Collective Redress & Class Actions 2024 Comparisons

The history of class actions can be traced back to the 1800s in common law jurisdictions, but significant advancements in this legal mechanism occurred in the United States during the 1930s.

In Italy, class actions were introduced at the beginning of this century as a tool to represent the interests of specific categories (or classes) of consumers against large economic entities. This mechanism was integrated into the Italian legal system through the following key legislative steps.

• Law No 244 of 12 December 2007 amended the Italian Consumer Code (Legislative Decree No 206 of 6 September 2005) by adding Articles 139, 140 and 140-bis. These provisions aimed to provide consumers and qualified consumer associations with a legal means to react against unfair practices and seek damages.
• Law No 31 of 12 April 2019, coming into effect on 19 May 2021, repealed Articles 139, 140, and 140-bis of the Italian Consumer Code and introduced Title VIII-bis into the Italian Civil Procedure Code, covering collective proceedings from Articles 840-bis to 840-sexdecies.
• Legislative Decree No 28 of 10 March 2023, implemented on 25 June 2023, incorporated EU Directive No 2020/1828, which establishes representative lawsuits for the protection of collective consumer interests across Europe, by introducing Articles 140-ter to 140-quaterdecies into the Italian Consumer Code.

Class actions have a well-established history in the USA, whereas they are a more recent development in Italy. A comparative analysis shows that the Italian class action framework is influenced by the American model. Both systems (i) involve complex proceedings with multiple parties and phases, (ii) allow any class member to participate and (iii) include a judicial filter that assesses the subjective requirements of the plaintiff.

However, the American and Italian class action systems differ in several key aspects, ranging from the types of actions allowed to the handling of legal costs and damages. The main differences are summarised in the following.

• Types of actions allowed:
1. USA – a wider range of action is permitted, including injunctive, declaratory, constitutive and condemnatory actions.
2. Italy – only condemnatory and injunctive actions are allowed.
• Participation of class members:

1. USA – class members are automatically included in the proceedings, and the judgment applies to all unless they opt out.
2. Italy – class members must opt in by filing their own declaration.
• Role of law firms:

1. USA – large law firms often finance class actions by recruiting class representatives and covering litigation costs. They are incentivised by the contingency fee system, where they receive a percentage of the awarded damages if successful.
2. Italy – law firms are typically smaller and cannot bear the financial burden of class actions. As the contingency fees are not allowed, Article 840-novies of the Italian Civil Procedure Code provides for a premium fee based on the number of class members if the action succeeds. However, this mechanism is not sufficient to encourage law firms to promote class actions as happens in the USA. To meet the costs of litigation, third-party funding is often used in common law countries. In Italy, this scheme is still rarely adopted, although – especially in recent years – many funds are investing in Italy to publicise this possibility.
• Types of damages awarded:

1. USA – both compensatory and punitive damages are allowed. Punitive damages are designed to deter particularly serious misconduct, such as actions carried out with malice or gross negligence.
2. Italy – only compensatory damages are permitted. The aim is to restore the victim to the pre-damage state, without any punitive element.

EU Directive 2020/1828 sets the rules to ensure that every EU member state has a representative action mechanism for protecting the collective interests of consumers. The Directive aims to improve consumers’ access to justice and contribute to the effective functioning of the internal market while achieving a high level of consumer protection.

EU Directive 2020/1828 was implemented into Italian law by Legislative Decree No 28 of 10 March 2023, effective as of 25 June 2023. This decree introduced Articles 140-ter to 140-quaterdecies into the Italian Consumer Code, which closely adhere to the requirements of the EU Directive, defining the scope of the proceedings that can be initiated through representative actions and outlining the conditions of such actions.

Class actions are regulated by Title VIII-bis, Book IV of the Italian Civil Procedure Code, which includes specific provisions on “Collective Proceedings” (Articles 840-bis to 840-sexiesdecies of the Italian Civil Procedure Code).

Representative actions for the protection of consumers’ collective interests are governed by Title II.1, Part V of the Italian Consumer Code (Articles 140-ter to 140-quaterdecies of the Italian Consumer Code).

