Oireachtas Joint and Select Committees

Wednesday, 14 September 2022

Joint Oireachtas Committee on Jobs, Enterprise and Innovation

General Scheme of Representative Actions for the Protection of the Collective Interests of Consumers Bill 2022: Discussion

Photo of Maurice QuinlivanMaurice Quinlivan (Limerick City, Sinn Fein)
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The proceedings of Oireachtas committees will be conducted without the requirement for social distancing and with normal capacity in the committee rooms restored. However, committees are encouraged to take a gradual approach to this change. Members and witnesses have the option to attend meetings in the relevant committee room or online through Microsoft Teams. Those attending the committee rooms and its environs should continue to sanitise and wash their hands properly, be respectful of other people's physical space where possible, and practise good respiratory etiquette. If those attending the meeting have any Covid-19 symptoms, no matter how mild, they should not attend in the committee room. Members and all in attendance are asked to exercise personal responsibility in protecting themselves and others from the risk of contracting Covid-19. Members who are required to participate in the meeting remotely must do so from within the Leinster House complex, as they are well aware.

Apologies have been received from Senator Garvey and Deputy Shanahan.

Today's meeting is to discuss the general scheme of the representative actions for the protection of the collective interests of consumers Bill 2022. This Bill aims to give effect to the EU representative actions directive by creating a new civil litigation mechanism by which a qualified entity may act as a claimant party on behalf of consumers who have opted into a representative action against a trader in the High Court. The Bill also creates a mechanism whereby an organisation which represents the collective interests of consumers may apply to the Minister to be designated as a qualified entity to bring a representative action in Ireland or in other EU member states.

The new law is a response to recent mass consumer rights breaches by private companies.

It will allow for several cross-border qualified entities to come together to represent EU consumers where they have been harmed by the same alleged infringement which has been caused by the same trader in several member states. Today we are pleased to have the opportunity to consider these matters further with representatives of various bodies. I welcome Mr. Philip Andrews from the Law Society of Ireland, who is a partner in McCann Fitzgerald with responsibility for EU, anti-trust and telecoms. He is a member of the Law Society's business law committee. I understand that Ms Aleksandra Pruska of McCann Fitzgerald may also be joining us. I also welcome the chairperson of the Competition and Consumer Protection Commission, CCPC, Mr Jeremy Godfrey. He is joined by Mr. Kevin O'Brien, who is a member of the CCPC; Ms Síona Ryan, who is the CCPC's director of policy and international; and Mr. Robert Dunne, who is the CCPC's deputy director of legal services. I also welcome the chairperson of the Consumer Association of Ireland, CAI, Mr. Michael Kilcoyne, who is attending remotely. He is joined by Mr. Raymond O'Rourke, who is the vice chairperson of the CAI; and Mr. Dermott Jewell, who is the CAI's policy and council adviser.

Before we begin, I wish to explain some limitations to parliamentary privilege and the practices of the Houses as regards references that witnesses make to another person in their evidence. The evidence of witnesses who are physically present or who give evidence from within the parliamentary precincts is protected pursuant to both the Constitution and statute by absolute privilege. Witnesses are again reminded of the long-standing parliamentary practice that they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable, or otherwise engage in speech that might be regarded as damaging to the good name of the person or entity. Therefore, if their statements are potentially defamatory to an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative that they comply with any such direction.

The opening statements from the three organisations have been circulated to members. To commence consideration of the matter today, I invite Mr. Philip Andrews to make his opening statement on behalf of the Law Society.

Mr. Philip Andrews:

I thank the Cathaoirleach, the Teachtaí Dála and the Seanadóirí for the opportunity to discuss the general scheme of the Bill. The Law Society welcomes the opportunity to contribute to the committee's scrutiny of the general scheme. I am a member of the business law committee of the Law Society of Ireland. I am a practising Irish solicitor in the area of EU competition, trade and regulating markets. My practice is mainly advisory and I do not regularly litigate cases. I am therefore not an expert in litigation procedure. I wish to extend apologies on behalf of Ms Aleksandra Pruska who is unable to attend today for health reasons.

