With the introduction of the Redress Action, Germany has made a significant step forward towards a sophisticated consumer collective action regime.

What is the most common type of collective action you are seeing?

Consumer Actions.

What are the various ways a group could bring a collective action?

Filing of a collective action in front of court, either by way of Model Declaratory Action or by way of Redress Action.

If collective actions are permitted, are these opt-in or opt-out actions?

Collective actions are subject to an opt-in mechanism by the individual consumer.

Does the law currently provide for private collective actions by consumers?

Under the Model Declaratory Action and the Redress Action in the Gesetz zur gebündelten Durchsetzung von Verbraucherrechten (VDuG)

If collective actions are permitted are the usual forms of relief permitted and can punitive damages be claimed?

The Model Declaratory judgment establishes the existence of a legal relationship in the form of a declaration. Once obtained the consumer then asserts a specific claim against the relevant company in a separate lawsuit. Only then can the usual forms of relief be obtained.

A judgment under the Redress Action grants the consumer a claim for performance directly from the defendant company in the form of payment, subsequent service such as repair, replacement, price reduction, termination of the contract or reimbursement of the price paid.

Punitive damages are not recoverable.

Are bodies which represent consumers able to bring actions on their behalf? And if yes, can these bodies bring cross-border actions?

Only specific bodies which represent consumers are able to bring actions on their behalf. These bodies can bring cross-border actions as long as they are listed in the list provided for in Article 4 (3) Directive 2009/22/EC.

Is third party funding of litigation permitted?

Yes.

Is litigation funding permitted for collective actions? 

Yes, litigation funding is explicitly permitted (with limitations) for the Model Declaratory Action and the Redress Action. However, the extent to which litigation funding is permitted is unclear as there are contradictory court rulings on this issue. The German Federal Court of Justice (BGH) has ruled that third party-financed class actions to skim off profits are abusive of the law.

Are consumer groups and law firms allowed to advertise the collective actions they are running?

The law is unclear on this issue. It has not yet been finally decided whether advertising is permitted.

Is there a formal mechanism to settle actions on a collective basis?

Approval of the court is required, and any consumer may withdraw from the settlement within a period of 1 month from the date of the delivery of the proposed settlement.

If a trader loses a collective action does the law require the trader to publicise this?

The judgment is published in the Complaints Registry by order of the court.

Is there a penalty for non-compliance with a final decision issued in respect of a collective action?

Regarding the Model Declaratory Action, the consumer has to bring a separate action against the trader in order to benefit from the Model Declaratory Action. Only once a judgment is rendered, can enforcement against the trader begin.

Regarding the Redress Action, the implementation of the final redress judgment is carried out by an administrator appointed by the court. The administrator sets up an implementation fund and organizes the distribution of the total amount awarded by the court to the consumers who have registered a claim. If the trader fails to comply with a request by the administrator to fulfil a consumer's claim for an action other than payment or for a non-fungible action within the time limit, the court may, at the request of the administrator, order the trader to pay a penalty and, if this cannot be recovered, to be held in custody to perform the other fungible action or the non-fungible action.

The Collective Redress Directive must be implemented in all EU member states by 25 December 2022. To find out more about the current progress of implementation of the Directive in this jurisdiction click here.