of the entire group, concerning claims of the same kind, by at least 10 persons, based on the same or similar factual basis). However, the Draft of 05.07.2023 introduces specific distinctions for group proceedings on cases concerning the cessation of practices infringing the general interests of consumers or claims related to such practices. Among other things, these distinctions refer to the entity entitled to initiate the proceedings, the premises of the admissibility of group proceedings, and the course of proceedings. The Draft of 05.07.2023 also proposes innovative and interesting solutions regarding the financing of the proceedings and the allocation of their costs.
The new category of group proceedings will apply to cases concerning the cessation of practices infringing the general interests of consumers or to claims related to such practices.
The term “practices infringing the general interests of consumers” is a new concept in Polish consumer protection legislation (the Consumer Protection Act refers to practices infringing the general interests of consumers, and there is also a statutory definition of unfair market practices2). The Draft of 05.07.2023 does not introduce a definition of “general interests of consumers”; however, based on the explanatory memorandum to the Draft of 05.07.2023, it can be concluded that the notion of “general interests of consumers” is a category that may encompass both collective and individual interests. It is therefore a broader category than the polish law concept of collective interests of consumers in Consumer Protection Act.
The Draft of 05.07.2023 introduces a new mechanism that will complement the existing system for protecting consumer rights – one that, to some extent, competes with the actions of the President of UOKiK in proceedings concerning infringments of collective interests of consumers or proceedings to declare contractual terms unfair. However, actions taken by the competition authority – the President of UOKiK – will have priority, leading to the mandatory suspension of group proceedings concerning identical allegations and, subsequently, to the discontinuation of those group proceedings (see newly proposed Article 10c(1–6)).
What differences from the so-called classic group proceedings does the Draft of 05.07.2023 introduce concerning the new special type of group proceedings?
First, the Draft of 05.07.2023 significantly modifies the premises of admissibility of group proceedings.
The very definition of group proceedings set out in Article 1(1) of the Class Action Act remains unchanged and apply to the new category of cases, subject to modifications introduced by other newly proposed provisions.
It appears that the premise of homogeneity of claims remains intact. However, the Draft of 05.07.2023 introduces certain changes and distinctions regarding the other main admissibility premises for group proceedings.
A significant liberalization is proposed concerning the premise of the same or similar factual basis of claims (in practice, this premise means that claims must arise from a common factual basis, such as one or the same event). The Draft of 05.07.2023 provides that in group proceedings concerning the cessation of practices infringing the general interests of consumers or claims related to such practices, it will be sufficient for the claims to be based on the same legal basis (i.e., their factual basis may differ…).
As for the subject-matter category of cases, the Draft of 05.07.2023 clarifies that the new category of group proceedings concerning the cessation of practices infringing the general interests of consumers or claims related to such practices may involve infringments of European Union law provisions listed in Annex I to Directive 2020/1828.
The Draft of 05.07.2023 (in the newly proposed Article 1(5) of the Class Action Act) provides for the elimination of the requirement to define the group of consumers and to submit declarations on joining the group in cases concerning the cessation of practices infringing the general interests of consumers. This constitutes a modification of the existing numerosity premise of at least 10 persons. The rationale behind the proposed Article 1(5), as explained in the explanatory memorandum to the Draft of 05.07.2023 is “to enable the initiation of group proceedings in cases concerning the cessation of practices infringing the general interests of consumers under the provisions of the act on pursuing claims in group proceedings, without the requirement to gather a group of at least 10 persons, as referred to in Article 1(1) of that Act” (p. 9 of the explanatory memorandum). Moreover, in cases concerning claims related to the application of practices infringing consumer interests, the Draft of 05.07.2023 excludes the requirement to unify monetary claims.
Secondly, the Draft of 05.07.2023 introduces a new category of entity participating in group proceedings. In addition to the group representative (which, as of recently, may also be the Financial Ombudsman), the Draft of 05.07.2023 introduces the institution of the so-called “qualified entity”, which is a category distinct from the “group representative”, although its role in the proceedings is analogous to that of a representative.
A group action in cases concerning the cessation of practices infringing the general interests of consumers or claims related to the application of such practices may only be brought by a so-called qualified entity.
In the following posts, we will take a closer look at the proposed solutions.
In our opinion, the proposed changes regarding group proceedings should contribute to the popularization of group proceedings in consumer cases and to an increase in the number of group proceedings brought before Polish courts. If the provisions in the form specified in the Draft of 05.07.2023 are adopted and enter into force, it will be a significant step toward the procedural strengthening of consumer rights protection. At the same time, it will be an additional risk factor that entrepreneurs, especially those providing services to consumers on a mass scale, should take into account.
1 See: https://eur-lex.europa.eu/legal-content/PL/NIM/?uri=CELEX:32020L1828 [accessed: 16th August 2023, 4:48 PM].
2 The definition of an unfair market practice is provided in Article 4 of the Act of 23th August 2007 on counteracting unfair market practices (Journal of Laws of 2023, item 845, i.e., as of 4th May 2023).
