Consumers’ protection under Hollywood style ”class-action”?
Updated: Jun 26
This seems to be the promise of Law no. 414 of 19 December 2023 regarding the conduct of representative actions for the protection of the collective interests of consumers (we call it “the Law” for the scope of this article), a normative act adopted right before the end of last year. It is not really the Romanian Parliament to take credit for it, but the Law implements a directive of the European Union intended to ensure the legal framework for class actions, as a remedy for abusive practices on the part of professionals.
In modern times, where consumers interact with an impressive variety of products and services, there is an increasing emphasis on the need to protect their rights and safety. Class actions are a powerful tool in the hands of consumers, giving them a way to come together to protect common interests against unfair business practices or wrongdoing by suppliers of goods and services.
What do we know about ”class-action” in Romania?
Not so much. Traditionally, collective litigations of the ”class action” type have not been allowed in Romania, i.e. those in which a party is formed by a group of persons or by an entity acting on behalf of a group, to affirm a common right. The solution in which each person affected in their rights addresses the court separately with a court claim to obtain reparations or to carry out certain actions, has been preferred.
Exceptions to the rule are relatively few, and they might allow several parties to stand before trial together if they share common or related rights (cases of procedural co-participation) or when certain disputes have elements that justify a joint trial, and thus several parties might end up together, sharing a common trial (cases of joinder requests).
Certain domains also allow for another kind of representativeness. Claims in administrative litigation (ie, disputes against the state or state authorities, or those related to public procurement contracts) can be commenced - in certain cases - by NGO-type associations whose object of activity is dedicated to promoting the interest public. Even if they do not act in the representation of other parties, the effects of a possible annulment of administrative acts may also be beneficial to third parties in relation to the process. We add the example of disputes regarding abusive clauses in contracts, where the professional could be forced by the court, following an isolated case, to modify all contracts in a certain category that contain illegal provisions. They are probably the types of litigation closest to the notion of ”class-action” that have taken place so far in Romania.
Are class action lawsuits finally allowed?
The Law enacts the representative action as a lawsuit to protect the collective interests of consumers, which is introduced by a qualified entity in the name and representation of a group of consumers (limited or not). It enables mass claims to protect a group of consumers that have been affected by a breach and seek redress and injunctive measures in a range of policy areas.
The qualified entity stands as plaintiff in the class actions, but the consumers ultimately benefit from the result. A class actions might aim for an injunction, redress measures or both.
The litigation will be settled by the courts having general jurisdiction in the respective matter. Judges can order temporary or permanent cessation of a practice, reparative measures to cover the damages suffered, the duty to publish press release on the solution and a statement of rectification, repair measures, replacement, price reduction, termination of the contract, reimbursement of the price paid or other measures falling into one of the two generic categories.
Injunctions are granted regardless of whether there was intent or negligence on the part of the professional in committing the sanctioned practice or whether or not the plaintiff entity proves the damage suffered by the affected consumers individually.
What is the List?
Not any consumer claim can be raised in a class actions. There is a certain list of claims to which an action can be brought – ”the List” annexed to the Law.
The List proves to be quite comprehensive, encompassing a variety of areas, such as defective products, abusive clauses, liability of air transport operators (should WizzAir and RyanAir finally be held liable for their services, like delayed or canceled flights?), e-commerce, issuance of electronic currency, contracts for the provision of digital content and digital services, telecommunications and many others. A lawyer can assist.
Who can initiate consumer protection class actions?
The qualified entities have legal standing in class actions (ie, the right to file collective representation claims). There legal entities will be expressly authorized in this regard.
Qualified entities are institutions or organizations for consumer protection designated by the national authorities or the Member States of the European Union. Consumers’ protection associations are eligible for this quality. Regulators in the policy areas from the List are automatically designated as qualified entities.
Other legal entities that meet the following conditions are also eligible:
submit an application for registration.
in the 12 months prior to the request, they have carried out effective public activities regarding the protection of consumers’ interests.
justify a legitimate interest to protect the interests of consumers (the Law does not define what legitimate interest means).
are not profit oriented.
is not in an insolvency state or shortage of funds available for the payment of certain, liquid and due debts and is not undergoing liquidation procedures.
is independent and not influenced by persons who are not consumers, in particular by professionals, who have an economic interest in bringing an action for representation, including in the case of financing by third parties, and, for this purpose, has established procedures to prevent such influence, as well as to prevent conflicts of interest between the entity itself, its financiers and the interests of consumers.
presents publicly, in a simple and intelligible language, through all means of communication, including on its own website, information proving that it meets the criteria listed above.
presents in an accessible manner information regarding the sources of financing, the organizational and management structure, the structure of its members, its object of activity and the activities carried out.
Entities qualified for this purpose in other Member States can file class actions before Romanian courts of law. They would have an interest in doing so when acting on behalf of consumers who are harmed by practices of a Romanian professional. And vice versa, which can be the gateway for various professionals to no longer be able to hide from liability behind various jurisdictional objections.
When can class actions be filed?
To start a class action, the following conditions must be met cumulatively:
there is a violation by a professional in the areas of the List.
the collective interests of consumers are harmed.
regardless of when the violation occurred, including when the respective violations ceased before the representation action was filed or before the court charged with the representation action gave a solution.
the harmful practice can be either domestic or cross-border.
Should the consumers consent to the class action?
Not for opening the proceedings in a class action: the qualified entity is entitled to bring claims without the consent of the consumers benefiting from the class action.
In the class action seeks injunction with respect to a harmful practice, the consent of consumers is not required at all.
Conversely, when the class action seeks redress measures, the affected consumers will have to confirm their willingness for the proceedings. By accepting the class action, the consumer consents to be represented by the qualified entity that filed for reparation, and to bear the consequences of the judgement (except for court expenses, which are borne by the qualified entity). Once the consent has been expressed, the respective consumer can no longer file an identical action individually nor join actions having the same object and against the same professional. Consumers can benefit from favorable solutions consisting of redress measures within 3 years of their resolution.
How does a consumer benefit from this Law?
To look at the overall context, the Law takes part in a wider approach of the European Union to protect the interests of consumers, especially in the context of the free movement of services and products within the single market. It will allow public authorities or bodies acting in the public interest to get involved in protecting group interests, at national or cross-border level.
It is possible that the Law is the answer to various abuses that unfortunately affect consumers constantly, such as those in the field of air transport (flights canceled or delayed without adequate compensation or information, extra-taxes), telecommunications (abusive clauses in service contracts and unilaterally calculated and modified tariffs) or other essential services.
When you are a consumer and face such a problem, follow the public authority or active NGOs in the field. It is possible that steps will be taken soon towards ending abusive practices. Or, if you know you are not the only one affected by a particular practice, notify the regulator in the field. Notifications from multiple individual may be an incentive towards taking action.
At Docs & Deeds we care for consumers' interests by providing fast and efficient legal sessions and personalized legal assistance. We similarly protect the interests of professionals by providing a wide range of contracts balanced in terms of the parties’ performance.
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