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Headline Litigation, Corporate & Finance: Proposed rules on collective actions under Belgian law

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This headline summarizes the main features of the draft law on collective actions (the “Collective Actions Bill”). Please note that this headline is provided for general information purposes and cannot be considered as legal advice. Should you have any questions or wish for legal advice in this respect, please feel free to contact us at any time.

 

1. Background and status

A few days after publication of the European Commission’s recommendation on collective redress mechanisms, the Belgian cabinet adopted the Collective Actions Bill on 5 July 2013. It is expected that the Collective Actions Bill will be submitted to the cabinet for a second reading late September/early October. It will then be reviewed by the Belgian Legislative Review Body (Conseil d’Etat) before undergoing the legislative process. It is expected that it will become law sometime in the spring of 2014, and in any case before the Belgian elections in May 2014.

2. Who can act?

A consumer group is represented by a representative acting on the consumers’ behalf. The representative will be one of: (1) a consumers’ association with legal personality that is a member of the Belgian Consumers’ Council; (2) an association which does not pursue a long-term economic purpose and that is authorized by the Minister of Economy and has existed for more than 3 years; or (3) the federal consumers’ mediator. Commercial companies, trade unions and law firms are therefore excluded as they do not meet these criteria.

3. Only consumer matters

A collective action can only be initiated to claim compensation for losses suffered by consumers due to breach by a company of its contractual obligations, European law or any statute specifically referred to in the Collective Actions Bill, including competition law, product liability, the Financial Services Act of 2 August 2002 and the act organizing the gas and electricity markets.

The Collective Actions Bill does not apply to small and medium-sized enterprises for breaches of competition law (follow-on actions), even though this would be permitted under European law.

4. An opt-in or an opt-out procedure

The court will decide between the opt-in procedure, whereby consumers specifically opting into the action can benefit from it, or the opt-out procedure, whereby all consumers affected by the breach benefit from the action unless they specifically opt out of the group. That said, the opt-in procedure is compulsory (1) to claim damages for personal injury and non-material/non-financial damages and (2) for consumers who do not reside in Belgium on a regular basis.

5. A three-phase procedure

Proceedings have to be raised before the Brussels courts, subject to appeal to the Brussels Court of Appeal, and will be composed of three phases:

- admissibility: there is a check of the status of the representative and the efficiency of a collective action compared to the ordinary-law procedure;
- compulsory negotiations: between 3 and 6 months; binding if confirmed by the court;
- pleadings before the courts: in the case of unsuccessful negotiations or negotiations not confirmed by the court.

It should be noted that, in the interests of efficiency, collective actions will not be stayed in the case of a criminal prosecution in the same matter.

6. Compensation that can be claimed

Compensation can be in kind (e.g. specific performance of a contractual guarantee) or by equivalent (i.e. monetary damages). In the latter case, damages can be global, for the entire group, or individualized. In any case, the full loss will be compensated and no punitive damages will be awarded.

Damages will be distributed by a court-supervised administrator among those consumers that registered, within the timeframe set out by the court after its decision.

7. Costs of the procedure

Just as under the ordinary-law rules in this respect, the losing party pays the procedural indemnity, i.e. partially covering the fees of the winning party’s lawyers plus the costs of the publicity measures provided for by the bill, and the costs of the administrator. No contingency fees or other fees will be deducted from the damages awarded to consumers.

 

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