Class Actions in France - What You Need to Know
A legal framework for class actions was officially introduced in France last year. As soon as the law was published, a series of actions were launched, including one against a leading insurance company and others against major transport networks.
It’s too early draw conclusions on the impact and efficiency of the system, but given that new cases are continually cropping up, it’s worth having a look at how the new system works.
How Wide Is the Scope?
The scope of class actions is restricted to services provided, sales of products and damages caused by unfair competition. Multiple conditions are necessary to launch a class action, including that plaintiffs should be consumers (and not part of any professional entity) and that there is plurality of consumers willing to join in (two being sufficient).
Only material damages apply. Bodily injuries, environmental and moral damages (including those stemming from material damages) are excluded.
Who Can Start a Class Action?
The law limits the right to sue to consumer associations, of which there are 15 authorized national associations in France. In contrast to other legal systems that allow the exclusion of one association to the benefit of another, French legislation allows the possibility of a “leader” and does not exclude the possibility of multiple “rival” actions on the same issue.
How Is a “Class” Formed?
Membership in the class action group is very important as it determines the number of consumers ultimately concerned. In general a class (or group) is usually formed in one of two ways:
- All people potentially concerned become part of the class without any action on their part. However, by fulfilling the criteria of the class they lose the right to act on their own, unless they expressly opt out.
- Consumers actively consent to becoming part of a class. In France the solution is a special “opt-in” as the class is only formed after the defendant’s liability has been determined.
Which Jurisdiction Handles Class Actions?
The law specifies that only circuit courts (Les Tribunaux de Grande Instance) can deal with class actions.
What Are the Different Phases of the Action?
The judge checks that all conditions of the class action have been fulfilled and rules on the liability of the defendant. If upheld, he/she also determines:
- The criteria for the class
- The value of the indemnity
- The period consumers can join the class (two to six months)
- The period for compensation to be paid
- The exact damages that can be indemnified (e.g. the cost of changing a faulty product, expenses to resolve the problem, etc.)
This phase is for the members of the class to be compensated, based on the judgment. Funds can be paid directly to consumers, to the association or to a third party defined by article L.423.9 of the Code de Consommation.
A simplified process can be used if the following conditions are met:
- The number of affected consumers and their identity is known (e.g. through a client database)
- The value of the damages is the same for all consumers
The final phase allows distinct cases disputed by the defendant to be referred to the judge for further consideration (e.g. if the victim used the product incorrectly or the claim doesn't fulfill the criteria of the class action). The judge can accept or deny the request.
If no requests for further adjudication are received, the judge validates and finalizes the class action. After this point, no additional applications for compensation will be accepted.
Is It Possible to Appeal?
An appeal is possible if the total compensation (per class) is above €4,000, or if the final amount is not known when the judge delivers his decision.
What’s Happening Next?
The government has stipulated that the system will be reviewed in March 2017 and aspects for its improvement considered. In the meantime it’s possible that it could also be extended to include areas such as environmental pollution and healthcare. Indeed a draft on the latter is already being debated in the National Assembly, which could come into force as early 2016.
Given the implications, not least for insurers and reinsurers, this is a development that we will be monitoring closely. If the team here in Paris can be of service to your business in the meantime, don’t hesitate to get in touch.