Collective Redress & Class Actions 2021

Last Updated November 09, 2021

France

Law and Practice

Authors



Signature Litigation AARPI is a specialised firm handling major high-value litigation, arbitration and regulatory investigations. From offices in London, Paris and Gibraltar, it handles multiparty disputes stretching across multiple jurisdictions and acts for numerous worldwide manufacturers in all industries and financial institutions. Its Paris office was established in January 2019; its dedicated litigation and international arbitration team comprises lawyers who trained at major international law firms and who are highly regarded for their expertise. The team is recognised for its work in complex, cross-border litigation; commercial, banking, corporate and post-M&A disputes; insurance/reinsurance, product liability and environmental litigation; and mass litigation and class actions. Its work on mass and group litigation linked to the field of hazardous substances is well recognised, with some of its pro-company case law featuring in the Civil, Civil Procedure and Social Security Codes due to their significance.

Class action/collective redress mechanisms were only introduced into French law in 2014, which is quite recent compared to the USA. The system was subject to many discussions from the 1980s onwards, but none of them were successful.  

In 2005, a special committee was formed and began working on the potential introduction of class actions into the French legal system. However, it was nine years before lawmakers finally issued legislation sanctioning class action mechanisms. The Hamon Law was enacted on 17 March 2014 (Law No 2014-344) and a decree implementing this Law (Decree No 2014-1081 of 24 September 2014) was then adopted in September 2014. The mechanism is governed by the French Consumer Code as it is only applicable to consumer law matters (damage resulting from the sale of goods, the provision of services or anti-competitive practices). The actions can only be brought by 15 consumer associations that have been duly authorised and are representative at the national level. The action is not available to individual claimants.  

By two acts of 2016, the French class action was extended to the field of health and cosmetics (Act No 2016-41 of 26 January 2016) and to the fields of discrimination, the environment, and the protection of personal data (Act No 2016-1547 of 18 November 2016). Articles 848 et seq of the French Code of Civil Procedure, introduced by Decree No 2019-1333 of 11 December 2019, specify the procedural rules applicable to French class actions.  

In spite of this extension, very few class actions have been initiated in France: a total of 21 since 2014, 14 of which concerned consumer law and were limited to economic damage. No company has yet been held liable.

The French collective redress mechanism is very different from the class action system in the USA.  

First, the scope of the French class action is limited to certain types of issues: consumer rights, health and cosmetics, discrimination, protection of personal data and the environment. On the contrary, in the USA, the scope of class actions is much broader: consumer law, securities law, health, the environment, business law, discrimination, infringement of fundamental rights, etc. In the USA, many class actions concern issues pertaining to overtime or working hours for example, which is not possible in France. 

Secondly, only 15 officially recognised associations or trade associations can initiate a class action in France, unlike in the USA where they can be initiated directly by an individual. In France, authorised associations have to gather a specific group of consumers that they will represent while the USA does not impose this prerequisite. 

A third major difference relates to the opt-in/opt-out system. In the opt-out system in force in the USA, a person who shares a common interest in the proceeding is automatically part of the class, unless that person expressly chooses not to participate. On the contrary, in the opt-in system in force in France, each person who wants to be part of the action must actively take steps to join the class. 

On 24 November 2020, the European Parliament approved the new Directive on representative actions for the protection of the collective interests of consumers (the "Directive"), presented by the European Commission in April 2018. Member states have until 25 December 2022 to adopt and publish the laws, regulations and provisions necessary to comply with the Directive and until 25 June 2023 to start applying them. 

The purpose of the Directive is to ensure the harmonised and effective enforcement of consumer protection laws to safeguard the interests of consumers, while providing for sufficient controls against malicious prosecution. Therefore, the European class action only applies to the field of consumer law.  

It is important to keep in mind that the Directive does not aim at replacing or modifying existing class actions in member states provided that these mechanisms already meet the requirements of the Directive. In France, the existing collective redress mechanism already meets some of the European requirements (eg, there is already an action in consumer law, and the action must be brought by approved associations, which are non-profit entities, like the “qualified entity” in the Directive).   

However, some changes could be required in order to meet other conditions set out in the Directive (eg, while the associations must be established for at least five years in France, the Directive requires qualified entities to be established for 12 months).  

In any case, the Directive will not have a major impact since it does not impose an opt-out or opt-in system on EU member states. Each member state is free to choose, and France will probably not change for an opt-out mechanism. Furthermore, the Directive excludes opt-in with regard to injunctions (Article 8) and only allows opt-out mechanisms which include consumers who have their usual residence in the member state where they are located in (recital 45, Article 9). 

The principal law governing the French collective redress mechanism is Law No 2014-344 of 17 March 2014 (the so-called Hamon Law, named after the minister who led its adoption), enacted by Decree No 2014-1081 of 24 September 2014. The provisions of this Law have been transposed into the French Consumer Code (Articles L 623-1 et seq and R 623-1 et seq).  

Another legal basis for class actions in France is Law No 2016-41 of 26 January 2016 on the modernisation of the healthcare system. This Law regulates class actions in the health and cosmetics fields.  