I will set out some background and then talk about three specific points with regard to the general scheme. As I am sure is well-known to members, in 2005 the Law Reform Commission, LRC, conducted a review of the law regarding multi-party litigation and reached a preliminary conclusion that the Irish legal system "lacks a comprehensive procedure that would tackle class claims in a uniform and consistent fashion". An LRC report on foot of that assessment which was issued later in 2005 recommended that a formal procedural structure for collective redress be established. Following the introduction of a Private Members' Bill on multi-party actions, MPAs, the then Minister for Justice and Equality referred the question of the introduction of an MPA procedure in the Irish legal system to the review of the administration of civil justice review group, established in 2017 and chaired by the then president of the High Court, Mr. Justice Peter Kelly.

In January 2018 the European Commission published a report and study on collective redress mechanisms in member states. The report and study found that Ireland was an outlier among EU member states because Ireland had "no dedicated mechanism for bringing collective claims in Ireland". It continued:

Rather, mass claims are dealt with under the general rules of civil procedure which only allow for collective claims in very limited circumstances.

A 2020 report on foot of the work of the administration of civil justice review group, which I will call the Kelly group, concluded that in addition to EU Directive No. 1828 on representative actions, there was a further rationale for the introduction of a new and more comprehensive MPA procedure to accommodate mass claims. More specifically, while acknowledging the importance of public law redress mechanisms like those provided for in EU Directive No. 1828, the Kelly report concluded that in addition it seemed clear that there was an objective need to legislate for a comprehensive MPA procedure in Ireland.

In SPV v. HSBC, then Chief Justice Clarke stated, in 2018, that:

I remain very concerned that there are cases where persons or entities have suffered from wrongdoing but where those persons or entities are unable effectively to vindicate their rights because of the cost of going to court. That is a problem to which solutions require to be found. It does seem to me that this is an issue to which the legislature should give urgent consideration.

While the Law Society welcomes the directive and general scheme, it would support broader and carefully-balanced reforms that implement the recommendations of the LRC and the Kelly report. It would be important that those reforms are carefully balanced to facilitate small-harm class actions while preventing excessive litigation.

I will give one US example. In the US, courts have generally applied a very lenient standard for certification of class actions. An example is a recent class action lawsuit from May 2022, Chimienti v. Wendy’s International, in a New York district court in which the plaintiff seeks compensatory damages, disgorgement of ill-gotten gains, punitive damages and injunctive relief for alleged misrepresentations and omissions because “Wendy’s advertises its burgers to make it appear that the burgers are substantially larger in size than the actual burger served to customers”. The lawsuit goes on to claim that “the beef patties used for its advertisements are not fully cooked to make it appear that they are approximately 15-20% larger than the beef patties that are actually served to customers”. The claim is brought by the plaintiff “on his own behalf and on behalf of all other persons or entities who purchased an overstated Wendy’s menu item”, so it is really an opt-out system there. It is estimated that many thousands of new class actions are filed each year in the US federal and state courts. According to one authoritative source, “A putative class action takes no more than a single named plaintiff and a filing fee typically of several hundred US dollars”.

I will now turn to the general heads and our three comments. EU Directive 2020/1828 sets minimum standards only. It requires member states to put in place, at a minimum, at least one procedural mechanism to enable consumer organisations, called “qualified entities”, to commence representative actions on behalf of consumers. Notably, under the directive and the general scheme, only qualified entities, not individual consumers, can bring representative actions. Many, if not most, member states are expected to go beyond the minimum requirements, or already do so.

A key purpose of the directive is to enable, consistent with Article 38 of the Charter of Fundamental Rights of the EU, representative actions to ensure a high level of consumer protection. That is in recital 4 of the directive. To that end, the directive requires member states to implement, at a minimum, a type of collective representative action involving a qualified entity, but it is not a purpose of the directive to require that representative actions can only be taken by qualified entities.

