Written By Michael A. Eizenga and Preet K. Bell
Belgium has joined the ranks of other European countries that allow for the possibility to file a collective claim, more commonly known as a class action. There is clearly a global trend in favour of class actions and Belgium is no exception, testing the waters by enacting legislation that provides for consumer class actions. It is currently expected that the legislation will enter into force in September 2014.
Belgium is a civil law system, similar to the Quebec legal system, heavily influenced by the French system. It is also a federal state and a member of the European Union, many of which have also recently enacted legislation allowing for collective claims.
The new Belgium class actions law is currently limited to consumer actions. Class actions are only available in disputes between consumers and companies that relate to the company's breach of contractual obligations, or the company's infringement of specific consumer protection rules. The breach or infringement must be in a listed context, which include intellectual property, market practices, competition, defective or damaged products, insurance, etc. For example, we will likely see class actions against manufacturers of defective products, and class actions with respect to price fixing or other anti-competitive practices.
To be a class action, the claim must have "collective damages". In essence, collective damages are physical, moral or material damages arising from a common cause and giving rise to related factual and legal questions. Physical damages would be damages from personal injury, and moral damages are roughly comparable to general damages including pain and emotional suffering. Material damages would encompass economic loss and damages.
In addition, in order to proceed, the class action must be found to be more appropriate than an individual action. This is parallel to the requirement in Canadian class actions that the class action must be the preferable procedure.
Opt-in and Opt-out
Whether class members must opt-in to the class proceeding, or opt-out if they wish not to participate, depends partly on the type of collective damages. For physical or moral damages, consumers must opt-in to the class action. This is likely because physical and moral damages are more personal damages, so the government felt that consumers must opt-in to such a claim. For other types of damages, the court will decide whether the proceeding will be opt-in or opt-out. However, any consumers not resident in Belgium automatically fall under an opt-in system. This element implies that non-residents will be able to participate in Belgium class actions. In Canada, several of the provinces (including British Columbia and Newfoundland) also expressly contemplate non-resident class members opting into a class proceeding. However, the majority of Canadian provinces (including Alberta and Ontario) allow for opt-out class actions where non-residents are part of the class.
The law provides that a class can only be represented by a "class representative" which must be one of the following: (1) an organization which protects the interests and rights of consumers and is represented in the Council for Consumption or recognized by the Minister of Economic Affairs; (2) accredited organizations recognized by the Minister whose purpose is closely linked to the collective damages (the organization must also have had a legal personality for at least three years which eliminates the potential for any type of ad hoc group); or (3) the Federal ombudsman or autonomous public service for consumers (this is only with respect to the mandatory negotiation phase, discussed below). The court will assess whether the class representative is adequate.
The class representative can only be compensated for its own costs, and therefore cannot profit on the success of the class action. This is to avoid any sort of "success fee" for the class representative, which is sometimes seen in U.S. class actions.
The law grants the courts of Brussels the exclusive jurisdiction to hear these claims. After a claim is submitted, the court must first rule on the "admissibility" of the claim. Admissibility is akin to certification in Canada; the court would consider whether the claim has the requisite elements, discussed above, to advance. If it is deemed admissible, the law provides that the parties must undertake a mandatory negotiation stage. If an agreement is reached during the negotiations, it must then be approved by the court although there are limited grounds on which the judge can refuse to accept it. If no agreement is reached, the judicial proceedings will continue and the court will rule on the merits of the claim and damages. The law provides that punitive damages cannot be awarded.
A trustee is then appointed to ensure the proper allocation and distribution of damages based on the approved settlement or the court's decision.
The law is not available for historical wrongs; a collective action can only be brought for damages caused after the law was enacted.
While the new law is limited only to consumers, it will also serve as a test case which, if successful, would likely be broadened to recognize other types of plaintiffs. The limitations on class representatives and financial compensation could potentially limit the amount of class actions brought forth under this legislation; therefore, it is unknown whether this law will ultimately generate a significant number of claims. However, it is Belgium's first step towards collective actions.