The last specific law on class actions in France is Title V of Law No 2016-1547 of 18 November 2016, known as the Law on the Modernisation of the Justice of the 21st Century and its implementing Decree No 2017-888 of 6 May 2017. This Law extends class actions to three new fields: discrimination (particularly discrimination at work), data protection and the environment.  

Apart from specific provisions set out in the specific laws and decrees, class actions are governed by the general French rules on tort liability and civil procedure.

In France, collective redress mechanisms are regulated by areas of law. They exist in the fields of consumption, health and cosmetics, environment, data protection and discrimination.  

Class actions in the health area can be brought by health user-approved associations to obtain compensation for the individual losses suffered by health users who are in an identical or similar situation. This situation may result from a failure to comply with legal obligations or a breach of legal obligations by a producer, supplier or service provider producing, supplying or providing services relative to the products mentioned in Article L 5311-1 of the French Public Health Code. This Article lists, for example, cosmetic products, contraceptive products, non-corrective eye lenses or tattoo products, which is a rather broad field of application.  

Class actions in the environmental area are aimed at obtaining an injunction to stop a nuisance or at claiming compensation for damage caused to the environment. This type of class action also seeks to obtain compensation for the physical damage or material losses suffered by several persons placed in an identical or similar situation caused by the violation of legal obligations or the failure to comply with legal obligations relating to the protection of nature and the environment. The class action may be brought by any approved environmental protection association (Articles 142-2 to 142-3-1 of the French Environmental Code).  

There are two types of class actions in the area of discrimination. They aim to either obtain an injunction to stop a nuisance, or obtain compensation for damage suffered by several persons caused by discrimination related to their individual characteristics (origin, gender, family situation, opinion or physical appearance, for example). The first action is a general action and must be brought by approved associations. The second action is specific to the discrimination caused by a public or private employer. This second type of collective action may be brought by any trade union or association specialised in the fight against discrimination provided that it has existed for at least five years.  

Class actions in the field of data protection only allow individuals to obtain the cessation of a nuisance resulting from a breach of Law No 78-17 relating to data processing, files and freedoms (such as a security breach of an operator or one of its subcontractors). No compensation can be obtained via this specific mechanism.   

Class actions in consumer affairs allow consumers who have suffered the same injury from the same professional to join and take legal action via an association. To date, only 15 consumer associations have been duly authorised at a national level. 

A class action as it exists under French law enables groups of individuals to collectively sue a defendant or a group of defendants, without separately having to file a case or resort to a lawyer. The people composing the groups of individuals must be in a similar or identical situation and must suffer from damage caused by the same defendant or the same group of defendants. 

In a Ministerial Circular dated 26 September 2014 presenting the provisions of the Law of 17 March 2014 that introduced class actions in France, the French minister of justice defines class actions as a right of action of a particular nature granted by the Law to certain identified persons who may, under certain conditions, initiate such an action in the fields of consumer and competition law. Today, class actions are available in other areas such as data protection or the environment.  

Only nationally representative and accredited consumer associations are entitled to represent consumers and bring a class action and only in the following circumstances: 

  • to stop breaches by an entity of its legal or contractual duties; and 
  • to compensate losses suffered by the individuals and caused by the said breaches.

In France, a group action must be initiated by a duly approved association by way of a writ of summons. There are currently 15 consumer associations authorised to bring group actions, listed on the Ministry of the Economy’s website and in the Ministerial Circular dated 26 September 2014. 

The relevant court for the group action is the Tribunal Judiciaire (Judicial Court – "TJ"). The association must file suit in the court of the defendant's domicile or, if the defendant is not in France, in the TJ of Paris. If there are several defendants, the association has the choice between the different places of residence of the defendants.  

There are two different procedures applicable for class actions: the standard procedure and the simplified procedure.  

The standard procedure is a two-step process. After having determined whether the conditions required to bring a class action are met, the TJ will rule on the liability of the defendant. If the defendant is held liable, the TJ will determine the class of persons concerned by the class action and make its decision public to allow those persons to opt in. They can do so via the approved association that initiated the procedure and the liable company pays damages to this association. The final step is for the association to distribute the awarded sum between the consumers who opted in.  

The simplified procedure allows the defendant held liable by the TJ to directly and individually compensate the affected consumers whose identity and number are known (for example, where the liable company has a client database) and all of the affected consumers who have sustained an economic loss of the same amount. In this type of class action regime, the decision is not made public and the final decision is notified to each consumer individually, who must then individually accept the compensation. 

In France, the standard group action is organised in two steps.  

The first stage aims at obtaining a judgment on the merits relating to the liability of the professional. At this stage, the TJ will rule on the liability of the defendant. To do so, the court will do the following.  

