Analysis of regulatory development in the European Union has largely focused on the potentially negative consequences of the proposed changes outlined in the Voss Report. However, there is equal opportunity for the EU’s Representative Action Directive to generate a wave of group action activity across the continent, with funders able to capitalize on these forthcoming opportunities.
An LFJ Conversation with Michael Kelley, Partner, Parker Poe
Analysis of regulatory development in the European Union has largely focused on the potentially negative consequences of the proposed changes outlined in the Voss Report. However, there is equal opportunity for the EU’s Representative Action Directive to generate a wave of group action activity across the continent, with funders able to capitalize on these forthcoming opportunities.
In a piece of analysis on Bloomberg Law, Keir Baker and Chris Warren-Smith of Morgan, Lewis & Bockius, examine the potential impact of the directive and how it could shape the European class action landscape in 2023 and beyond. With member states required to amend their own laws to fall in line with the directive by 25 June 2023, the continent will soon see a greater degree of standardization in the regulation of representative actions.
Of most interest to funders will be the provision in the directive that requires member states to allow the use of litigation funding, with the caveats that the source of funding must be disclosed if there are perceived conflicts of interest, and that the financing should not shift the action “away from the protection of the collective interests of consumers.” The authors note that states such as Cyprus and Ireland, where litigation funding has previously been heavily restricted, will be most likely to experience a surge in representative action opportunities for funders.
Baker and Warren-Smith emphasize that whilst the directive is designed to provide a more unified set of guidelines, it does allow for individual member states to tailor their implementation of the rules. This will include the standards set out for the use of opt-in or opt-out regimes, as well as the minimum number of class participants required for it to move ahead. Therefore, this may create a new environment in which those looking to bring collective actions will pick their jurisdiction of choice more carefully, with countries like the Netherlands likely to be hotbeds of activity given their willingness to go even further than the bounds of the directive in creating an accessible framework for representative actions.
