EU directive gives groups of consumers right to sue companies
Class action suits, allowing groups of consumers to sue traders who cause “mass harm”, will soon be possible in Ireland. The Government is bound by a 2020 EU directive to change the law to allow non-profits, such as consumer organisations, to sue companies - for instance, in the case of a major data breach.
The rules must be in place by 2023.
The Department of Enterprise, Trade and Employment is putting out a public consultation today to ask for help in designing the rules.
“This will be a first in Irish law, as such procedures are not currently in place here,” said Robert Troy, the Minister for Trade Promotion, Digital and Company Regulation.
“This directive is an important development to improve consumers’ access to justice, contribute to fairer competition, and create a level playing field for businesses operating in the internal market.
“Once implemented, when the rights of a large number of consumers are violated by the same business, a qualified entity can launch a representative action on their behalf before a court.”
The EU directive, which became law last year, aims to cover a range of sectors, including financial services, travel and tourism, energy, telecommunications and the environment.
It would allow non-profits, such as consumer organisations, to take domestic or cross-border suits against companies that breach EU consumer protection laws.
Those bodies would have to be approved by the Government in advance.
Ultimately, companies could face fines and be forced to pay all legal costs if they are found to have breached EU rules.
The US and UK have mature class-action systems but Ireland is one of several EU countries where there are no clear rules.
Ryanair is currently facing a potential class action suit in the US as a result of issues with its pilots and an Alabama-based pension fund.
UK law firm SPG law is fighting a case against Ryanair, KLM, and Air France for refusing to issue refunds to customers on foot of pandemic-related flight cancellations.
A record number of people have also joined the law firm’s class action against British Airways for a 2018 security breach leading to a data leak affecting 380,000 customers.
Lawyers say Ireland could be a natural jurisdiction for future class action lawsuits, now that the UK has officially left the EU.
The Government has some room for manoeuvre in interpreting the EU rules, including the option to allow courts to dismiss a settlement if it judges it to be “unfair”.
They can also set limits on court or administrative costs, or offer legal aid to consumer organisations or other groups taking the class action suits.
The deadline for submissions is Friday, May 7.
“My department and relevant stakeholders have a significant job of work to do to design the procedural mechanism for collective representative actions required by this directive”, said Mr Troy. “I therefore urge all interested bodies, not-for-profit organisations, consumers, and businesses to consider the objectives of the directive and to make their views known on how the directive should be implemented in Ireland and what forms the new procedural mechanism might take.”