  • Verify that the conditions to bring the action are met. 
  • Investigate whether the defendant is responsible for the damage alleged by the consumers by analysing the submissions exchanged between the lawyers of the parties. The association must show, using factual proof, that the professional can be held liable. 
  • Define the group of persons concerned (eg, the purchasers of a product not delivered or a service not provided, etc) by analysing the criteria proposed by the association in its submissions. 
  • Determine the amount of compensation owed to each person (or a category of persons) or the elements allowing the evaluation of these losses. Once again, the court will do this on the basis of the submissions of the parties. 

Based on these points, the TJ will order the appropriate publicity measures to be taken in order to inform the people who may potentially belong to the consumer group. This publicity can only take place when the decision ruling on the group action is no longer subject to appeal. 

The second stage of the group action aims at compensating the victims. Once the ruling has been made public, it will be up to the victims to make themselves known in order to obtain compensation for their damage. To do so, the victims will have to apply, in accordance with the court's decision, directly to the professional or to the consumer association (see Article L 623-5, paragraph 2, of the French Consumer Code). It should also be noted that the victim's membership to the group does not prevent him/her from taking action under ordinary law to obtain compensation for damage not covered by the decision. 

A French class action may only be brought by a duly registered association that has existed for at least five years and whose purpose is to defend the interests that have been infringed. These requirements must be met by all associations seeking authorisation to bring a class action in France.   

To initiate a class action, an association is approved:  

  • for consumer class actions – under the conditions of Articles L 811-1 and 811-2 of the French Consumer Code;  
  • for health class actions – under the conditions of Article L 1114-1 of the French Public Health Code; 
  • for environmental class actions – under the conditions of Article L 142-3-1 of the French Environmental Code; 
  • for discrimination class actions – under the conditions of Articles 86, 87 and 88 of Law No 2016-1547; and  
  • for data protection class actions – under the conditions of Articles L 811-1 of the French Consumer Code. 

In the fields of health, the environment, discrimination and data protection, class actions are available to approved associations but with no requirement of representativeness at a national level. This differs from the consumer class actions, where an association must be representative at the national level to be approved.  

The number of associations who are able to bring a class action in the fields of health, environment, discrimination and data protection is much higher than the number of associations authorised to bring consumer class actions.  

The consequence of this mechanism is that in France, only approved associations can be a party to the proceedings. This means that an individual acting alone cannot bring such an action but will receive compensation at the end of the proceedings if he/she makes him/herself known to the association when the ruling on liability is made public by the court.  

Furthermore, to bring a group action, the approved association must prove that there are at least two victims in the same situation. Given that victims take part to the proceedings only at the second stage of the process, it is interesting to note that no mandate is given to the association by the victims. Such mandates are only given after the professional has been established as liable. 

The French class action is based on the opt-in system. However, a new form of class action has been introduced by way of an amendment to Articles L 623-14 and R 623-11 et seq of the Consumer Code, known as the "simplified group action". It will apply in cases where the identity and number of consumers concerned are known and their loss is identical. In this case, after having ruled on the professional's liability, the court may order him or her to compensate, directly and individually, the various injured consumers. The latter, unaware of the action taken on their behalf, will only be informed of the compensation claim that has been awarded to them after the expiry of the appeals relating to the judgment on the liability. They will then be able to "accept to be compensated". While they will come forward to accept and not to refuse the compensation, the difference is purely symbolic: everything will have happened without them being involved in any way.  

Health class actions slightly differ from the other types of action since they contain a delayed opt-in system. 

Generally, the court will always define a period of time in which people can make themselves known to obtain compensation. This period of time is at least two months and no more than six months. In the scope of the health class action, the court must determine the deadline for people to join the class action, which cannot be less than six months and no more than five years (Article L 1143-4 of the French Public Health Code). The period to opt in is, in this case, much longer than in the other types of class actions.  

French law does not provide for any rules regarding the size of the group. There are therefore no limits and the group can increase in size as long as victims make themselves known.  

The procedure for joining class actions in France occurs in two stages. During the first stage, which only aims at determining the liability of the defendant, the question of joining the group is not relevant because this part of the procedure takes place only between the approved association and the defendant.  

During the second stage of the procedure, once the court has made its ruling public, the persons meeting the requirements to take part in the group of victims as defined by the court must make themselves known to the approved association within the period of time defined by the court. A person who misses the time limit set by the court cannot join the procedure at a later date, and the only way for this person to obtain compensation for the damage is to initiate separate proceedings, outside of the framework of a class action. This can be done by way of a “joint representation action”, which is an action that allows an approved association, representative at the national level, to bring a joint action before the court if at least two persons have given it a mandate to do so.   

The difference with a class action is that the persons are already identified before the beginning of the procedure and that they have expressly mandated the association. This action is less technically demanding than a class action. 

Class actions are not dealt with by special courts/judges in France. There are no specific procedural aspects. The claimant must be careful to meet the rules of jurisdiction and limitation to not see its action fail on a procedural basis.  

In its judgment on liability, should the court consider that the defendant is liable, the court will define the criteria needing to be met to join the group and hence ask for compensation. The court also sets the deadline by which the persons meeting such criteria must apply to obtain compensation.  

For all the other aspects of the procedure, the court has the same powers as in a standard procedure. 