Under subsection (1) in head 5 - application, the general scheme states that “a representative action may be only brought before the court by a qualified entity designated by the Minister for the purposes of bringing a domestic representative action”. A question arises as to why head 5(1), appears to suggest that only collective actions by qualified entities are permitted in Irish law. By explicit inclusion of the word “only", a question arises as to whether a limitation is incorporated into the Irish legislation that may have unintended consequences. Could this approach prevent organic emergence of representation actions in common law? Ireland currently has a relatively restricted regime for collective action, including by reference to other EU member states, as well as other common law jurisdictions such as the UK. A legislative provision that limited private-party rights to take collective or multiparty actions in such a way could also run counter to recommendations of the LRC and the calls for legislative reform by the Judiciary. The 2020 Kelly report refers-----

Photo of Maurice QuinlivanMaurice Quinlivan (Limerick City, Sinn Fein)
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You are running out of time, so if you want to conclude, you can go on for another minute or so.

Mr. Philip Andrews:

Okay.

Photo of Maurice QuinlivanMaurice Quinlivan (Limerick City, Sinn Fein)
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The rest will be read into the record anyway.

Mr. Philip Andrews:

The 2020 Kelly report refers at some length to a 2001 Supreme Court of Canada authority, in which the Supreme Court effectively introduced a nationwide class action procedure without requiring the legislature to act.

The scope of the general scheme is relatively wide but we note that it does not include competition or antitrust law, an area in which there is a growing body of class actions in the UK, the Netherlands and Germany.

The final point is around the relatively strict criteria that are applied in respect of what can be a qualified entity for the purpose of bringing domestic action.

The directive does not require such restrictive actions. It simply states that in respect of domestic representation actions only, the requirement is that they should be consistent with the objectives of this directive to make the functioning of such representation actions effective and efficient.

Photo of Maurice QuinlivanMaurice Quinlivan (Limerick City, Sinn Fein)
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I thank Mr. Andrews and invite Mr. Jeremy Godfrey to make his opening remarks on behalf of the Competition and Consumer Protection Commission.

Mr. Jeremy Godfrey:

I thank the Chair and the members of the committee. My colleagues and I welcome the opportunity to provide our views on the general scheme. I am the chairperson of the Competition and Consumer Protection Commission, CCPC, and I am joined by Ms Síona Ryan, who is director of our policy and international division.

The CCPC welcomes the general scheme, which will establish a system for representative actions in Ireland and will ultimately lead to the improvement of consumer access to justice and redress. Redress is a very important aspect of consumer protection. When things go wrong, consumers must be confident that traders will provide them with appropriate remedies such as compensation, repair, replacement, price reduction, contract termination or refund of the price paid. The CCPC therefore strongly believes all consumers should have access to fair and timely dispute resolution and redress mechanisms. One mechanism for achieving redress is enforcement action taken by public bodies. Another is legal action taken by consumers themselves. Where consumers have suffered as a result of a trader failing to uphold their rights, a public body such as the CCPC or a sector regulator can take enforcement action, using its legal powers to investigate and seek sanctions. Enforcement action can result in penalties, orders to come into compliance and, in some cases, compensation for affected consumers.

Individual consumers can take legal action against a trader in the small claims court for amounts under €2,000 and in the higher courts for larger amounts. In some cases, individual consumers may also be able to avail of alternative dispute resolution; for example, by making a complaint to a sector ombudsman or a sector regulator. This Bill will introduce another mechanism for consumers to take legal action. It allows for representative actions to be taken on behalf of multiple affected consumers. This will apply when a trader has failed to uphold rights derived from EU consumer law, both general consumer law and a range of other laws that protect consumer interests. The Bill will allow both for injunctions and for compensation and will apply both to domestic and to cross-border actions. Irish consumers will be able to join representative actions taken in other member states and vice versa.

This Bill transposes the EU representative actions directive, and the general scheme of the Bill closely follows the requirements of the directive. We have only a few comments on the detail of the general scheme. First, we welcome the criteria for designation of qualified entities who can take representative actions on behalf of affected consumers. These criteria follow the directive and will ensure consumers’ interests are placed at the heart of all representative actions.

Second, we consider that qualified entities should be free to make independent decisions about which cases to pursue, based on their own criteria, such as the prospects of success, the scale of consumer detriment and whether they have the resources and expertise needed. This is implicit in the general scheme and it will be important the final legislation does not constrain the independence of qualified entities in this regard.

