What forms of collective actions are permitted in this jurisdiction and under what authority?
Actions for collective redress
Chapter 2 of Book XVII of the Code of Economic Law, which entered into force on 1 September 2014, makes actions for collective redress available under Belgian law, albeit in a limited set of cases.
- An action for collective redress is only permitted when the claim is based on a breach by an undertaking of a contract or of one of the Acts or European Regulations specifically listed in Article XVII.37 of the Code of Economic Law. These include consumer rights and protection rules such as product safety and liability, insurance regulation, protection of personal data, the sale of financial products and pharmaceuticals regulation, as well as competition law, intellectual property law and the statutes on certain regulated industries, such as natural gas and electricity.
- Furthermore, actions for collective redress may only be brought by certain representative organisations and only in respect of harm suffered by either consumers or small or medium-sized-enterprises (SMEs) in the sense of Commission Recommendation 2003/361/EC.
- Finally, actions for collective redress may only be brought in respect of facts underlying a collective harm that occurred after 1 September 2014.
- All actions for collective redress must be brought in the courts of Brussels.
Save for actions for collective redress, a plaintiff before the Belgian courts must usually have a direct, personal and actual interest in a claim to be able to institute legal proceedings. This prevents a plaintiff from bringing claims on behalf of others in a single action. Therefore, outside the scope of application of the Code of Economic Law, actions for collective redress are not permitted in Belgium.
Joined actions, on the contrary, are permitted in Belgium. A joined action is where multiple plaintiffs either jointly bring an action or request the court during proceedings to join their individual actions. This is only possible, however, if their claims are so closely connected that it is appropriate to try them together, in order to avoid potentially incompatible decisions. In these circumstances, the claims will be heard and tried together. Each plaintiff must have an immediate, personal and actual interest in the claim and must have consented to the commencement of proceedings in his name.
Joined actions have become increasingly common as a substitute for actions for collective redress. Actions by multiple plaintiffs (ranging in the hundreds or even thousands), represented through a power of attorney, have been commenced in the area of investors’ litigation and recently in other areas. Such actions may be initiated by public interest associations representing small investors, who obtain powers of attorney from affected investors to commence a damages claim in their name. However, each plaintiff must (i) be named and identified individually in the action, (ii) have a direct, personal and actual interest in the claim and (iii) provide evidence of the existence and extent of the damage it has suffered individually as a result of the allegedly wrongful act.
Actions for the protection of a collective interest
By way of derogation from the requirement of a direct, personal and actual interest, certain legal entities and certain representative organisations have been given the statutory right, in accordance with their statutory purpose, to bring a representative action on behalf of an unidentified group of people to defend specific collective interests, such as consumer interests, the environment and human rights (e.g. anti-discrimination). Until recently, these actions could, in principle, not have as their objective the recovery of monetary compensation for a harm but might only seek injunctions to stop the unlawful practices harming the relevant collective interest. The right to bring these actions was also reserved to legal entities.
In a judgment of 11 June 2013, the Court of Cassation, Belgium's highest court in civil and commercial matters, broadly accepted that environmental organisations may, on the basis of the Aarhus Convention on Access to Information, Public Participation in Decision-making and Access to Justice in Environmental Matters, lodge an action to defend environmental interests, even though no such explicit derogation from the condition of a direct, personal and actual interest exists in Belgian law.
An Act of 21 December 2018, which entered into force on 10 January 2019, extended these actions for the protection of a collective interest, under certain conditions, to all legal entities whose purpose is to protect human rights or fundamental freedoms recognised by the Belgian Constitution or international treaties binding on Belgium.
Who may bring them?
Actions for collective redress
According to the Code of Economic Law, actions for collective redress may only be brought by one of two entities if they concern the reparation of harm suffered by consumers:
- an association for the protection of consumer interests that has legal personality and either holds a seat in the Special Advisory Commission for Consumer Affairs or has been recognised by Ministerial Decree;
- the Consumer Ombudsman, although only with a view to negotiating a collective settlement agreement. If no collective settlement agreement is found, the Consumer Ombudsman must be replaced by another representative. This right of action for the Consumer Ombudsman is controversial and subject to a pending test case.
