The continuing rise of Consumer Litigation in the EU: a deep dive into current trends - Trend 1: Consumer Class Actions

In Part One we consider the growth in consumer class actions.

Trend 1 - The growth in consumer class actions

Why are they growing?

The EU wants to ensure that consumers have effective legal rights and remedies against large businesses and to equalise the playing field between consumers and these businesses irrespective of their size and financial strength. In order to do this a collective redress system needed to be created because the legislation on collective actions varies across EU Member States.

Prior to the Introduction of the Representative Actions Directive, companies which reside in States with more well-developed class action regimes are much more likely to find themselves on the receiving end of a mass claim. This is well demonstrated on our Current Collective Action Landscape Map.

EU states with sophisticated consumer class action systems

The Netherlands provides an interesting example of how this works in practice. In 2020 the Netherlands introduced a new Act, the Settlement of Mass Damages in Collective Action (WAMCA) which enables civil courts to impose compensation on sued parties in collective action cases. The Netherlands has had a class action procedure since 1994 but victims were made to seek damages before the civil court individually, where the burden of proof was on their part. This also created pressure on the judicial system, which was overwhelmed with individual cases. A new regime was later introduced in 2005, namely the Collective Settlement of Mass Damages Act (WCAM). Settlements could now be declared universally binding for all victims, regardless of if they participated in the settlement or not (Dutch Civil Code, Article 7:908). Still, there was neither a collective compensation scheme nor a relief of pressure on the judicial system. Fifteen years later, both goals were realised through the introduction of the WAMCA.

The 2020 Act allows for damages to be awarded collectively and directly. Furthermore, it provides for an opt-in mechanism for foreign claimants (i.e., potential claimants need to actively sign up to take part), but an opt-out mechanism for Dutch class action members (i.e., nobody needs to sign up, everybody who meets the criteria of the claim is entitled to join the action). The WAMCA also includes a series of admissibility requirements which must be met by the representative bodies to qualify for a class action.

This regime has made Dutch class actions very attractive, especially to litigation funders, and has brought a lot of mass consumer claims in various, previously unfunded, sectors to the Dutch courts. Since 2020, more than 70 new cases have been registered at the Amsterdam Court of Appeal and include landmark claims such as those brought on behalf of children against TikTok for privacy and data protection violations, claims against Google and X (Twitter), and ongoing cases with Meta, Apple, and, Oracle and Salesforce. Further, cases have also been brought before the Dutch courts in relation to non-material damage. For example, a foundation fighting for female rights issued a claim for damages for defective breast implants – including the distress and harm the implants have caused (Rechtbank Amsterdam, 5 April 2023,…