Third, we welcome the provision for the Minister to facilitate co-operation and sharing of best practice among qualified entities. Co-operation and sharing of best practice among entities interested in becoming qualified entities prior to designation will also be useful, and public bodies such as the CCPC may have a role in sharing experience with qualified entities or bodies seeking designation. However, this does not necessarily need to be explicitly referenced in the Bill.

While the Bill will enable representative actions to be taken, there are a number of complementary measures that will determine how the mechanisms in the Bill operate in practice. For example, the general scheme contemplates that courts could make rules on matters such as admissibility, evidence and the means of appeal. Any such rules could set important criteria for representative actions, such as the minimum number of consumers affected and how similar their claims must be.

The CCPC also considers it would be useful for the courts to provide for fast-tracking of representative actions, both to provide faster redress when an action succeeds and to minimise the costs that are inevitably incurred when an action is prolonged.

The availability of funding for qualified entities will be crucial to their success. The CCPC welcomes the possibility of removing court fees payable by qualified entities taking a representative action. We note, however, that such fees are not likely to be material in the overall cost of a representative action. The ancient prohibitions on champerty and maintenance remain in place in Ireland, despite having been abolished in most other common law jurisdictions. These prohibitions will severely limit the ability of qualified entities to fund representative actions. The CCPC therefore welcomes the recommendation in the 2020 Review of the Administration of Civil Justice, led by Mr. Justice Peter Kelly, that the rules on funding of litigation should be modernised.

At the committee's previous hearing on the Bill, there was some discussion on which types of body might become qualified entities. The CCPC's view is that the interests of consumers are best served if they have the option of civil society bodies taking representative actions on their behalf in addition to public bodies taking enforcement actions against traders who breach consumer law. Having these two options available will mean that consumers will be able to take matters into their own hands if a public body decides not to pursue a particular case for any reason.

I will end with some remarks on the CCPC's role in helping consumers to secure redress. First, we will use the enhanced enforcement powers contained in the Consumer Rights Bill to secure redress for consumers in cases in which there is substantial or widespread consumer detriment. These new enforcement powers mean we will be able to require traders to provide refunds, price reductions or similar remedies if they fail to deliver goods or services or if those goods or services are faulty or otherwise do not conform with the consumer contract. Second, we will continue to advocate improvements to the small claims court procedure and a rise in the ceiling for claims. Last year there were only 2,134 claims submitted through the small claims procedure, indicating that many consumers find that the process does not meet their needs. Third, we will share expertise and collaborate with civil society bodies that are interested in becoming qualified entities to help them to develop the capacity to take on this role. Fourth, we will consider how the CCPC's role in securing redress for consumers could evolve in the light of our experience using our new powers and once we know whether other bodies have secured designation as qualified entities.

The CCPC welcomes the general scheme of the Bill and the introduction of representative actions in Ireland. The CCPC believes that representative actions for the protection of collective interests of consumers will complement the soon-to-be-expanded role of the CCPC and other public bodies in securing redress for consumers. It will allow for more efficient cross-European redress in cases of mass harm and provides a further incentive to traders to comply with consumer protection law.

Photo of Maurice QuinlivanMaurice Quinlivan (Limerick City, Sinn Fein)
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Thank you, Mr. Godfrey. I now invite Mr. Michael Kilcoyne to make opening remarks on behalf of the CAI.

Mr. Michael Kilcoyne:

One of my colleagues, Mr. O'Rourke, will do so.

Photo of Maurice QuinlivanMaurice Quinlivan (Limerick City, Sinn Fein)
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Sorry.

Mr. Raymond O'Rourke:

Mr. Jewell is first.

Mr. Dermott Jewell:

Thank you, Chairperson, for the opportunity to present to the committee and for the invitation, on behalf of our members. Since 2004, the CAI has been lobbying for consumers to have the benefit of access to justice by means of collective action in a court whereby, rather than 1,000 consumers taking 1,000 cases to court, a qualified entity such as the CAI would take one case on behalf of those 1,000 consumers affected. This is already effectively operational in other member states of the European Union. Our engagement was significantly extended through our membership of BEUC, the Brussels organisation of consumer associations in the EU. As a result, we are now, 18 years on, with collective redress demanded by the European Commission to be implemented by December and operational by June 2023 in every member state.