French provisions on class actions do not determine a maximum length of proceedings. It is therefore not possible to gauge the potential length of class actions based purely on legal provisions.  

The only requirement that exists in terms of time under French law pertains to the statute of limitations. However, it should be noted that there are no specific rules on the statute of limitations for class actions. Consequently, the applicable limitation period is the same as in standard procedures, namely five years following the occurrence of the damage. The date of the occurrence of the damage is the date on which the holder of the right to bring the claim becomes aware or should have become aware of the facts enabling him/her to exercise this right (Article 2224 of the French Civil Code). 

However, this limitation period to start the action does not help to determine how long the proceedings will last once launched. As explained, the court will give the parties time to make themselves known. The period of time given by the court will also have an impact on the length of the proceedings. Once the first stages of the proceedings have occurred, potential appeals will further impact the total duration of the action. It is therefore impossible to give an average length of the proceedings given all the factors that can have an impact on the action and given that no collective proceedings have been successful in France to date. However, for each action, a provisional procedural timetable will be determined by the court for the parties to be aware of the scheduled length of the procedure. In view of the possible referrals and various procedural incidents possible, this timetable may change considerably as the procedure progresses. 

Generally speaking, all the procedural issues that may arise will lengthen the procedure (questions on the jurisdiction of the court for instance). Some mechanisms, for example, suspensions or interruptions can occur during the procedure and will considerably lengthen the duration of the proceedings. As explained at 4.7 Length and Timetable for Proceedings, the lodging of appeals can also lengthen the procedure and this can be counted in years, especially as, in France, all cases can be subject to appeal. 

Conversely, the acceleration of the procedure can only be done by the mechanism of the simplified class action explained at 4.1 Mechanisms for Bringing Collective Redress/Class Actions

When it comes to the funding and costs of proceedings, Articles 696 and 700 of the French Code of Civil Procedure provide for mechanisms for determining the burden of costs of the proceedings between the parties.  

Article 696 provides that the unsuccessful party bears the costs, fees and taxable charges relating to the proceedings, unless otherwise decided by the court. 

Article 700 grants the successful party the right to ask to the court to be reimbursed of its expenses by the unsuccessful party. The expenses covered by Article 700 are the ones that are not covered by Article 696, such as lawyer's fees, travel expenses or private expertise expenses for example. This being said, it never happens that all fees are reimbursed in the scope of French proceedings. The court will instead determine the amount to be granted based on the amount of the claim and “equity”, meaning what it believes to be reasonable fees. 

As for third party funding, there are no specific provisions on the funding of class actions in France. Therefore, general rules on the funding of proceedings apply.  

The existing laws and decrees on collective actions do not provide for the possibility of the proceedings being funded by a third party but neither do they contain provisions prohibiting it. Moreover, the French Supreme Court (Cour de Cassation) rendered a decision on a third-party funding issue in which the Court did not prohibit this mechanism (French Supreme Court, 1st Civil Chamber, 23 November 2011, No 10-16.770). 

It is therefore possible in France for a third party to fund proceedings. Nonetheless, lawyers and parties accepting to proceed with a third-party funding must ensure that the secret professionnel (professional privilege) is not violated. The lawyer must also ensure that the third-party funding does not raise any conflict of interest. The EU Directive on Collective Redress deals with third-party funding and provides that the third-part funder must not influence the decisions of the qualified entity and that the third-party funder cannot fund a class action against one of its competitors. These provisions are not implemented into French law at present.  

In France, the rules and standards governing the non-disclosure of documents on the grounds of professional privilege are very clear and established. These rules are known as secret professionnel. According to Article 66-5 of the Law of 31 December 1971, all communications between lawyers and their clients (letters, emails and all the documents communicated in this scope) are strictly confidential and cannot be disclosed to third parties. 

There are no discovery or disclosure procedures in France as this concept is commonly known in common law countries. However, the court may still order the disclosure of specific documents at the request of a party. These orders can be issued prior to the initiation of the proceedings (Article 145 of the French Code of Civil Procedure) or during the proceedings (Article 138 of the French Code of Civil Procedure). In particular, Article 145 of the French Civil Procedure Code provides that investigative measures may be ordered if there is a legitimate reason to preserve or establish evidence before the filing of a lawsuit. 

In addition, Article L 623-3 of the French Consumer Code specifically provides that for class actions, at any point in the proceedings, the court can take all legal measures to safeguard evidence and order the disclosure of documents, including those held by the defendant.  

Different remedies are available through class actions, but the award of damages is the most common one:  

  • in consumer law and competition law class actions – damages can only be sought in relation to financial losses; 
  • in health class actions – damages can only be sought in relation to personal injuries;  
  • in discrimination class actions – damages can only be sought in relation to financial losses and moral damage;  
  • in environment class actions – damages can only be sought for personal injuries and financial losses; and 
  • in data protection class actions – damages can only be sought in relation to financial losses and moral damage.  

