Thursday, 9 May 2013
French class action bill moves forward
France moved a step closer to allowing US-style class actions, as the government of president François Hollande presented a bill that could see consumers access collective legal redress.
The proposals still need to go through Parliament, which is however controlled by the Socialist Party headed by Mr Hollande. But business leaders in France have already expressed concern as they fear their companies, like their American counterparts, could become embroiled in long, expensive court procedures driven by groups of consumers.
However, consumer advocates and lawyers have expressed disappointment as they believe the bill does not go far enough to protect the interests of consumers.
The introduction of class actions is part of broader legislation drafted by the government with the stated goal of re-establishing trust between companies and consumers. The bill will also make it easier for motor and home insurance policyholders to cancel contracts in the first year, if they are unhappy with their insurers.
However, the class action proposals have really caught the attention of the public, as a number of products in France, especially in the medical and pharmaceutical sectors, have been deemed to have caused harm to large numbers of users in recent years.
The government says that class actions à la Française will enable the public to get compensation for damages caused by mass-market products and anti-competitive practices, reducing the disadvantage that a consumer is prone to suffer when taking action alone against a big corporation.
But the government also said that the bill will avoid destabilising businesses with a flood of opportunistic actions. “[The bill] does not risk to import to the French law the drifts that have been seen in other countries,” the government said in a statement, in a thinly veiled reference to the class action industry that has developed in the United States.
For that reason, the bill establishes that class actions can only be launched by a recognised consumer association. Lawyers and consumer advocates have derided the idea, saying that it restricts the rights of consumers to seek compensation.
Critics of the bill also say that it only creates the possibility of seeking compensation for ‘material’ losses caused by companies via the class actions.
Medef, the association of French companies, has also criticised the introduction, albeit from the opposite point of view. The association believes that the bill will increase the legal insecurity faced by French companies, which already face challenging economic conditions.
The bosses' body also doubts the efficiency of class actions to solve disputes. “The class action is not the quickest nor the least expensive or the most efficient way for consumers and companies," Medef argued in a statement.
But the organisation approved the bill’s restriction of class actions to material losses and the provision that only registered consumer associations can trigger the lawsuits.