Class actions may be used to protect all homogeneous individual rights, and may be brought against companies and entities managing public services or utilities regarding conduct related to their activities.

Representative actions can be employed to protect the collective interests of consumers and can be brought against any individual or legal entity engaged in commercial, entrepreneurial, craft or professional business activities.

Both actions can be pursued across various areas, including banking and finance, data protection, financial services, travel and tourism, energy, telecommunications, liability for defective products, food safety, climate and environmental issues, and misleading advertising.

Class actions are legal actions aimed at protecting the homogeneous interests of individuals, without any specific limitations on the subject matter. They are intended to obtain compensatory and restorative relief, as well as injunctive orders on a collective basis. Active legal standing is granted to each class member and to non-profit entities registered in a public list held by the Ministry of Justice.

Representative actions are legal actions focusing on protecting the collective interests of consumers by seeking compensatory or injunctive relief for unlawful conducts. Active legal standing is conferred only upon qualified entities, according to Article 140-ter of the Italian Consumer Code, which act on behalf of consumers harmed by unlawful commercial behaviours without the need for a mandate.

Class actions and representative actions may only be filed with the specialised business court section where the defendant’s registered office is located.

A class action claim must include the following details:

• the indication of the court;
• the identities of the plaintiff and the defendant;
• the subject matter of the claim;
• the facts and elements supporting the claim;
• the evidence and the means of proof that the plaintiff intends to submit; and
• the nature of the homogeneous right and the elements proving the plaintiff's class membership and standing.

In a representative action, the claim must include:

• the elements necessary to identify the group of consumers concerned by the action;
• the jurisdiction;
• the applicable law; and
• the details of any funding for the action received or promised by third parties.

The class action procedure, as set forth in Article 840-ter and subsequent Articles of the Italian Civil Procedure Code, has three stages as follows.

• After the application is filed, the court determines the admissibility of the claim and issues an order that is published on the telematic portal managed by the Ministry of Justice. If the claim is deemed admissible, the order sets a peremptory deadline for the parties with homogeneous individual rights to join the action (not less than 60 days and no more than 150 days from the date of publication of the order).
• After assessing admissibility, the court evaluates the merits of the claim; should it be found to be well-grounded, the court issues a judgment confirming the defendant’s misconduct, defines the characteristics of the relevant homogeneous individual rights and appoints the deputy judge, as well as the common representative for class members joining the action. After the judgment has been issued, bearers of homogeneous individual rights still have the possibility of joining the class action within a time limit set by the judgment (always not less than 60 days and no more than 150 days from the date of publication of the judgment).
• The deputy judge settles the amounts due to the class members joining the action through a decree.

The representative action procedure set in the Italian Consumer Code is governed by a simplified procedure, as outlined in Article 281-decies and subsequent Articles of the Italian Civil Procedure Code and Articles 840-ter and subsequent Articles of the Italian Civil Procedure Code, as referred to in the Consumer Code, and consists of the following three steps.

• After the claim is filed, the court assesses the admissibility of the claim and issues an order accordingly.
• If the case is held inadmissible, the plaintiff may refile it if the circumstances have changed or different factual or legal circumstances arise.
• If the claim is admissible and it is proved that the trader engaged in unlawful practices, the court may issue injunctive or compensatory relief (Articles 140 septies, octies and novies of the Italian Consumer Code and Article 840-sexies of the Italian Civil Procedure Code).

Adhesion is allowed in representative actions that seek compensatory or restitutive measures. Joining the action (i) does not require legal representation, (ii) is carried out through the Ministry of Justice’s online portal and (iii) must be completed within the timeframe set by the judge, which is between 60 and 150 days from the publication of the order or judgment. This can occur at two distinct points: either after the issuance of the order declaring the action admissible or following the final judgment.

Regarding class actions, legal standing is granted to (i) individual class members and (ii) non-profit organisations registered in a public list held by the Ministry of Justice.

