VCI on the vote of the EU Committee on Legal Affairs
Misuse of collective redress is to be feared
Legal Affairs Committee of European Parliament missed opportunity to prevent potential misuse of collective redress ++ Requirements for the right to bring action of plaintiff organisations should be stricter, in order to restrain a profit-oriented „litigation industry“ ++ In European Council, German federal government should speak for collective redress as a well-balanced EU instrument to enforce consumer rights ++ German „Musterfeststellungsklage“ could make a good example.
The Legal Affairs Committee of the European Parliament is setting the wrong course for EU-wide collective redress as is planned. In view of the outcome of the Committee’s vote, this is criticized by the German chemical industry association VCI.
Berthold Welling, VCI director of legal and fiscal affairs, sustainability, voices disappointment: “Compensation for consumers whose rights are infringed by companies as well as effective law enforcement are essential elements of a functioning legal system. It is deplorable that the EU Legal Affairs Committee did not take today’s opportunity to restrain to a greater extent the potential misuse of collective redress.”
The EU directive should be limited to cross-border cases that affect consumers from at least two Member States who have given an individual mandate to bring legal action (“opt-in”). Furthermore, the requirements for the right to bring action of plaintiff organisations should be stricter, in order to prevent misuse by a litigation industry. Welling warns: “The unlimited possibility of collective redress funding by profit-oriented third parties who see collective redress purely as an investment is unacceptable.”
Welling is positive about the stance of the Legal Affairs Committee which wants a ban of punitive damages and demands to apply the “loser pays” principle, i.e. the losing party has to pay the proceedings.
According to Welling, it is now mainly up to German politicians to become active. The VCI legal expert recommends: “In the forthcoming negotiations of the European Council, the federal government should take a clear position and speak for collective redress as a well-balanced EU instrument to enforce consumer rights. Here, the German Musterfeststellungsklage – or legal action for model declaratory judgement – could make a good example.”
The VCI represents the politico-economic interests of around 1,700 German chemical companies and German subsidiaries of foreign businesses. For this purpose, the VCI is in contact with politicians, public authorities, other industries, science and media.The VCI stands for over 90 percent of the chemical industry in Germany. In 2017 the German chemical industry realised sales of more than 195 billion euros and employed around 453,000 staff.