Collective action

Collective action – specific features and characteristics:

Bringing a collective action is uncommon, but it is of substantial public importance and is also significant for the development of the law.

The Consumer Protection Act regulates methods of collective protection against acts and commercial practices that harm the collective interests of consumers. Proceedings on a collective action are governed by the Code of Civil Procedure (Articles 379–388 CCP).

A collective action may be brought on behalf of persons harmed by the same infringement where, owing to the nature of the infringement, their group cannot be identified precisely but must be capable of being determined (Article 379(1) CCP).

Each person harmed by the infringement also retains, under the general rules, a tort claim for the damage sustained.

Article 379(2) CCP governs claims to establish the infringement, to bring it to an end, to remedy its consequences for the injured collective rather than personal interest, or to obtain compensation for damage caused to that collective interest. Compensation awarded by the competent court in a collective action is not compensation for the individual damage sustained by every person affected by the infringement; it serves to remove the source that causes the impairment of the collective interest.

A collective-action case falls within the subject-matter jurisdiction of the district court.

In addition to the circumstances on which the claim is based, the statement of claim must set out the circumstances defining the group of injured persons and the proposed method of publicising the action. The method depends on the type of infringement and on whether it may affect an indeterminate group of persons only in a particular town or region, or throughout the country. Article 380(3) CCP requires evidence that the claimant is capable of protecting the injured interest seriously and in good faith and of bearing the burdens of the proceedings, including the costs. These circumstances may be proved by any means, including evidence and declarations concerning the financial position of the persons who filed the claim. The competent district court must examine of its own motion whether the person or persons bringing the action are able to protect the injured interest and bear the burdens of the proceedings. If the court finds that none of the persons bringing the collective action, or all of them taken together, satisfies these requirements, it terminates the proceedings by an order subject to appeal.

For the case to proceed, it may be sufficient that the conditions under Article 381(1) CCP are met by even one of the claimants, or by all claimants taken together. One claimant may have the experience and qualifications needed to conduct this type of case, while another has the necessary funds; in that event the case should be admitted for examination. The same applies where none of the persons who filed the claim has sufficient resources individually to bear the burdens of the proceedings, but together they have sufficient means: the proceedings should not be terminated.

Under Article 382(1) CCP, preparation of the case takes place at a public hearing at which the district court hears the parties’ positions on the circumstances defining the group of injured persons and on the method of publicising the particular collective action. Article 382(2)(1) gives examples of ways to publicise the action, including notices in the media. The court may select other methods, such as posting notices in or in front of buildings where the defendant carries on its activity, and may determine for how long the notices must remain. The court also sets an appropriate period after publication within which injured persons may state that they will participate in the proceedings or pursue their protection independently. The court’s order on these matters may be challenged by an interlocutory appeal.

Every person who claims to have been harmed by the infringement may, within the period fixed by the court, duly state a wish to participate in the case. The court must admit that person if there is evidence that the person belongs to the group of injured persons. The court excludes injured persons who state within the prescribed period that they will pursue their protection independently in separate proceedings. The law protects their interests because they may rely on a judgment upholding the collective action. If the action is dismissed, however, the excluded persons are not bound by the res judicata effect of the judgment and may establish the act, its unlawfulness and fault in proceedings on their own tort claims.

Article 385 CCP regulates the interim measures for protection of the injured interest that the court may order during the proceedings. Such measures may be imposed only at the claimant’s request, not on the court’s own initiative. The district court is not bound by the measures proposed and may freely determine which measures are appropriate in the particular case. Likewise, when giving its judgment, the court is not bound by the protective measures requested by the claimant. Having regard to the features of the case and the defendant’s position, it may order different measures that provide adequate protection of the injured interest.

Both the order on interim measures and the judgment in a collective action are in all cases subject to appellate and cassation review, irrespective of whether the conditions under Article 280(1) CCP are present. This is because every issue raised for examination in a collective action is relevant to the development of the law within the meaning of Article 280(1)(3) CCP.

Article 386 CCP identifies the persons bound by the judgment: the infringer, the person or persons who brought the action, and the persons claiming to have been harmed by the established infringement who did not state, within the period fixed by the court, that they wished to pursue their protection in separate proceedings. If the action is dismissed, the judgment does not bind the excluded persons. Conversely, if the action is upheld, the excluded persons may rely on the judgment, because the common fact of the infringement cannot logically be established differently for injured persons depending on whether they participated in the collective-action proceedings.