Regarding representative actions, legal standing is granted to (i) nationally recognised consumer and user associations included in the list held by the Ministry of Enterprises and Made in Italy, (ii) independent public bodies responsible for enforcing EU legislation on consumer protection and (iii) organisations designated in another member state and registered in the list compiled and published by the European Commission.

Regarding class actions, the only requirement set by the law for forming a class is the homogeneity of the violated rights. The requirement is deemed satisfied when there are common individual rights that have been harmed, all stemming from the same tort.

Regarding representative actions, the only requirement set by the legislator for forming a class of consumers is the existence of collective interests harmed by the conduct of traders.

Both class actions and representative actions follow an opt-in mechanism because class members are not automatically involved in the proceedings. Each member, with the exception of injunctive actions, may join the collective action by filing a declaration of adherence. The goal is to extend the effect of the judgment to all the adherents (Articles 840-quinquies and 840-septies of the Italian Civil Procedure Code and 140-novies of the Italian Consumer Code).

Affected class members may join class actions or representative actions within a timeframe set by the court, ranging from 60 to 150 days, either (i) from the declaration of admissibility of the action or (ii) from the issuance of the final decision (Articles 840-quinquies and 840-septies of the Italian Civil Procedure Code and 140-novies of the Italian Consumer Code).

According to Article 840-ter, paragraph 3, of the Italian Civil Procedure Code (pertaining to class action) and Article 140-septies, paragraph 7, of the Italian Consumer Code (relating to representative actions), the court must decide on the admissibility of the application within 30 days of the first hearing. However, the court may suspend the proceedings if there is an ongoing investigation by an independent authority or case before an administrative tribunal concerning the relevant facts.

Regarding class actions, Article 840-quinquies of the Italian Civil Procedure Code specifies that the court will:

• in its order authorising the class action, define the homogeneous individual rights and specify the elements and criteria for including individuals in the class;
• establish a period of no less than 60 days and no more than 150 days for individuals to join an action;
• waive non-essential formalities and proceeds in the manner it deems most appropriate for inquiries related to the subject matter of the action; and
• upon a reasonable request by the claimant, potentially order the defendant to produce the relevant evidence in their possession. This plaintiff’s request must outline the facts and evidence reasonably available to the opposing party, which must be sufficient to establish the plausibility of the claim.

Regarding representative actions, the proceedings are governed by a simplified procedure, as outlined in Article 281-decies and the subsequent Articles of the Italian Civil Procedure Code. This procedure emphasises efficiency and expediency, featuring a straightforward and uncomplicated preliminary investigation. Indeed, during the first hearing, if the judge finds no procedural deficiencies and believes that no further investigation is necessary, he/she may refer the case directly for decision.

In Italy, the average length of first-instance proceedings depends on several factors, including the complexity of the case, the court’s workload and the conduct of the parties. In general, the length is approximately two years.

In Italy, there are no procedural mechanisms to deviate from the above length/timetabling principles.

Both for class actions and representative actions, it is provided that the deputy judge orders the defendant to pay the following.

• A direct fee to the common representative of the members, in addition to reimbursing documented expenses. The fee is determined as a percentage based on the number of members of the class, and it can be increased or decreased by up to 50% considering factors such as (i) the complexity of the task, (ii) the use of assistants, (iii) the quality of work performed and (iv) the promptness of activities and the number of members involved.
• An additional amount to the lawyer who represented the claimant up to the judgment, in addition to the sums owed to each member. (Articles 840-novies of the Italian Civil Procedure Code and 140-novies of the Italian Consumer Code).

Furthermore, the plaintiff is required to pay a court fee, which is reduced by 50% for representative actions (Article 140-quaterdecies of the Italian Consumer Code).

For representative actions, Article 140-septies of the Italian Consumer Code explicitly states that the appeal must indicate, among other things, the funding of the action. Indeed, the admissibility of the action hinges on the absence of any conflict of interest, especially if it appears that the funding party is a competitor of or dependent on the defendant. The existence of a third-party funder of the litigation must be disclosed (although, to date, the instrument is rarely applied, it could become a valuable solution to cope with the high costs of litigation). In such cases, the court may raise the issue ex officio and grant the applicant organisation a period to refuse or modify the funding.

