12/05/14

"Class Actions” are now also possible in Belgium

Introduction

Following the majority of Anglo-Saxon countries (United States, Canada, Australia), the possibility to file a collective claim or “class action” has already been introduced in eight European countries: Germany, Portugal, Spain, Italy, Sweden, the Netherlands, the United Kingdom and Denmark. However, the governing rules and in particular the possibility to join the claims for damages is not organized in the same way in the different countries.

On 11 June 2013 the European Commission published a recommendation calling on Member States to introduce collective redress mechanisms in their legal systems in order to ensure effective access to justice. On the same day, it also issued a proposed EU Directive relating to specific rules for collective damage actions, based on national law, for violations of anti-trust provisions.

Belgium has now put into law the Commission’s recommendation. After a long and difficult legislative process, the new Act was finally published in the Belgian Official Gazette of 29 April 2014.

You will find below a review of the most significant elements of this new Act.

Principle

The class action allows any consumer who has been prejudiced by a collective damage to obtain collective redress for the individual prejudice suffered.

The consumers concerned will therefore be represented by a recognized group representative. The group representative will have to fulfill the conditions set out in the new Act. The competent Minister can admit associations that have had legal personality for at least three years as group representatives.

It is legally prohibited for lawyers to act as group representatives; they can only assist the recognized group representative during the legal proceedings.

Consumers vs. companies

The class action is reserved for consumers and will only concern the relationship between companies and consumers. Contrary to what was provided in the initial draft of the Act, a class action can go beyond material damage and may concern corporal and moral damage.

The class action can only be filed against a company that has not respected its contractual obligations or because of a violation of one of the laws on the exhaustive list featured in the new Act, of executory decisions or of European regulations. Amongst others, this list includes the Code of Economic Law itself (market practices and protection of consumers, intellectual property, anti-trust), the Act on medicines, the Act on the sale of houses that have yet to be built or are in the process of being built (Breyne Act), the land insurance contract Act, the Act on the protection of privacy, the Act on the electricity market and the laws on boat, train and airplane transport.

Choice for the “opt-out” system with exceptions

Class action procedures are often paired with the possibility to choose.

Two systems are used here:
1. an “opt-out” system through which the victims explicitly express their desire not to be part of the group;

2. an “opt-in” system in which the victims explicitly express their desire to be part of the group.

Although the European Commission recommended the “opt-in” system in its document of June 2013, the Belgian legislator chose the opt-out system with exceptions.

The “opt-in” system will still be authorized if (i) the “opt-out” mechanism is not suited to the case at hand, and (ii) the case concerns people who live abroad.

The “opt-in” system is also valid in cases of corporal damage. In this case it is very difficult to judge on the prejudice without knowing who has been affected by it.

Amicable process with negotiations vs. legal proceedings

When introducing the class action, consumers have the choice between an amicable process with negotiations or to go through a legal procedure.

In both cases, the class action must be introduced by filing a request at the Court registry of the First Instance Court of Brussels.

“Class action”

This is the legal procedure aiming at the redress of a mass damage that is subject to an admissibility decision by the judge.

This procedure takes place in five stages:

1) Admissibility stage

The class action must necessarily be filed by the above-mentioned recognized representative: a consumer association that fulfills the legal conditions, an association that fulfills certain cumulative conditions or an Autonomous Public Service that acts in the name of the victims.

The action is introduced by filing a request in which certain mandatory information is included.

The judge will then examine whether the admissibility criteria included in the Act are met. In particular, a class action must seem more suitable than normal civil proceedings.

If the judge decides that the action is admissible, he must include a precise description of the mass damage and of the group of victims in his decision. This admissibility decision is published in the Belgian Official Journal as well as on the website of the Ministry for Economy.

2) Selection stage

The publication of the admissibility decision marks the start of the selection period. In his decision, the judge will have to determine the timeframe (at least 30 days and at most three months) and the way the consumers will have to exercise their right not to be included in the group.

3) Negotiation stage

After the admissibility decision, the parties may express their preference either for a negotiation or for the initiation of legal proceedings.

Each party can request the suspension of the proceedings in order to negotiate a collective settlement agreement (see infra “Collective settlement agreement procedure”). This will suspend the period of time for the selection stage and the legal proceedings.

In the event the attempt at negotiation succeeds, the judge will confirm the collective settlement agreement.

The timeframe to negotiate a settlement agreement cannot be shorter than three months and cannot be longer than six months.

4) Continuation of the proceedings

If the attempts at negotiation fail, the timeframe of the selection stage starts to run again and the legal proceedings are resumed.

The judge then takes a decision on the merits of the case. The decision can eventually be appealed.

5) Publicity and execution

The decision is disclosed through the publication in the Belgian Official Gazette and on the website of the Ministry of Economy.

The judge also appoints an “administrator” who must ensure the correct execution of the decision. He will have to submit a report to the judge every three months about the execution of his duties. The defendant-company will have to execute its compensation obligation under the supervision of the administrator. The judge remains competent until the reparation is entirely executed with regard to all the members of the group.

“Collective settlement agreement procedure”

This is an amicable procedure that aims at redressing a mass damage through a collective settlement agreement, without any legal proceedings.

This procedure also takes place in five steps:

1) Negotiation stage

First of all, an attempt is made to reach an agreement or settlement through negotiations. The parties must agree on a series of essential points that are included in the new Act.

2) Confirmation

If the parties reach an agreement, it may be submitted to the judge for confirmation. He will examine whether it is in accordance with the legal requirements. He may refuse confirmation if certain elements are “manifestly unreasonable”.

3) Publicity

The confirmed judgment is disclosed to the known victims and appears in the Belgian Official Gazette and on the website of the Ministry of Economy, as well as in various newspapers, which should make it possible for all prejudiced persons to express their desire for compensation.

4) Choice

Here also, the new Act provides for an “opt-out” system whereby the victims must explicitly express their desire not to be part of the group.

The consumers must make their choice known at the Court registry of the Court of First Instance of Brussels within the timeframe foreseen in the confirmed judgment.

5) Execution

After the expiration of the period of time for the victims to make their choice, the settlement agreement can be executed and the victims compensated.

Entry into force

The Act will enter into force on 1 September 2014. Class action procedures can only be pursued if the cause of the prejudice takes place after such date.

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