The draft Bill provides the template for Ireland's mechanism. We have some concerns about a number of the provisions, their effectiveness and their fitness for purpose for Irish consumers and, when and if one is appointed, for the qualified entity. I will pass to Mr. O'Rourke to outline those concerns.

Mr. Raymond O'Rourke:

I thank Mr. Jewell and thank the committee for inviting us here to discuss this rather long Bill, which transposes the directive. We have some points about specific items and we drill down quite specifically into various parts of the Bill. I hope Deputies and Senators will be happy with the detail, rather than just broad brush strokes, that I will put forward.

Head 16(1) transposes the conditions laid down in Article 4(3) of Directive (EU) 2020/1828 on the designation of an organisation as a qualified entity for the purposes of taking domestic or cross-border representative actions; in particular that the entity should be an association with the primary aim of protecting the interests of consumers. The specifics of the designation process will be dealt with under future ministerial regulations, as referenced in head 16(2).

We are concerned that additional conditions could be introduced, as seems to be asked by the Law Society even here today, militating against the Consumers Association of Ireland, the only existing consumer NGO in Ireland, from applying to be a qualified entity. Will those regulations be in place by the time this directive is to be operational on 25 June 2023?

The Department of Enterprise, Trade and Employment is the designated authority to inform the European Commission of designated qualified entities. What happens if it does not designate a body? If it does not, Irish consumers will be left without their statutory rights under this directive. What is the response of Oireachtas Members?

With regard to funding for qualified entities, head 7(3) states that, aside from an entry fee placed on an individual consumer to be a party to the representative action, "any costs incurred in the bringing of a representative action for redress shall be borne by the qualified entity and not the consumers represented by it". Head 20 clarifies that the head 7(3) fee should be a modest fee to be determined by the Minister, but how will this be determined? Will it be determined via the proposed ministerial regulations or another regulation?

Head 4 states that all representative actions for redress or an injunctive measure will be taken via the High Court under new superior court rules. Have these rules been adopted and will they be in place by 25 June 2023? We all know that commencing legal proceedings in the High Court is not cheap and, yet, the Bill ignores the administrative costs that will be demanded of a qualified entity, that is, a consumer association, to commence a representative action.

Head 3(4) notes that the Minister for Justice may make regulations to provide for the removal of fees payable to the court by parties bringing representative actions under the Act. This certainly would be of benefit to the qualified entity and, yet, as with other issues such as the superior court rules and ministerial regulations, we in the CAI are waiting to see if the Minister for Enterprise, Trade and Employment or the Minister for Justice is truly on the side of the Irish consumer.

The CAI suggests that even if such measures were introduced, the legislation places considerable administrative burdens on the qualified entity, such as the provision of information about representative actions online, transparency as to the funding of the qualified entity to avoid conflicts of interest and interactions with consumers prior to commencement of a representative action. In that case, the qualified entity would need to have a well-resourced office with staff to complete the task of instigating representative actions.

Without some form of funding from the Government or co-operative assistance from the Competition and Consumer Protection Commission, CCPC, as mentioned in its presentation, possibly by means of a memorandum of understanding, the CAI is doubtful if this directive will be fully enacted in Ireland for the benefit of Irish consumers.

I highlight Articles 20(1) and (2) of directive. Article 20 specifically states - this is not in the preamble - that:

Member States shall take measures aiming to ensure that the costs of the proceedings related to representative actions do not prevent qualified entities from effectively exercising their right to seek the measures referred to in Article 7.

Article 7 refers to representative actions. The measures referred to in paragraph 1 may, for example, take the form of public funding, including structural support for qualified entities, limitation of applicable court or administrative fees, or access to legal aid.

This issue is not mentioned at all in the Bill before the committee and therefore means that the Government does not seem serious about fully transposing Directive (EU) 2020/1828, taking into account all the additional issues mentioned that still have to be enacted via ministerial regulations and changes to superior court rules. Are the Deputies and Senators happy, as Oireachtas Members, to potentially see Irish consumers unable to avail of their statutory consumer rights under the directive as of 25 June 2023 due to these anomalies?

