What You Need to Know
- Key takeaway #1Group members will now be able to opt-in at a later stage, after knowing that a settlement has been reached or that the defendant has been condemned to pay damages.
- Key takeaway #2Ad hoc entities incorporated specifically for class actions will be able to act as a group representative.
- Key takeaway #3The scope of the law is extended to include collective redress in the financial sector.
On 31 May 2024, the law of 21 April 2024 amending Books I, XV and XVII of the Economic Code, and transposing Directive (EU) 2020/1828 on representative actions to protect the collective interests of consumers, was published in the Belgian Official Journal.
In short, the Belgian procedure for collective redress allows a group representative of multiple possible claimants to introduce proceedings before the Brussels commercial court in relation to alleged contractual breaches or violations of certain specified Belgian and European laws. The procedure was originally introduced into Belgian law in 2014 for the benefit of consumers (i.e., before the adoption of the EU Directive) and was extended to protect small and medium enterprises (SMEs) in 2018.
This new law modifies the existing Belgian legal framework on actions for collective redress (otherwise known as “class actions”) to bring it into line with the 2020 EU Directive, which introduced a procedure for collective redress for consumers and imposed certain minimum requirements for this procedure. Because the existing Belgian regime already met most of the requirements set forth in the Directive, the impact of this Directive on Belgian law is relatively limited. Nonetheless, certain modifications (discussed below) will have real effect and may well give a new boost to Belgian class actions litigation.
- New timeline for opt-inAn important amendment to the law affects when group members can join the proceedings. Consumers or SMEs that allege harm as a result of the behavior of a defendant are now entitled to wait before participating in the procedure until after either a settlement has been reached between the defendant and the group representative (in which case, the settlement agreement will contain a choice on whether an opt-in or an opt-out mechanism will be used for the composition of the group), or a decision has been made on the liability for the defendant to indemnify the group (in this case, the law imposes a mandatory opt-in mechanism).This would seem to present potential group members with a win-win situation: given that the statute of limitations period is suspended for individual claims for the entire duration of a class actions procedure, potential group members can now wait and see if the collective redress action is successful before deciding whether to join or not. If the class action is dismissed, that party can go on to pursue their claim individually if they think that they have a chance of success. While this measure might be useful in encouraging those who have suffered harm to join collective proceedings, it is less appealing to defendants who have up to now benefited from the classic advantage of a class action: the opposability of a potential dismissal vis-à-vis the members of the group.
- Possibility for ad hoc entities to introduce proceedingsAside from entities specifically recognized as group representatives by the competent minister, it will now be possible to set up an ad hoc entity specifically for introducing proceedings for collective redress.
- Cross-border aspectIn response to the EU Directive, it will now be possible to initiate cross-border actions for collective redress before the Belgian courts. This means that a consumer group representative who is recognized in another Member State will be entitled to initiate proceedings for collective redress in Belgium and vice versa. However, this automatic recognition does not apply for:
- ad hoc entities acting as group representative;
- Belgian group representatives acting on behalf of SMEs. Because the EU Directive only requires Member States to foresee a legal regime for collective redress for the benefit of consumers, a Belgian group representative for SMEs does not automatically have the right to act as such in another Member State jurisdiction. Nonetheless, group SME representatives who are recognized in other Member States will be able to act as such before the Belgian court.
- Extended scopeThe scope of the class actions regime has been updated and extended to include certain B2B infringements that were not previously explicitly mentioned (e.g., the provisions on pre-contractual information in commercial co-operation agreements are now explicitly included), and to reflect the list of legislative instruments in Annex 1 of the EU Directive and the laws that transpose them into national law, any infringement of which could lead to an action being brought.Notably, Annex 1 explicitly mentions the MiFID II Directive and the Prospectus Directive, thereby extending the applicability of the class action procedure to the mis-selling of financial products (this was previously excluded from the scope of the Belgian law). Aggrieved financial investors will consequently now be able to introduce proceedings in such a case, with the help of a recognized or ad hoc group representative, and past experience from other jurisdictions suggests that the financial sector could prove to be an attractive new area for collective redress actionsTort liability is, however, still excluded from the scope of the law.
The new regime on actions for collective redress will apply to all class actions initiated starting from 10 June 2024. Pending class actions remain governed by the existing rules.
Please contact Emmanuel Plasschaert, Werner Eyskens, or Charlotte Stynen for any additional information regarding the amended law, and keep a look out for our book on this subject that is soon to be published by Larcier-Intersentia.
For further information, please contact:
Emmanuel Plasschaert, Partner, Crowell & Moring
eplasschaert@crowell.com
