The concept of collective redress in the European Union (“the EU”) has evolved more slowly than in some other jurisdictions, such as the United States. Initially, the EU did not have a unified approach to collective redress, and individual member states developed their own mechanisms independently. In the early 2000s, however, the European Commission started to explore the need for collective redress mechanisms across the EU. This period saw the beginning of discussions and consultations on how to harmonise collective redress across member states.

The European Commission published a Green Paper in 2008 on collective redress, highlighting the need for effective mechanisms to protect consumers and ensure access to justice, which prompted several EU countries to introduce or reform their collective redress mechanisms.

However, by 2011 the European Commission, noting that procedures varied across the member states, recognised the importance of developing coherent and effective collective redress mechanisms across the EU and in February 2011 the European Commission published a White Paper “Towards a Coherent European Approach to Collective Redress”. This paper outlined the European Commission’s vision and proposals for developing a unified and balanced framework for collective redress across the EU.

Building on the 2011 White Paper, the European Commission issued a recommendation in June 2013 calling on EU member states to establish collective redress mechanisms by providing a comprehensive framework of common principles and guidelines to ensure a coherent approach across the member states.

In 2017, the European Commission carried out an overview to assess how member states had implemented the principles and guidelines set out in the 2013 recommendation on collective redress. The overview found significant variation in how member states had implemented the 2013 recommendation. While some member states had established robust collective redress mechanisms, others had made limited progress.

Based on the insights from the 2017 overview and ongoing consultations with stakeholders, the EC proposed a draft directive (2018/0089) on representative actions in 2018.

Directive (EU) 2020/1828 on Representative Actions

After almost two years of discussions and deliberations between the European Parliament and the European Commission, the text of the EU Directive 2020/1828 on representative actions for the protection of collective interests of Consumers (“the Directive”) was finally agreed in 2020. The Council endorsed the Directive on 4 November with the European Parliament’s endorsement following on 24 November 2020.

The Directive was first published in the Official Journal on 4 December 2020 and entered into force on 24 December 2024. EU member states had two years, until 25 December 2022, to transpose the Directive into national law and to apply the provisions by 25 June 2023.

The primary aim of the Directive is to enhance consumer protection; ensure access to justice; prevent abusive litigation; and create a harmonised, robust and effective framework for collective redress across the European Union.

The Directive, while taking inspiration from other global class action regimes including the US class action system, establishes its own unique regime incorporating several safeguards and adaptations to fit the European legal and cultural context. 

The focus on qualified entities, the flexibility in opt-in and opt-out mechanisms, and the emphasis on transparency and independence in funding are key features that distinguish it from other regimes, particularly the US class action regime.

As of the most recent updates, several member states have now implemented the Directive into their national legal frameworks. However, some member states – such as France, Spain and Sweden – are still in the process of finalising their implementation measures.

The Directive sets out minimum standards for harmonisation that all member states must adhere to, while also allowing for flexibility in adaptations and the adoption of extra measures to enhance consumer protection, provided these measures align with the Directive’s provisions and the overarching principles of EU law. Some proposed local deviations may include variations on the scope of qualified entities, regulation of funding and costs, procedure and remedies.

The EU Directive 2020/1828 on representative actions for the protection of collective interests of consumers is the principle law on collective redress in the European Union. Once implemented by the EU member states, it will become the primary legal framework for collective redress in their respective jurisdiction

The Directive is specifically designed to apply to certain legislative frameworks, which are set out in Annex I, to ensure a focused and targeted approach to consumer protection. Annex I includes various areas of consumer protection and currently comprises 66 legislative acts including:

• the Consumer Rights Directive (2011/83/EU);
• the General Product Safety Directive (2001/95/EC);
• the Product Liability Directive (85/374/EEC);
• the E-commerce Directive (2000/31/EC);
• the General Data Protection Regulation (GDPR) (2016/679);
• the Energy Efficiency Directive (2012/27/EU);
• the Telecommunications Framework Directive (2002/21/EC);
• the Food Safety Regulations (which encompass various regulations ensuring food safety and consumer protection in the food sector);
• the Medicinal Products Directive (2001/83/EC);
• the Environmental Protection Regulation;
• the Unfair Commercial Practices Directive (2005/29/EC); and
• the Unfair Contract Terms Directive (93/13/EEC).

