Class actions to rise in Europe next year, warns Clyde & Co

A leading lawyer predicts class actions will gain momentum in Europe next year after new rules come into play, but doesn’t foresee US-style litigation becoming widespread.

The EU Directive on Representative Actions will enter into force next year and will make it easier for individuals to take part in collective redress when corporate scandals or other incidents occur.

Henning Schaloske, partner at law firm Clyde & Co, believes the new rules will be a “game-changer” for consumers seeking redress against companies.

“While we will not see a swathe of US-style collective actions, 2023 will certainly see an increase in claims,” he said.

The new rules have been designed by the EU to avoid a US-style ligation culture emerging in Europe. But Schaloske said there are “certainly groups readying themselves to use this new law to seek to recoup losses”.

“We can expect more claims for data privacy breaches, for example,” he said. “Article 82 of the EU General Data Protection Regulation enshrines the right to compensation and liability for breaches; the EU Directive on Representative Actions will make bringing collective actions simpler for groups of individuals whose data privacy has been breached,” he added.

Schaloske believes that litigation funding, a major driver of collective redress actions in the US, is likely to play an increasingly important role in individual and collective legal actions in Europe.

“Although the European Parliament recently voted to approve a proposal that would regulate the third-party litigation funding market and impose a 40% cap on awards and settlements, high-profile cases such as the Volkswagen diesel scandal have illustrated the growing importance of litigation funding in consumer claims and other actions against companies, directors and officers,” he said.

The EU Directive on Representative Actions has been in the pipeline for many years. Many EU member states already have mechanisms that enable actions seeking collective redress, but most mean that claimants have to pursue quantum individually once a case has been decided.

The new directive will supersede current national mechanisms and enable consumers, consumer groups and small entities to bring claims when individual losses may not seem significant enough to pursue.