A new kind of class action has been introduced to the Italian legal system. Legislative Decree No 28 of March 10, 2023, transposing EU Directive No 1828/2020, has introduced the so-called “Representative Action”. The provisions applied as of June 25, 2023 with respect to violations occurring after application date.
The main features of this new class action are as follows:
Scope: the new representative action is intended to protect the collective interests of consumers, i.e., those arising from violations of EU regulations and directives expressly listed in Annex II-septies of the Decree and include product liability, unfair terms in consumer contracts, consumer price indications, e-commerce, personal data protection, unfair commercial practices, and misleading advertising.
Plaintiffs: the representative action can be brought only by EU representative associations included on the list held by the EU Commission, or domestic associations on the list held by the Ministry of Enterprises and Made in Italy and the independent public bodies named in EU Regulation 2017/2394.
Defendants: The representative action can be brought against any natural person or legal entity, public or private, including one acting through another entity, for purposes relating to its commercial, entrepreneurial, or professional business activity.
Territorial scope: for infringements of one or more EU laws affecting consumers of different Member States, cross-border representative actions can be brought by either one (or more) non-Italian representative bodies (including jointly with an Italian consumers’ representative body) before Italian courts or by one (or more) Italian representative bodies (eventually with the consumers’ representative body designated by another Member State) before a non-Italian court. This means that several qualified entities, even if appointed in different EU countries, can co-operate jointly to bring a cross-border representative action before the court of a Member State. The purpose is to increase the effectiveness and efficiency of safeguarding consumers’ collective interests.
Remedies: According to the new rules, remedies may be injunctive or compensatory:
- Injunctive remedies, which aim to stop or prohibit the unlawful practice, including the prohibition on repeating omissive or commissive unlawful conduct, or on publishing the court’s decision in the press. In this case, the claimant benefits from a special burden of proof, since there is no need to prove the fault or the wilful misconduct of the defendant, nor the actual loss or the damage suffered by the consumers.
- Compensatory measures, g. order to pay a sum of money for compensation, or to repair or replace the defective product, the termination of the contract, the reduction or refund of the price.
Third-party funding: The new legislation also addresses third party funding which allows a third party to finance litigation in exchange for remuneration calculated on the damage compensation awarded. It is worth noting that the indication of received or promised funding by third parties must be stated when initially bringing the new class action. Moreover, if the person who financed the action is a competitor or an employee of the defendant, the representative action is inadmissible.
Publicity: The entities entitled to bring the representative action must indicate on their websites the action they have decided to bring, and the status of actions already brought and their outcomes. The entities shall communicate the same information to the Ministry of Enterprises and Made in Italy, which shall publish it on its own website as well.
Conclusion
The long-promised advent of civil group litigation in Europe has taken another notable step forward, empowering individuals and especially consumers who are victims of unlawful business practices. Unlike the class action introduced in Italy under Law no 31/2019, which is aimed at protecting the homogeneous individual rights of the members of a class, the new representative action will protect the collective interests of consumers – providing consumers’ associations with a powerful tool.
Arcangela Gerbino (Trainee) contributed to this article.