Obviously, the nature and quantum of the damages that could effectively be awarded to a given group will depend on several factors, including the remedies sought in the initial writ of summons and the decision as to the defendant's liability handed down by the court on the merits at the end of the first stage.  

Punitive damages do not exist under French law.  

Since the creation of group actions in France in 2014, only few group actions have been filed. To date, no judgment retaining the liability of the defendant has been rendered, and only three group actions have resulted in compensation for the claimants, by way of settlements.  

With regards to mechanisms for settling class actions, arbitration, although not expressly prohibited, must be considered unavailable.  

The general provisions of the French Consumer Code prohibit clauses that impede legal action by consumers, in particular by requiring them to refer to an arbitral tribunal. There is, therefore, mistrust of arbitration clauses in general consumer law that must be taken into account in class actions. 

Indeed, the two laws implementing class actions in France (the Hamon Law and the Law on the Modernisation of the Justice of the 21st Century) do not provide for any provisions regarding arbitration. However, the Hamon Law has integrated into the French Civil Code an article prohibiting clauses whereby consumers waive the right to exercise a collective action (Article L 623-32 of the French Consumer Code). 

Moreover, various articles governing the jurisdiction of the courts give jurisdiction to the TJ and to administrative courts to hear class actions (Article L 211-9-2 of the French Judiciary Organisation Code; Article R 1143-1 of the French Public Health Code; Article L 77-10-1 et seq of the French Administrative Code of Justice; Article 848 et seq of the French Code of Civil Procedure).  

It is therefore possible to deduce that arbitral tribunals are excluded from hearing class actions. 

Mediation as well as negotiations between outside counsel are always an option under French law, even in the scope of class actions. When it comes to negotiations between outside counsel (which is the only way in France to ensure the confidentiality of the discussions), they can happen at any time and they often result, if an agreement is reached, in the withdrawal of the claim. Since the Law on the Modernisation of Justice for the 21st Century of 18 November 2016, mediation is highly encouraged by the courts. If this option is chosen, the mediation is led by the approved association and, if an agreement is found with the defendant, the suggested agreement is submitted to the court who will decide whether or not to approve it after having considered whether it is in the interests of those to whom it is intended to apply. If the agreement is approved, it is then made public to allow people to join within the determined deadline. 

Like all judgments in France, judgments in class actions can only be enforced when they become final.  

The consequence of this in French class actions is that the court, when ruling on the liability of the defendant (first stage), will define the criteria that will allow the identification of the people likely to belong to the group of victims and define the publicity measures for the judgment to allow them to make themselves known. This publicity can only occur when the judgment ruling on the group action is no longer subject to appeal, ie, when the judgment becomes final. Therefore, to enforce judgments on liability, the judgment must be final. 

When the judgment on liability is made public, it must contain some mandatory information, consisting of a reproduction of the operative part of the decision, an indication of the type of proceedings that will follow (collective liquidation proceedings or individual procedures for compensation of damage), the contact details of the party or parties to whom each interested party may address his/her request for compensation, the form, content and time limit within which the request for compensation must be submitted (Article 849-13 of the French Code of Civil Procedure).  

The announcement of the judgment must also inform the public that the request for compensation sent to the approved association, official claimant to the proceedings, confers upon it a mandate for the purpose of compensation and, where applicable, for the purpose of representation in order to launch an action for compensation or for the compulsory enforcement of the judgment rendered as a result of such an action. However, this mandate can be revoked at any time by the individual.  

In the scope of the enforcement of the judgment, the group can be compensated by the defendant in two different ways. The option that will be applied will be specified in the judgment on liability.  

The first way to compensate the group is to apply the “collective liquidation proceeding”. Such an option is applicable when the approved association specifically asks for it during the first stage of the action and if the nature of the damage involved permits it. 

This procedure allows for a lump-sum compensation to be awarded to each person in the group. If the court accepts this type of compensation, a negotiation phase will be started during which the approved association and the defendant will attempt to negotiate the amount to be paid to the members of the group. The negotiations should last no longer than one year. If an agreement is found during this period, the court analyses and then approves the agreement. If no agreement is found during this period, the other existing procedure to compensate the group will be applied, namely the individual procedure for compensation of damage.  

The “individual procedure for compensation of damage” is used when it is necessary to individualise compensation. In such a case, the victim must either approach the person declared liable (the defendant) or the approved association that handled the proceedings and compensation is awarded on an individual basis. This type of compensation is the only one possible in the scope of health and discrimination class actions.   

When the second stage of the class action on compensation is closed, if the defendant does not pay the sums owed to each person in the group, the procedure to have the judgment on liability enforced will be led by the approved association. The approved association takes over on the basis of its mandate given by each member of the group and leads the proceedings to have the judgment enforced and the compensation awarded to the victims.  

Several policy proposals and reports have been made in recent years with regards to French class action. 

On 17 October 2018, members of the French parliament presented a bill intended to make group actions directly available to groups of citizens. The proposal is that groups of consumers (of at least 100 members) could initiate group actions themselves, without the need to be represented by one of the approved consumer associations.  