If it concerns the reparation of harm suffered by a group of SMEs, the action for collective redress can only be brought by:
- an inter-professional organisation for the protection of SMEs which has legal personality and is represented in the High Council for Self-Employed Persons and SMEs or has been recognised by Ministerial Decree
Additionally, two types of entities can act for a group of either consumers or SMEs:
- an association which has had legal personality for at least three years and which has been recognised by Ministerial Decree. The statutory purpose of that association must be directly related to the collective harm suffered by the class and may not include long-term commercial activities;
- an entity which (i) is recognised by a Member State of the European Union or the European Economic Area to act as a representative body, (ii) has a non-profit making character, and (iii) has sufficient capacity to represent multiple plaintiffs, acting in their best interests, though only on the condition that (iv) there is a direct relationship between the objectives of the entity and the rights that are claimed to have been violated.
Joined actions may be brought by any group of plaintiffs whose claims are so closely connected that it is appropriate to try them together in order to avoid incompatible decisions. Likewise, claims that have already been lodged with a court may be joined in the course of the proceedings if the condition of a sufficiently close connection is satisfied.
Actions for the protection of a collective interest
Finally, actions for the protection of a collective interest may only be brought by organisations who have been authorised to do so, either explicitly or generally by the law. These include, for example, consumer protection organisations, environmental organisations and legal entities whose purpose is to protect human rights and fundamental freedoms.
Opt in or opt out?
Actions for collective redress
As a general rule, the Code of Economic Law leaves the decision of whether an action for collective redress will require potential members of the class to opt in or opt out up to the court, which will choose either system based on the specific circumstances of each case, after the claim has been lodged.
However, two exceptions to this general rule exist. First, where the action for collective redress is commenced to claim reparation of a physical or moral harm, the proceedings must require plaintiffs to opt in. Secondly, members of the class who do not habitually reside in Belgium (for consumer claims), or do not have their primary establishment there (for claims brought on behalf of SMEs), must always opt into proceedings and cannot be bound by judgments rendered in proceedings to which they have not consented.
For a joined action to be lodged or for multiple existing actions to be joined, the plaintiffs must be identified and must have lodged the action personally, i.e. in their own name. It is therefore necessary specifically to opt into a joined action.
Actions for the protection of a collective interest
Actions for the protection of a collective interest do not require the members of the group whose interests are being protected to consent to the lodging of the claim.
Judge or jury?
Since there are no juries in any civil case in Belgium, any collective action will be decided by a judge.
What relief may be obtained?
In actions for collective redress, only specific performance and/or damages may be obtained. Conversely, in proceedings for the protection of a collective interest, representative organisations are usually only entitled to seek injunctions to stop unlawful practices that harm the collective interests they represent and may not claim damages for breach of these interests. All types of relief may be sought in joined actions.
How are such actions funded?
In principle, each party will be responsible for its own costs.
However, the successful party may obtain reimbursement of its procedural costs and part of its attorney fees from the unsuccessful party. This reimbursement is determined by the adjudicating court within set upper and lower limits, which vary depending on the value of the initial claim. The maximum amount that may be recovered from the unsuccessful party is €36,000, for claims valued at over €1,000,000. Contingency fees or “no win no fee” agreements are not permitted, although a success fee may be agreed upon.
Is pre-trial disclosure available?
Belgian law does not have a procedure corresponding to that of disclosure. There is no general discovery, nor pre-trial witness depositions. As a general rule, each party must send a copy of the exhibits cited in its trial brief to the opposing party. In some cases, such as when there are serious indications that a party is withholding a specific, relevant document, the judge may order the production of that document.
In competition damages claims, the Act of 6 June 2017 extended document production orders to categories of documents rather than individually specified documents, as part of the transposition of the Directive 2014/104/EU.
Likely future scope and development?
Developing Belgian case law
Since the entry into force of the Act of 28 March 2014, nine actions for collective redress have been brought. The concern expressed by opponents of the collective redress regime that allowing actions for collective address would open the floodgates has thus proven to be unwarranted.
