An Act to provide for representative actions for the protection of the collective interests of consumer, and to carry out other consequential amendments
On the 24th November 2020, the European Parliament adopted the Directive (EU) 2020/1828 on representative actions for the protection of collective interests of consumers, which became a decisive step of the European Union towards building collective redress mechanism in all 27 EU Member States. The Directive provides the possibility for consumers throughout the EU to be represented in domestic as well as cross-border class actions by qualified entities.
Member States have to transpose the Directive until the 25th December 2022 and with the deadline fast approaching, the Maltese Parliament published a bill entitled ‘An Act to provide for representative actions for the protection of the collective interests of consumers, and to carry out other consequential amendments’ for which consultation is now open.
Qualified entities
Representative actions may be brought by qualified entities, generally designated organisations or public bodies representing consumers, who will act as plaintiff in the proceedings, able to claim injunctive measures involving provisional and definitive measures to cease or prohibit an infringement as well as redress measures involving compensation, repair, replacement, price reduction, contract termination or reimbursement of the price paid.
Representative actions are to be brought before the Civil Court (Commercial Section) by means of a sworn application, and in certain circumstances, before a national administrative authority.
Consumer participation
In representative actions for redress measures, affected consumers may choose one of the following mechanisms:
- Opt-in mechanism: consumers should be required to explicitly express their wish to be represented by the qualified entity in the representative action for redress measures;
- Opt-out mechanism, consumers should be required to explicitly express their wish not to be represented by the qualified entity in the representative action for redress measures.
In principle, settlements will be binding upon the trader, the qualified entity and all consumers; however, consumers may choose to opt out of the settlement.
Cost rules
Individual consumers generally should not pay the costs of the proceedings except in circumstances where costs were incurred as a result of their intentional or negligent conduct such as the prolonging of proceedings because of unlawful conduct.
When filing a representative action proceeding, qualified entities are exempt from the payment of Court Registry fees unless the Court decides against the qualified entity. In such instances, the Court reduces the fees against the entity between one tenth and one half of the fees normally due, depending on the economic standing of the qualified entity and the legal reason for finding against the entity.
Impact of the Directive on Maltese legislation
In the current legal framework Collective Proceedings Act, Chapter 520 of the Laws of Malta, already applies to infringements to the Competition Act, the Consumer Affairs Act and the Product Safety Act. By means of the proposed Bill, the Collective Proceedings Act will now be dedicated totally to the competition field which is not included within the scope of the Directive.
Furthermore, while Part I of the proposed Bill transposes the EU Directive, Parts II – VIII amend the Consumer Affairs Act (Chapter 378), the Collective Proceedings Act (Chapter 520), the Malta Competition and Consumer Affairs Authority Act (Chapter 510), the Civil Courts (Establishment of Sections) Order (Subsidiary Legislation 12.19), the Civil Code (Chapter 16), the Malta Communications Authority Act (Chapter 418), and the Electronic Commerce Act (Chapter 426).
For more information on consumer rights, please contact Dr. Sarah Galea, Dr. Caterina Galati or any other member of IURIS Advocates.