EU recommends class actions to member states

frtAdmin
FRT Admin
Site administrator
August 2, 2013

As the scope of securities group actions continues to expand globally, many countries are exploring ways to model itself after the U.S. class action system. While the European Commission has previously stated that Europe is not heading for U.S.-style class action lawsuits, it recently issued a recommendation to all EU Member States that they should adopt a collective redress system to be implemented at the national level within the next two years.  The recommendation states collective actions are valuable for the enforcement of rights in the areas of “consumer protection, competition, environment protection, protection of personal data, financial services legislation and investor protection.”

EUSome Member States already have some form of collective redress, although the type of mechanisms, the areas in which they may be used, and the intricacies in the laws differ among them. However, the EU’s recommendation is intended to create a common framework in all EU States for that would allow multiple claimants to seek relief for breaches of rights granted under EU law on a collective basis or through a representative claimant. The Commission recommends that the system be implemented as an opt-in procedure and should utilize the loser-pays principle, whereas the winner is reimbursed for legal costs.

What does this mean for securities class actions? While several European nations like the U.K. and the Netherlands have securities group action systems in place, there are many countries that are still developing their group action mechanisms. The recommendation by the Commission is likely to jumpstart many of those countries that have begun to conceptualize or implement the beginning stages of how securities class actions will function in their jurisdictions. We can anticipate that the number of European countries allowing securities group actions will grow in the coming years, equally more potential recoveries for investors globally.

Non-US group securities litigation continues to increase across the globe, which is why Financial Recovery Technologies established FRT Global to track and analyze international settlement recovery opportunities.

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