A parliamentary fact-finding mission was launched in July 2019, the findings of which were presented in a final report issued on 11 June 2020. The report found that the group action regime had led to mixed results and concluded that consumers would be better protected if the various group actions available under French law were simplified and unified. The report suggested 13 possible measures aimed at increasing the effectiveness of group actions by simplifying access, ensuring better compensation for the victims, or reducing the time taken to bring cases to trial, by providing for a unique regime for all group actions, expanding the types of associations that can initiate an action, or authorising associations to publicise an action.  

On 15 September 2020, a bill (No 3329) for a new regime governing group actions was submitted to the French National Assembly. The text implements the main recommendations found in the information report. 

The French Bar Association has also already indicated that it would be in favour of allowing lawyers to bring class actions, but this has not been successful as yet.

As mentioned at 5.1 Policy Development, some reports have been issued, proposals made, but no concrete legislative or regulatory developments related to class actions are expected any time soon in France. There is therefore no legislative reform in progress in respect of class actions in France.  

However, the EU collective redress regime is currently being implemented in the members states. Although changes are not expected in France at the moment due to the fact that French class actions already meet the requirements of the EU Directive, some discussions on the development of class actions may occur at any time during the period of its implementation.  

Futures changes, if any, will probably be suggested to France by the EU. In its report to the European Parliament, the Council and the European Economic and Social Committee dated 25 January 2018, the European Commission recommends, for example, the introduction of "collective out-of-court dispute resolution schemes" that "should take into account the requirements of Directive 2008/52/EC of the European Parliament and of the Council of 21 May 2008 on certain aspects of mediation in civil and commercial matters but should also be specifically tailored for collective actions". However, despite the EU's attempts to push the member states to further develop their class actions, profound changes will not happen in France in the near future. 

From a judicial point of view, the French Supreme Court rendered a decision on 19 June 2019, which clearly limited the scope of the law relative to class actions by excluding the application of class actions to lease contracts, which are governed by a specific law, considering that this type of contract cannot be considered as a supply or service contract within the meaning of Article L 623-1 of the French Consumer Code (French Supreme Court, 1st Civil Chamber, 19 June 2019, No 18-10.424). 

The French class action mechanisms have not been impacted in any way by Brexit.  

The only impact that Brexit could have on French class actions in our view is on the enforcement of French judgments in the United Kingdom (or on the enforcement of British judgments in France). Indeed, since Brexit, the rules on the recognition of judgments between EU member states no longer apply to the United Kingdom. 

No specific provisions on this subject have been issued since the United Kingdom left the EU. Therefore, the enforcement of class action judgments follows the same rules as any other judgments. 

On 2 April 2020, the United Kingdom applied to be re-admitted to the Lugano Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters. To be admitted, unanimous acceptance from the parties to the Convention is required. Switzerland, Norway and Iceland gave their consent, but the European Commission refused the United Kingdom’s request. The European Commission justified its refusal on the grounds that the Lugano Convention is “meant for states with close regulatory integration with the EU and its view that the Hague Conventions should be used for relations between the EU and third states”. The 2005 Hague Convention on Choice of Court Agreements has already been signed by the United Kingdom but the 2019 Hague Judgments Convention has not yet entered into force.

Contrary to other jurisdictions, the COVID-19 pandemic has not led to class action lawsuits related, directly or indirectly, to COVID-19 in France. This is due to the specificity of the French collective redress mechanism which focuses on specific areas only. 

To address the COVID-19 pandemic, the French government proclaimed a state of national health emergency between 12 March 2020 and 23 June 2020 that led to a national lockdown during the same period. This was accompanied by the closure of all courts and administrations. By Order No 2020-560 of 13 May 2020, the French government postponed all legal deadlines for all legal actions, lawsuits, registrations and administrative formalities that were supposed to be carried out during the lockdown period. This Order also applied to the introduction of class actions and any corresponding deadline relative to class actions that had already been introduced.  

Signature Litigation AARPI

49/51 avenue George V
75008 Paris
France

+33 (0) 1 79 75 58 00

info@signaturelitigation.com www.signaturelitigation.com
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Trends and Developments


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Signature Litigation AARPI is a specialised firm handling major high-value litigation, arbitration and regulatory investigations. From offices in London, Paris and Gibraltar, it handles multiparty disputes stretching across multiple jurisdictions and acts for numerous worldwide manufacturers in all industries and financial institutions. Its Paris office was established in January 2019; its dedicated litigation and international arbitration team comprises lawyers who trained at major international law firms and who are highly regarded for their expertise. The team is recognised for its work in complex, cross-border litigation; commercial, banking, corporate and post-M&A disputes; insurance/reinsurance, product liability and environmental litigation; and mass litigation and class actions. Its work on mass and group litigation linked to the field of hazardous substances is well recognised, with some of its pro-company case law featuring in the Civil, Civil Procedure and Social Security Codes due to their significance.

