Why does the EU need mandatory safeguards against litigation abuse?
Without safeguards, collective actions are open to abuse. Unless the proper safeguards are instituted to protect the system against abuse and exploitation, third parties – like
lawyers and third party litigation funders – are likely to be the main beneficiaries of collective actions, not the consumers they claim to represent.
There is already a structure in place at the EU level to help guide this process. In 2013, the European Commission issued a Recommendation for Member States regarding how
collective redress systems should be constituted. The Recommendation included important safeguards that would balance the system and deter opportunities for abuse and
Unfortunately, no Member State has instituted all of the safeguards recommended by the European Commission. Even worse, the 2018 proposal from the European Commission
does not include the majority of these safeguards.
This flies in the face of public opinion. Two-thirds of EU consumers say the European Commission should not introduce collective actions without safeguards. Further, 82 percent
agree that collective action safeguards should be made consistent across the EU.
The EU now has the opportunity – and the duty – to ensure that the system it creates is consistent with best practice and is not open to abuse and opportunism. Below are some
safeguards that could help make the proposal a more balanced system.