France to allow class action lawsuits

The French have been debating the introduction of class actions for some time, and the country is now a step closer to making it a reality.  It was first discussed in 1990 before the Commission for the codification of the Consumer Code. During their tenures, former Presidents Jacques Chirac and Nicolas Sarkozy both unsuccessfully attempted to establish class action lawsuits. Now, the French government has said it will allow class action lawsuits against companies for fraud, price-fixing and other consumer violations.

france-rulingThe legislation, which was presented to the Council of Ministers earlier this month, is expected to reach Parliament in mid-June. Consumption Minister Benoit Hamon, who presented the bill to the Council, said “[w]e want a quick procedure that would allow consumers to obtain compensation down to the euro for damages they suffered.” He admitted that currently there are “some holes in the protection of consumers.”

In an attempt to avoid the abuse and excesses associated with U.S. class actions, the legislation only authorizes 16 approved consumer associations to initiate a class action. Additionally, compensation would only be able to be sought for material damages arising from a company’s legal or contractual violation. According to the proposed legislation, there would be no minimum number of plaintiffs required to bring a case and no upper limit to financial damages.

The proposed class action will use a hybrid opt-in/opt-out approach. When an authorized consumer association brings a case, the judge will decide on the merits and devise a formula for the distribution of damages. Members of the class will then have an opportunity to opt-in or opt-out of the action.

While the proposed law only applies to anti-trust and consumer claims, revisions may be made in the future to cover investor rights in securities actions.

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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