I will mention the issue regarding a minimum number of consumers. Members will understand that preambles are really the philosophy behind the legislation. They do not have to be transposed. Preamble 12 of the directive notes that it is up to member states to lay down rules on various issues relating to representatives actions, such as "to decide on the required degree of similarity of individual claims or the minimum number of consumers concerned by a representative action for redress measures in order for the case to be admitted to be heard as a representative action.".

The CAI does not regard these important matters to be covered by the Bill. Will they also be an issue for ministerial regulations?

The last item I will mention is the length of prior consultation. Head 10(5) states that prior to a qualified entity bringing an action before the courts seeking an injunctive measure:

the qualified entity must first seek to enter into consultations with the trader concerned with the express purpose of having the trader cease the infringement referred to in section 6 of this Act.

This is a reasonably correct transposition of the directive, but the CAI would point out that one very important matter has been omitted in the wording of this section of the Bill. Paragraph (41) of the preamble to the directive states:

Where Member States have established that there should be prior consultation, a deadline of two weeks after the request for consultation is received should be set, after which, if the infringement has not ceased, the applicant should be entitled to immediately bring a representative action for an injunctive measure before the competent court or administrative authority. Such requirements could also apply to representative actions for redress measures, in accordance with national law.

This is a crucial issue that must be amended in the Bill; otherwise, the prior consultation could be a means to entirely undermine the consumer representative action by obstructive lengthy consultations, whether by solicitors, lawyers or traders, thereby making the injunctive measure of little use if finally agreed to by the court. Injunctive measures need to be introduced in a quick and timely fashion, as understood by Preamble (41).

Mr. Michael Kilcoyne:

The CAI would like to note that in previous submissions to the Department of Justice and the Department of Enterprise, Trade and Employment, it was opposed to any form of US-style class-action collective-redress procedure being introduced in Ireland, as seems to have been envisaged in the Multi-Party Actions Bill 2017. The directive is quite clear that the consumer representative action procedures are not like US class-action litigation. The CAI has never sought or supported US-style class action legal procedures for Irish consumers, as highlighted on many occasions by Mr. Jewell.

Never before in the 56 years of the CAI’s history, or arguably not since we launched the pilot scheme for the small claims court in Ireland, have we been so engaged in trying to bring affordable access to justice to consumers. As members have heard, the CAI is not happy with many aspects of the Bill before the joint committee. We ask that substantial changes be made to it in order that Irish consumers, as of 25 June 2023, can rely on their statutory consumer rights, as described in the directive, and, importantly, deliver the appropriate resources by a truly independent entity to challenge the deep pockets of those who seek, with far too much regularity, to deny consumers their legal and fair entitlements under common law.

We thank the Chairman and members very much for their time and engagement with us today. We look forward to assisting in any way we can with the limited resources we have.

Photo of Maurice QuinlivanMaurice Quinlivan (Limerick City, Sinn Fein)
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I thank Mr. Kilcoyne, Mr. Jewell and Mr. O'Rourke for their contributions. I now invite the members to discuss the issues with the representatives. I remind members who are participating remotely to use the raise-your-hand feature and, more important, to take their hand down when they are finished speaking. The first speaker is Deputy Louise O’Reilly, who has 14 minutes.

Photo of Louise O'ReillyLouise O'Reilly (Dublin Fingal, Sinn Fein)
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I thank the Chairman and our witnesses. This is pretty complicated, so we need to be sure we get it right. I am aware that there are substantial concerns, as expressed this morning. We had representatives of the Department here before the summer recess. Obviously, the representatives will have watched the proceedings. I asked for more information on what body would be a qualified entity. I believe that is really important. I am concerned that there does not seem to be very much by way of clarity. We were told that no decisions had been made as to what body would constitute a qualified entity, that there would have to be an application process and that those concerned would have to wait to be designated. Have the representatives got any clarity from the Department as to how it will work and what the entities will be?

That is going to be a concern. Have the witnesses any issues with the adjudication process involved in establishing a qualified entity? The questions can be taken in any order they like.