While the Directive currently includes a broad range of consumer protection areas, it is designed to be adaptable and responsive to new legislative developments and there is a mechanism in place under Article 5 which allows the European Commission to update and expand this list to include new EU legislative proposals as they are adopted.

Several new EU legislative proposals are under consideration or have been recently adopted, which may be included in Annex I in the future. Some of these proposals include, the Digital Markets Act, AI Act, Sustainable Products Initiative and Data Governance Act.

The Directive sets out the following definitions of different types of representative actions available under Article 1:

• A “representative action” means an action for the protection of the collective interests of consumers that is brought by a qualified entity, as a claimant party on behalf of consumers to seek an injunctive measure, redress or both.
• A “domestic representative action” means a representative action brought by a qualified entity in the member state in which the qualified entity was designated.
• A “cross-border representative action” means a representative action brought by a qualified entity in a member state other than that in which the qualified entity was designated.

While the Directive provides a general framework for collective redress or class action suits, member states have significant discretion in determining the specific procedural mechanisms to be used. This includes designating qualified entities, establishing court procedures, setting rules for funding and costs, and facilitating cross-border actions. Member states also have the responsibility to determine the specific courts that have jurisdiction, which normally involves designating which courts within their national judicial systems will hear the case.

The procedure for commencing collective redress actions under the Directive is largely determined by national procedural law and generally relies on court procedures specific to the member state.

Only “qualified entities” have standing to bring an action under the Directive. A qualified entity is defined in Article 3 (4) of the Directive as any organisation or public body representing consumers’ interests which has been designated by a member state as qualified to bring representative actions in accordance with the Directive.

Member states have the discretion to set out the criteria for determining what qualifies as a “qualified entity” for domestic actions. However, for cross-border representative actions, the qualified entity must meet additional criteria, including being properly constituted according to the laws of the member state, operating independently, having a non-profit status, and having a legitimate interest in consumer protection.

Each member state is, however, required to designate at least one qualified entity that can bring both domestic and cross-border representative actions and must notify the European Commission of the designated qualified entities. The European Commission is responsible for maintaining a publicly accessible database of all designated qualified entities across the EU.

It should be noted, however, that member states have the authority to set additional criteria for the designation of qualified entities for domestic representative actions. Some member states, such as Ireland, Germany and France have adopted or are considering adopting more stringent criteria for designating qualified entities to bring domestic representative actions

The Directive does not explicitly set limits on the number of individuals or entities that can be part of a class. However, practical considerations and the specific legal framework of the member state may influence the size of the class.

The Directive allows member states to choose between an opt-in or opt-out mechanism or a combination of both for class membership. The exact procedures and requirements can vary depending on the national laws of each member state.

In the opt-in system, consumers must actively express their wish to be represented and be a part of the collective action and member states need to ensure that consumers still have an option to opt in after the representative action has been brought.

In the opt-out system, all consumers who fall within the defined class are automatically included in the representative action unless they explicitly choose to opt out.

For representative actions involving consumers who do not habitually reside in the member state where the action is brought, an opt-in mechanism is required, and consumers must explicitly express their wish to be represented to be bound by the outcome of the action.

The specific procedures and requirements can vary and will depend on national laws and regulations.

The Directive does not explicitly detail the case management powers of the courts. These powers are determined by national procedural rules and civil procedure codes in each member state. Courts generally have broad discretion to manage cases effectively, including setting timelines, consolidating cases, appointing experts, issuing interim orders, and facilitating settlements.

The length and timetable for collective redress proceedings are determined by national procedural rules and the discretion of the courts in each member state and the duration of collective redress actions can vary widely from one member state to another.

However, the Directive does outline procedural provisions to ensure that representative actions for injunctive measures are handled with “due expediency”, and it includes requirements for these to be dealt with by way of summary procedure, if appropriate.

These mechanisms will depend on the national laws and procedure rules of the member state and will vary from one member state to another.

The Directive includes specific provisions regarding costs and funding to ensure accessibility and fairness in representative actions.

