Proskauer Rose International Practice Guide Proskauer Rose LLP |
      Proskauer on International Litigation and Arbitration:
       Managing, Resolving, and Avoiding Cross-Border Business or Regulatory Disputes
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A. Overview

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  1. To epitomize the overall "Americanization" of European law, one could hardly think of three more "American-style" legal reforms than permitting private damage remedies for violations of public laws and regulations; permitting the enhancement of those remedies - allowing, for example, punitive damages; or permitting "class" or "collective" actions.
  2. Is the landscape changing?  Has it already changed?  The view from here and there is - well - mixed.
  3. US plaintiffs firms have set up shop in Europe or have joined forces with European law firms.
  4. The benefits of private damage remedies are even now being bruited by senior EU officials.  And the point is no longer theoretical. 
  5. Enhancing private remedies with relief such as punitive damages, once the bane of any sensible civil law regime, is now being opening considered in various countries.  France, for example, has been examining a proposal for contract law reform that would, among other things, introduce punitive damages where wrongful acts are "manifestly premeditated, particularly a fault whose purpose is monetary gain."
  6. As to class or collective actions, there are over 500 million consumers in the EU.  When they are faced with generally applicable conduct that harms them, they may have, or believe they have, legitimate claims.  These claims will be similar.  In the past, the significant hurdles to bringing an individual claim - cost, the loser pays rule in some jurisdictions, and the overall uncertainty of the outcome - discouraged plaintiffs. Yet this is exactly the environment in which a class action model can be made to work - both for plaintiffs and for defendants (who can get class-wide relief).

(a) The concept of collective litigation is not as foreign to European law as it has been to European authors. France, Spain, Germany, Austria, The Netherlands, Denmark, and Finland, to name a few, already have laws or practices that accommodate class or collective actions in one form or another. The differences among these rules or practices are ones of degree, not kind.

(b) Similarly, EU officials openly express the need for a unified means of collective redress.  Neelie Kroes, European Commissioner for Competition Policy, has said that a system of collective redress is a must for antitrust or competition policy to be effective.  To be sure, she has also stressed that the EU should not simply import the US system wholesale but rather should follow its own cultures and traditions.  Respectfully, that is what the bandaid said to the bursting dyke. 

(c) In November of 2007, Meglena Kuneva, the EU's Commissioner for Consumer Protection, stated that collective redress goes hand-in-hand with the EU's mission to establish "an open and fully functioning single market that brings tangible benefits for consumers."  Indeed, the EU is currently studying whether differences in the legislation, rules, and regulations of various European countries regarding collective redress constitute barriers to the carrying out of this mission or create an anticompetitive landscape.

(d) It seems almost inevitable that the EU will establish some form of collective redress for claims brought by both consumers and businesses (a topic that addressed in March 2008 at the seminar co-hosted in Paris by Proskauer and the Cercle Montesquieu). 

  1. We believe that European companies, or global companies doing business in Europe, can and must begin to focus on the various aspects of corporate life affected by US-style laws and litigation.  Their legal structure, how their goods are distributed, how they have (or have failed to) protect company privileges and employees, how they have structured their legal relations with other companies and with the ultimate consumer, how to avoid or reduce risks flowing from a culture that increasingly is looking to private legal redress rather than social programs and public regulation ? all of these must be addressed.  It is our view that companies act at their peril by failing to come to grips with the new reality and taking steps that do exist and can be employed in light of the paradigm shift that has occurred.  
  2. Yet the tidal wave has not yet hit. 

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