Mr. Raymond O'Rourke:

I am not sure whether the CAI should be asked about the Department and whether we know about the issue but I take the Deputy’s point. As the Deputy will have seen from our presentation, we are concerned about the whole process because it references that it is via ministerial regulations. The proof is in the pudding so we do not know. The transposition of the directive is correct. They follow all the lines. There is an emphasis that the body and the entity should be a consumer organisation of long standing, etc. but I reiterate that the proof is in the pudding. We have not seen the ministerial regulations or, as the Deputy said, the format of the application form or how to go about it and we do not know whether they are going to decide quickly, or whatever. We are at a bit of a loss on that.

Photo of Louise O'ReillyLouise O'Reilly (Dublin Fingal, Sinn Fein)
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The fact that we are still in the dark about this is somewhat concerning.

Mr. Jeremy Godfrey:

We do not have any concerns about the criteria or the process of a designation but the Deputy is quite right. We particularly see that the issue of funding will be crucial to who feels able to become a qualified entity. Of course, issues of public funding of qualified entities and issues of modernising the laws on private funding of litigation will be important. Some of those are issues for the Department of Justice rather than for the Department of Enterprise, Trade and Employment. We think it is important and highly desirable for consumers that some civil society bodies are able to come forward to be qualified entities. From our point of view, we are not a funding body but we have some expertise to assist and will do what we can to support bodies that are interested in being qualified entities in their applications. As the Deputy said, there is a lot of water to flow under the bridge before we know what is going to happen.

Photo of Louise O'ReillyLouise O'Reilly (Dublin Fingal, Sinn Fein)
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There is.

Mr. Philip Andrews:

From a purely legal perspective, the criteria laid down in head 16(i)(a) to (f) stipulate that the body should, among other things, be a non-profit body. The directive provides for a two-category system of designating qualified entities. As I read the directive for cross-border representative actions that qualified entities might take, these criteria must apply to qualified entities that are acting cross-border. In respect of purely domestic representation, I read the directive also to allow that for domestic qualified entities these stipulations do not have to apply. Article 4(4) of the directive on the issue of domestic representation actions states: "Member States shall ensure that the criteria they use to designate an entity as a qualified entity for the purposes of bringing domestic representation actions are consistent with the objective of this directive in order to make the functioning of such representative actions effective and efficient." It is not a requirement of the directive that the six stipulations that are included must be applied in respect of domestic representation actions. Member states have greater freedom to adopt different criteria under the directive.

Photo of Louise O'ReillyLouise O'Reilly (Dublin Fingal, Sinn Fein)
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I thank Mr. Andrews. I have a specific question for him. Has he any designs or ideas for the representative action procedure that will be in place for injunctions and redress actions that can be brought by qualified entities when established? How would he see this working effectively? The legislation sets out how the procedures will work - that qualified entities can seek injunctions, redress measures or both. However, we were also told that these rules could change depending on the view of the Department of Justice on the rules of the court.

Will it be necessary for us to introduce secondary legislation arising out of this in order to be able to proceed? Do the witnesses foresee this design having to be done through legislation or can it be done without additional legislation, assuming this legislation goes through?

Mr. Philip Andrews:

I am not sure if I can fully answer but I will do my best. I understand that in all likelihood there will be new rules of court, superior court rules, that will most likely need to be put in place to accommodate that. I am open to correction but I understand those rules are designed by the Department with the Judicial Council.

Photo of Louise O'ReillyLouise O'Reilly (Dublin Fingal, Sinn Fein)
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That is right, yes.

Mr. Philip Andrews:

I think there will be some additional work on that front. I do not think the current rules are sufficient to accommodate this new element.

Photo of Louise O'ReillyLouise O'Reilly (Dublin Fingal, Sinn Fein)
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Secondary legislation is likely to be required. I am not trying to make the witness say something he does not want to say. I am trying to work it out myself.

Mr. Philip Andrews:

I think that is right.

Photo of Louise O'ReillyLouise O'Reilly (Dublin Fingal, Sinn Fein)
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Yes, I believe it would be required in all likelihood.

Head 7, which concerns parties in a representative action, states that all costs will be borne by the qualified entity. There is an expense to bringing a case. Given that only nominal fees can be accepted by qualified entities, this creates a difficulty. The High Court is not cheap, as the witnesses noted in their submission.