One of the cornerstone principles of the directive is that consumers should not bear the financial burden of proceedings initiated by qualified entities on their behalf and proceedings generally follow the “loser pays” principle although this principle is subject to national laws and the discretion of the court. Additionally, the Directive mandates that the costs of the proceedings should not be prohibitive, ensuring that qualified entities can effectively bring representative actions without financial barriers.

Third-Party Funding

Third-party funding is permitted under the Directive, but it is subject to specific conditions to prevent conflicts of interest and ensure transparency. In particular:

• qualified entities bringing representative actions must disclose the existence of third-party funding arrangements to the court or administrative authority;
• member states must ensure that conflicts of interest between the funder and the claimants are prevented – this includes ensuring that the funding arrangement does not adversely affect the interests of the consumers represented and prohibiting competitors of the defendant from funding claims against it; and
• qualified entities must retain control over the representative action and must not allow third-party funders to dictate the conduct of the proceedings – this includes decisions on whether to settle the case or continue litigation.

The specific parameters of pre-trial and trial disclosure, as well as the rules on privilege, are subject to the laws of individual member states.

It should be noted however that Article 18 sets out conditions under which courts or administrative can order defendants and third parties (and equally a “qualified entity” or third party, as applicable) to disclosure relevant evidence in accordance with national procedural law.

There are several remedies available under the Directive. The main remedies available include:

• injunctions – eg, courts can issue orders to stop or prohibit the alleged infringement/unlawful practice; and
• forms of redress – eg, compensation, replacement, price reductions or damages.

Unlike the US regime however, to prevent misuse of representative actions, the Directive does not allow for punitive damages.

These mechanisms will depend on the national laws and procedure rules of the member state and will vary from one member state to another.

The Directive does, however, encourage collective settlements. Recital 53 provides that “[c]ollective settlements aimed at providing redress to consumers that have suffered harm should be encouraged in representative actions for redress measures”, which serves to enhance efficiency, effectiveness, and fairness in resolving collective disputes. This may therefore be attractive to businesses as such settlements could expedite resolution of these actions and save on costs.

Judgments and enforcement of judgments are governed by national laws and procedures and would vary depending on the individual member states’ local laws.

There are no reported policy developments in this area.

Some member states are still in the process of transposing the Directive into their national legal frameworks and further reforms can be expected at a national level.

Third-party litigation funding (TPLF) has been on the rise in the EU, particularly in complex competition law claims and mass torts and, with the introduction of third-party funding within the Directive, amendments to regimes regarding third-party funding are becoming more prevalent in member states.

Although proposals for a directive governing TPLF was first published in 2021, TPLF remains largely unregulated in the EU. However, the European Parliament, recognising the benefits and risks of TPLF, adopted a resolution on 13 September 2022 calling for EU-wide regulation of third-party funding. However, regulation on TPLF is unlikely to be considered until all member states have implemented the Directive. The European Commission has noted that it is committed to assessing the need for further regulations including conducting a mapping exercise, ordering an external study, and organising stakeholder consultations before taking a more detailed position on the European Parliament’s resolution.

ESG litigation is on the rise and is being driven by regulatory changes, heightened public awareness, investor pressure, judicial willingness, and a growing emphasis on corporate accountability and transparency. This is especially relevant in the context of the rise in environmental litigation seen over the past few years, as well as the heightened scrutiny of corporate governance obligations and disclosure.

Some European jurisdictions, such as the Netherlands, which has a well-established class action regime that is broadly aligned with the Directive, have already experienced a surge of high-profile class actions based on ESG issues. For instance, KLM Royal Dutch Airlines (KLM) faced a class action lawsuit from an NGO in 2022, accusing it of misleading consumers about its environmental impact.

In 2022, H&M faced a class action lawsuit in Sweden over allegations of misleading sustainability claims. The plaintiffs argued that H&M’s marketing of certain products as “sustainable” or “eco-friendly” was deceptive. Another class action lawsuit was launched in 2023 against a US chemical company for causing environmental harm with its use of PFAS, a group of allegedly toxic substances.

These cases illustrate the potential trend for ESG-related class actions to rise across Europe as the Directive is transposed into national laws.