CONSUMER ADR and COLLECTIVE REDRESS

Professor Dr Christopher Hodges

Head of the CMS Research Programme on Civil Justice Systems

Centre for Socio-Legal Studies, University of OxfordLife Member, Wolfson College, Oxford

Erasmus Professor of the Fundamentals of Private LawErasmus University, Rotterdam

Collective RedressProblem: How to deal with mass problems?

Fact: The most familiar technique within civil procedure is the U.S. class action

Starting From ScratchWhat is architecture of the legal system?

Is it the same in different parts of the world?

Public and Private Enforcement: different models in U.S. and EU

Enforcement Policy: deterrence, risk, responsive…

Private Enforcement – of private rights and public norms

Encourage everyone to enforce

Align substantive law

Remove economic and technical barriers

Insert economic incentives

Features of private enforcement: deterrence policyNo cost to PNo loser pays ruleOne-way cost shifting ruleHigh/triple damagesHigh fees for intermediariesWide discovery and depositionsPunitive damagesJury trialsAggregation of individual claimsNo regulatory pre-emption

Features of private enforcement: class actionsBan on class procedure if alternativesRestriction to certified personnelCertification criteriaEvaluation of meritsCertification by courtOpt-in or opt-outNotice to class membersCourt approval of settlementCourt approval of lawyers’ feesStand-alone or follow-on

EU Events

2008 14 MSs have collective rules: mostly little used

Consultation on BenchmarksSeveral StudiesCompetition Damages: ECJ, DG COMPCollective actions →Collective redress + ADR2010 Consultations on CR and ADR2011 Principles? Safeguards?

Judicial need: origins and sectors

State Origin TypeEngland & Wales GLO 1999 medicinal products horizontal

Spain 2000 adulterated rape seed oil consumer

UK CAT 2002 competition damages policy competition

Sweden 2002 academic horizontal

Germany KapMuG 2005 Deutsche Telekom investors

Netherlands 2005 DES, blood products etc settlement

Denmark, Finland, Norway 2008

Sweden consumers

Italy 2008→2010 Parmalat etc consumers, financial

Poland 2010 collapsed building horizontal

France? … France TelecomMediator

consumersmedicines?

Belgium? Explosions, collisions, bankruptcy,

Fortis nationalisation

?

IssuesConstitutional and fundamental rights

problem with determination of individual rights when the owner is not involved,eg opt-out

Principles of subsidiarity, procedural autonomy, proportionality

Issues with Private Enforcement

Financial incentives or barriers (safeguards) eg loser pays contingency fees, third party funding, trip[le damages

Technical barriers eg opt-in v opt-out certification Court approval of settlement

The problem: inability to calibrate the level of enforcement/abuse

What are we trying to do?First principles

1. Set standards of behaviour

2. Prevent things going wrong (infringement)

3. Put things right (restoration)

Three Pillar Model

RegulationADR Private Litigation

The New Integrated Model

Voluntary Settlement – ADRencourage specific schemes, negotiation, mediation, ombudsmen

Regulatory Oversight of RestitutionDanish Consumer Ombudsman: residual powers to arrange collective redress, or UK targeted responsive enforcement policy, plus restorative justice

Judicial Procedurelast resort, so not expansive, generally opt-in