Currently there is no formal procedure for bringing class actions in Ireland. Multi-party litigation tends to be dealt with by ‘test cases’, where numerous claims arise from the same set of circumstances but only one single ‘test case’ is run. This acts as a precedent for the remaining cases.
There has been some movement towards the introduction of a comprehensive multi-party action procedure to deal with mass claims more efficiently, particularly in circumstances where Ireland is being actively promoted as the forum of choice for international litigation given that it is the sole English speaking jurisdiction in the EU. In the Administration of Civil Justice Report 2020, Peter Kelly, the former President of the High Court expressed a preference for the introduction of a procedure similar to the
Group Litigation Order procedure in England and Wales. Draft heads of legislation are due to be drafted in the early part of 2023 to legislate for collective action.
The EU Representative Actions Directive (the “Directive”) was published in November 2020 . The Directive is an EU-wide response to recent mass consumer rights breaches by private companies, such as the 2015 car emissions scandal and the 2017 mass flight cancellation. Once implemented, it will allow for cross border “qualified entities” to come together to represent multiple EU consumers in actions relating to infringements caused by the same trader in several Member States.
Following the publication of the Directive, the Department of Trade and Enterprise carried out a public consultation which led to the publication of the General Scheme of Representative Actions for the Protection of the Collective Interests of Consumers Bill 2022 (the “Bill”) in March 2022. Although the Directive was due to be transposed into Irish law by December 2022, this deadline was not met and the Bill remains under legislative scrutiny.
The Bill aims to transpose the Directive into national law and will create a civil litigation mechanism to allow for collective action by consumers arising out of breaches of certain EU Consumer Protection legislation. The remedies which can be sought include injunctive relief, compensation, repair, replacement, price reduction, contract termination or reimbursement on behalf of consumers.
The Bill provides that actions can be brought on behalf of consumers by a “Qualified Entity” which will effectively step into the shoes of the consumer and will have the rights and obligations of the consumer in terms of discovery, inspection and interrogatories. The actions should be brought in the High Court and the Bill permits the Superior Court Rules Committee to introduce procedural rules in relation to the conduct of such actions. The consumers must opt-in to a representative action for redress against that trader and pay a fee and notify the Qualified Entity of their wish to be represented before the defendant trader enters an appearance in the proceedings (although there is requirement for consumers to opt in where injunctive relief is sought).
In order to be a “Qualified Entity” which can bring an action, an organisation must apply to the Minister for Enterprise, Trade and Employment Remedies for such designation. Amongst other things a “Qualified Entity” must be able to demonstrate 12 months of public activity in the protection of consumer interests and have a non-profit making character.
Qualified Entities, and not consumers, bear the costs of a representative action (save for the payment of any entry fee charged to consumers to join the representative action). The Court has the power to make orders in relation to the costs of the proceedings on the basis that the losing party pays however it is noteworthy that individual consumers may be ordered to pay part of the costs of proceedings where their conduct results in a party incurring costs.
The Directive provides for third-party funding of representative actions, in certain cases where permitted under national law. Unlike in the UK, third-party litigation funding remains unlawful in Ireland, except where it comes within limited exceptions to the rules against maintenance and champerty. The Bill does not amend this rule, rather it provides that when the Court is assessing the admissibility of a representative action, it shall have regard to the funding sources of a representative action. Where an action is funded
by a third-party "insofar as permitted under Irish law", the Court must ensure that any conflicts of interest are prevented, and the funding does not divert the action away from the protection of the collective interests of consumers. It is not entirely clear how this will work in practice.
Conclusion
Once implemented however, there is likely to be an increase in multi-party actions, with Ireland potentially being attractive forum within the EU for such litigation. This may lead to an increase in costly collective actions against both insureds and potentially against insurers for breaches of consumer protection legislation.