Out of those nine actions, one was dismissed on merit and four have resulted in a settlement, while the remaining four are still pending. As such, no damages have yet been awarded to group members through an action for collective redress. Consequently, the courts have yet to address merit-related questions, such as how the compensation awarded is to be divided among group members. Currently, the law allows the courts to award either an aggregate amount of damages, to be divided by the entire group or an individualised amount per group member. How that system will actually be applied and the criteria by which either system would be chosen, remains to be determined.
The nine cases for collective redress that have been brought have also uncovered some of the more perverse incentives of the regime, which had not been anticipated by the legislator. For instance, to prevent group representatives from bringing actions for collective redress as a means of generating profits, the legislator provided that group representatives cannot draw any direct benefits from the action for collective redress. In essence, this means that group representatives can only obtain a fixed indemnity for their attorney fees from the defendants, which is generally available in all cases under Belgian procedural law. That indemnity is quite low, as it amounts to a few tens of thousands of euros at most. However, at the same time, the legislator has provided that when the group representative obtains a settlement, he is able to recover from the defendants all of the expenses he has incurred. This has created a clear incentive from a cost perspective for group representatives to reach a settlement.
Furthermore, since group representatives cannot obtain direct financial benefits from actions for collective redress, it appears that they have begun using those actions as a means of recruiting members for their organisations.
This use of actions for collective redress as a means of membership recruitment has manifested itself in two ways: first of all, for several of the proceedings that have been brought, the group representative announced on its website that it would be bringing the action and requested that any interested group member first sign up with them (and consequently, pay a membership fee). Registration with the group representative is not, however, a statutory requirement to become a group member or participate in the proceeding. Second, in none of the proceedings that were settled did the group representative follow the settlement approval procedure required by law, which would have required court approval of the settlement and would have meant that all group members could have benefited from the settlement. Rather, once the defendant compensated the group members that had signed up with the group representative, the group representative simply waived its action, thus bypassing the court approval procedure. This means that group members who did not sign up with the group representative were unable to obtain compensation.
This issue is further exacerbated by the quasi-monopolisation of the collective redress regime by a single group representative: the consumer rights organisation Test-Aankoop/Test-Achat, which is a for-profit company and which has brought no less than eight out of the nine actions for collective redress.
The courts do appear to have become increasingly aware of this issue but, as of now, seem reluctant to act on it. For instance, in the admissibility judgment in the Dieselgate-proceeding, the Court reproached Test-Aankoop/Test-Achat in rather strong terms for the fact that it had asked group members to register their claim with it without informing them that such was not a statutory requirement. However, at the same time, the Court dismissed the defendants’ argument that this financial interest in the proceedings made Test-Aankoop/Test-Achat unfit as a group representative.
Rather, the Court stated that if group members considered that they had been harmed, they would have to take it up with Test-Aankoop/Test-Achat separately. It remains to be seen whether the courts will become stricter if this issue continues.
A European directive on collective redress
Another major upcoming development is a recent proposal for a European directive on representative actions for the protection of the collective interest of consumers. This proposal is considered in more detail elsewhere in this publication.
The directive would require the introduction of certain new aspects into the Belgian action for collective redress, including:
- cross-border representative actions: the proposal for a directive includes rules which would allow qualified entities from several Member States to jointly bring a single representative action in one Member State for the reparation of harm suffered in several Member States.
- litigation funding: the directive does not prohibit litigation funding, but rather sets out certain strict rules as to disclosure and the involvement of the litigation funding in decisions pertaining to the action. No such framework currently exists under Belgian law. The upcoming directive might lead the Belgian legislator to amend the current regime under which group representatives cannot draw direct benefits from actions for collective redress.
- penalties for non-compliance with final decisions in collective redress proceedings.
- potentially broader document disclosure rules.
The proposal for a directive is currently being discussed by representatives of the European Parliament, the Council and the Commission, meaning it is still not certain whether it will be passed and, if so, what rules will actually be included.