Introduction of Class Actions in France

France has implemented a collective redress mechanism, which focuses on specific sectors and can expand with the types of issues that may be raised against companies. This "class action" system for consumer claims was first created in 2014, together with competition-related class actions (follow-on actions), before specific class action schemes were introduced in 2016 for discrimination, health and cosmetics, environment or data privacy-related issues and, in 2018, for real estate issues.

The Limited Number of Class Actions in France

Up until now, only a few actions have been launched. Three actions were launched against rental property managers (Foncia, Paris Habitat OPH and Immobilière 3F). Four actions were launched against the financial industry (AXA-Agipi, BNP Paribas, BNP Paribas Personal Finance (BNP PPF), Banque Populaire). One claim was filed against SFR, a phone/communications company, one against a company managing campsites (Manoir de Ker an Poul), one against BMW Motorrad France and one against Free Mobile. In the health sector, one class action has been launched against Sanofi in the so-called Depakine case and one against Bayer relating to one of its contraceptive implants. A group action was further filed against Safran by one of its unions on the grounds of discrimination. These cases are either pending or were dismissed.

The reality is that French courts have either dismissed the claims by applying French civil liability principles and ruling that the damage claimed falls outside the scope of the law, or have not ruled on the cases as yet.

Increased Efforts to Launch Class Actions

On 11 June 2020, the working group created by the French National Assembly issued a report stating that the system of class actions in France is disappointing. The report mentions that "[i]n spite of the extension of its scope of application, the outcome of this system is disappointing: only 21 group actions were launched since 2014, 14 of which were consumer claims, without any business having been found liable as yet. Consequently, group action has not been at the forefront of significant progress in defending consumers."

On 22 June 2020, the European Parliament and Council negotiators reached a deal on the first EU-wide rules on collective redress. The rapporteur stated in this respect: "[w]e have sought to strike a balance between the legitimate protection of consumer interests and the need for legal certainty for businesses. Each member state has at least one entity qualified to exercise a remedy, while at the same time putting in place safeguards against abusive recourse. Europe must become a shield that protects the people. This new legislation offers new rights to consumers in their daily lives and shows that Europe is making a difference." 

Consumer-protection associations used a less balanced language, stating that this new mechanism should allow them to launch many more claims that should lead to businesses being sentenced more easily. The BEUC (European Consumer Organisation) is asking all member states to choose the opt-out system, "where everyone who suffered damages is included by default unless they decide to withdraw from the court action." 

The French associations specifically welcomed an agreement which would allow more plaintiffs to file more claims against more companies, although nothing had really prevented them from filing claims up until now. 

This being said, pushing for an opt-out system, rather than the existing opt-in system, and for a widening of third-party funding would, in our view, not have changed the outcome of the cases filed to date given the grounds used by French courts to dismiss them. 

The Pitfalls of the Pending Efforts 

Yet, the drive at both national and European levels to have a wider opportunity to file collective redress actions is justified, according to the French working group, by the fact the threat of a class action pushes companies to settle in order to avoid litigation, which could tarnish their reputation and trigger significant costs for their defence. This scenario, presented as the only fully successful aspect of the existing mechanism by the working group, is, however, one of the points criticised about the US class action mechanism. 

The working group's report highlights the fact that "the legal rules governing US class actions have led to several issues. The threat of a trial, under the media pressure of consumer associations or attorneys, has forced businesses to accept a settlement without their liability necessarily being established, given the significant costs and damage to their brand image and reputation. (…) The French embassy in the United States observes that one of the main issues that is often pointed out by detractors of class actions is that they would be a tool offering significant benefits to attorneys and very small results for members of the group." 

However, this warning is brushed aside by the working group, stating that the French system is protected against this scenario because it is not exactly the same as the US system (opt in v opt out, no punitive damages in France, different compensation system for lawyers, etc), while, as mentioned above, consumer-protection associations are suggesting changes aimed at the Americanisation of the European mechanisms. 

All these statements give rise to a number of questions. Why is the success of class actions only perceived through the number of companies prosecuted and, more importantly, through the number of companies sentenced? Should the success of a legal system not be assessed on the correct application of the rule of law by courts? Is combining national and cross-border level mechanisms a balanced approach?

The political agreement obtained at EU-level illustrates the fact that the main goal of the authorities is to increase the number of claims and not to focus on the fact that standard civil liability principles should apply.

Indeed, the press release concerning the agreement obtained states the following.

  • "At least one representative action procedure for injunction and redress measures should be available to consumers in every member state, allowing representative action at national and EU level."
  • "Qualified entities (organisations or public bodies) will be empowered and financially supported to launch actions for injunction and redress on behalf of groups of consumers and will guarantee consumers’ access to justice."
  • "Negotiators agreed that the Commission should assess whether to establish a European Ombudsman for collective redress to deal with cross-border representative actions at Union level."
  • "The scope of collective action would include trader violations in areas such as data protection, financial services, travel and tourism, energy, telecommunications, environment and health, as well as air and train passenger rights, in addition to general consumer law."

The statement also mentions the fact that there should be a "loser pays principle" and the possibility to quickly dismiss manifestly unfounded cases. Based on experience, this is rarely a principle that is fully applied by civil law courts, especially when the plaintiffs are NGOs and/or individuals. 