The discipline of collective redress is not guided by the American pre-trial and trial disclosure or the principles of confidentiality, but rather by transparency.

The system for publicising collective redress aims to maximise awareness of ongoing proceedings and encourage the participation of affected parties. This system provides for, among other things:

• the publication of, and free access on the Ministry of Justice’s online portal to, the claim and all significant judicial decisions made during the proceedings (Article 840-ter of the Italian Civil Procedure Code for class actions and Article 140-septies of the Italian Consumer Code for representative actions); and
• for representative actions, the publication of the consumer claim in a dedicated section of the Ministry of Enterprise and Made in Italy’s website, which also provides updates on the status of these proceedings (Article 140-undecies of the Italian Consumer Code).

Collective redress allows for both compensatory and injunctive measures, depending on the circumstances.

Remedial measures may include compensation, repair, replacement, price reduction, contract termination or a refund (Article 840-sexies of the Italian Civil Procedure Code for class actions and Article 140-novies of the Italian Consumer Code for representative actions).

Injunctive measures, on the other hand, are aimed at halting or preventing unlawful conducts (Article 840-sexdecies of the Italian Civil Procedure Code for class actions and Article 140-octies of the Italian Consumer Code for representative actions).

In both class actions and representative actions, the parties may submit a settlement proposal before the issuance of a decision or the court itself may encourage them to settle.

The court ensures that any settlement proposal complies with mandatory rules and does not include unenforceable clauses or obligations, considering the rights and interests of all parties involved. Thus, the court plays a dual role: facilitating discussions between the parties and overseeing the terms of the proposed agreement.

Both the settlement proposal and any agreement reached are made public and sent electronically to all parties, who can indicate their acceptance through a telematic declaration (Article 840-quaterdecies of the Italian Civil Procedure Code for class actions and 140-decies of the Italian Consumer Code for representative actions).

Regarding class actions and representative actions, the judgment granting or rejecting the claim does not fully conclude the proceedings.

Indeed, in its ruling, the court, among other things, (i) addresses the claimant’s requests for damages or restitution, (ii) determines whether the respondent has infringed homogeneous individual rights and (iii) declares the opening of the adhesion procedure. However, it is through a decree, issued under Article 840-octies of the Italian Civil Procedure Code, that the specific amounts owed to class members are quantified and settled. This decree may be complied with voluntarily or enforced if necessary. According to Article 840-terdecies of the Italian Civil Procedure Code, only the joint representative of the class members is authorised to enforce the decree.

The previous discipline for class actions outlined in the Consumer Code found little application in case law; notably the Court of Cassation issued only 12 rulings over a decade of implementation.

Following the reform introduced by Law No 31 of 12 April 2019, the use of collective redress has gradually increased between 2021 and 2024, although its application remains infrequent. Official data shows that only five actions were brought in 2021, with annual growth leading to a total of 13 collective redress cases in 2024 (six representative actions, six class actions and a collective injunctions action). To date, no specific policies or initiatives have been implemented to promote the wider use of collective redress.

In Italy, there are currently no legislative reforms underway or planned regarding collective redress.

Collective actions were introduced into the Italian legal system, drawing inspiration from both American law and EU directives.

Despite the expansion of the collective action framework resulting from the recent reforms of 2019 and 2023 (see the foregoing), these actions remain underexploited.

Several major obstacles hinder their widespread adoption, including:

• a cultural preference for individual disputes;
• litigation costs, which potential claimants may worry will not be recoverable even if the case is successful – in this respect, it should be noted that the funding mechanisms provided by the relevant legislation (eg, the defendant’s anticipation of expert costs, the leading attorney’s fee based on a percentage of the compensation awarded and litigation costs to be borne by the plaintiff only in case of bad faith) are not sufficient;
• overlapping discipline regarding class actions and representative actions;
• insufficient campaigns to make people aware of the significance and advantages of collective actions; and
• strict admissibility requirements (in 2024, 15% of class actions were declared inadmissible, with the remaining percentage of proceedings still pending).