Věra Jourová, Commissioner for Justice, Consumers and Gender Equality, when commenting on the New Deal for Consumers (in which the upcoming Directive on the European collective redress mechanism will be included) made the following statement: "In a globalised world where the big companies have a huge advantage over individual consumers we need to level the odds. Representative actions, in the European way, will bring more fairness to consumers, not more business for law firms. And with stronger sanctions linked to the annual turnover of a company, consumer authorities will finally get teeth to punish the cheaters. It cannot be cheap to cheat".

One can already anticipate that associations will argue that they cannot be penalised for abusive claims as claims would be the only way they have to determine whether or not a company acted illegally, and that courts will be sympathetic to such arguments. This is how, for instance, French courts refuse to penalise market surveillance authorities when they take decisions against products which then prove to be compliant, despite the damage that the decisions triggered on the companies at stake. 

Companies to Monitor Discussions and Prepare Their Defence

Working along the same lines, some member states, like France, are looking to implement a collective redress mechanism which would apply to all subjects, damages and industry sectors. As such, a section of the report of the working group of the French National Assembly highlights the fact that having a sectorial approach creates legal debate at an early stage of the proceedings which could be avoided if reformed. The working group also recommends that the number of authorised associations be extended and that companies (ie, small and medium-sized companies) could be plaintiffs against larger companies. 

Companies should therefore not underestimate this mechanism, even if ruled unsuccessful up until now. Consumers’ associations have learned the hard way but, in doing so, have gained experience; companies have not – so far, not a single company has faced more than one group action. Furthermore, the globalisation of litigation, especially in Europe, will push French consumer associations to be more proactive, especially when they see that their fellow counterparts in the member states are more active. 

Companies should also bear in mind that over the years the European Court of Justice has developed a pro-plaintiffs' case law with a number of national courts complying with it. In other words, if, up until now, collective redress mechanisms may have felt like a fake threat for companies, they should become a real sword of Damocles as legislators, plaintiffs and courts are taking measures to adapt and make this tool "successful", as per their definition.

Our view is that a strong defence on each single allegation made against the company will be a must-have, and that technology will be a key element to organise data and find a way to reduce exposure at the outset, ie, when challenging whether the individuals that are behind the claim are placed in the same or a similar situation.

There are some obvious criteria to check as soon as the summons is received:

  • whether all the information that is imposed by law is mentioned in the summons;
  • whether the defendant is the right entity and whether the relationship described by the plaintiff is one that can be subject to a group action (manufacturer, consumer/professional, data processor, employer) depending on the grounds of the group action; and
  • whether the organisation launching the group action is authorised to do so.

There are then more complex issues that need to be considered in order or them to be taken into account, or not, in the defence strategy, as set out below.

  • Whether or not it is clear that there are at least two individuals in the same or a similar situation. What situation is at stake? What type of damage is claimed? Etc.
  • What is the date of the alleged breach for statute of limitation purposes?
  • Is there is a demonstrated interest in bringing a claim?

Taking the time to analyse all aspects of the claim is key, especially in a context where courts feel overwhelmed by the logistics that group actions will require should liability be found.

Signature Litigation AARPI

49/51 avenue George V
75008 Paris
France

+33 (0) 1 79 75 58 00

info@signaturelitigation.com www.signaturelitigation.com
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Law and Practice

Authors



Signature Litigation AARPI is a specialised firm handling major high-value litigation, arbitration and regulatory investigations. From offices in London, Paris and Gibraltar, it handles multiparty disputes stretching across multiple jurisdictions and acts for numerous worldwide manufacturers in all industries and financial institutions. Its Paris office was established in January 2019; its dedicated litigation and international arbitration team comprises lawyers who trained at major international law firms and who are highly regarded for their expertise. The team is recognised for its work in complex, cross-border litigation; commercial, banking, corporate and post-M&A disputes; insurance/reinsurance, product liability and environmental litigation; and mass litigation and class actions. Its work on mass and group litigation linked to the field of hazardous substances is well recognised, with some of its pro-company case law featuring in the Civil, Civil Procedure and Social Security Codes due to their significance.

Trends and Development

Authors



Signature Litigation AARPI is a specialised firm handling major high-value litigation, arbitration and regulatory investigations. From offices in London, Paris and Gibraltar, it handles multiparty disputes stretching across multiple jurisdictions and acts for numerous worldwide manufacturers in all industries and financial institutions. Its Paris office was established in January 2019; its dedicated litigation and international arbitration team comprises lawyers who trained at major international law firms and who are highly regarded for their expertise. The team is recognised for its work in complex, cross-border litigation; commercial, banking, corporate and post-M&A disputes; insurance/reinsurance, product liability and environmental litigation; and mass litigation and class actions. Its work on mass and group litigation linked to the field of hazardous substances is well recognised, with some of its pro-company case law featuring in the Civil, Civil Procedure and Social Security Codes due to their significance.

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