Dr. Johnny Ryan from the Irish Council for Civil Liberties has pointed out that Article 20(1) of the directive provides that "member states shall take account of the non-profit making character of qualified entities and ensure that a lack of funding is not a bar to bringing representative actions". Should the Bill be reconfigured to enable non-profit organisations to source some funding for collective actions given that it is not going to be free or, indeed, cheap to take such actions? I am interested in hearing the views of the witnesses.

One of the witnesses asked if we were happy, as legislators, that consumers and others would be disadvantaged. Of course we will all say we are not happy that they would be disadvantaged but we need to do something about that by trying to put a bit of shape on what that would look like. If we are excluding not-for-profit entities that have a very real issue and may wish to take such cases, they will be barred from doing so because of the funding rules. Do the witnesses have a view on how we might make a change to ensure the Bill is as broad as possible to encompass as many not-for-profit organisations as possible? If they are going to be excluded, this provision will not work.

Mr. Dermott Jewell:

The Deputy has asked an excellent question. Let us consider the position in other member states. There are a number of member states where consumer associations take cases. We have examples of such cases and the costs involved. The costs of administration, preparation and engagement with legal people in advance are significant because it takes a lot of time. Beyond that, the cost of advising every consumer in an opt-in situation that a case is about to be taken and ensuring they all know and understand what the case is, are able to register, get in touch in person with an entity 24-7, as required, and not just a website, and be updated on progress is quite significant. That is the reality before a case gets to court. Cases under collective redress should be the exception. As it would be a very significant issue to challenge, it comes at a cost. The entity one is taking the case against will potentially fight it tooth and nail.

Photo of Louise O'ReillyLouise O'Reilly (Dublin Fingal, Sinn Fein)
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Of course.

Mr. Dermott Jewell:

These entities will have resources that the qualified entity in Ireland under this provision will not have. I will use the Consumers Association of Ireland as a classic example. We are funded solely by the citizens who pay a subscription to us. A consumer pays an annual subscription and not many people can afford that. Our resources could not meet the provisions required under the Bill. If we were dedicated tomorrow, we could not do it.

That is why there is no queue across the board of any other NGOs or non-profits, because they just do not have the capacity to do it. The way to do it is to look to other member states, for example, as it was suggested, potentially by means of a memorandum of understanding. It should be understood, and I am trying to be reasonable, that if we went to the CCPC or any other body tomorrow, it may not have the resources or funds available to join. Therefore, it is quite a challenge and it needs to be funded separately and properly.

Photo of Louise O'ReillyLouise O'Reilly (Dublin Fingal, Sinn Fein)
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We are out of line with the rest of the European Union. Along with Greece, we are the only countries that do not allow for third-party funding, and there may be good reasons for that. Does Mr. Godfrey have a view on this?

Mr. Jeremy Godfrey:

One of the other funding issues is that if a qualified entity loses a case, it may have to pay the other side's costs. It may be asked to provide security for costs when taking a case. The funding issues are, if anything, even more severe than the Deputy pointed out. The directive gives a number of examples of ways in which the funding issues may be addressed through both public and private funding of litigation. Those will definitely have a big impact on the success of representative actions in Ireland. They are matters for the Department with responsibility for the Bill and the Department of Justice. Both will have a role in that. I am not 100% sure whether that requires a change to the Bill. We agree with the Deputy that the funding of qualified entities is a fundamentally important issue.

Photo of Louise O'ReillyLouise O'Reilly (Dublin Fingal, Sinn Fein)
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That is where I have a genuine concern. We heard from the Irish Council for Civil Liberties, and it was very clear in saying we are out of line and that funding will be a real issue. You can talk all day about how the costs will be modest etc., but they are not. As it was point, it is time. If you work for free, you will never be idle, but people do not because they must pay their rent and all the rest of it. Therefore, people's time is valuable. As the Bill is currently constituted, I am concerned that groups that genuinely need access to this and are not the ones with the big, deep pockets will be excluded, and that is a problem.

Mr. Philip Andrews:

I am not sure if this adds to the Deputy's point, but a collective action was announced yesterday against one of the online giants following a fine received in France of €220 million for self-preferencing on an advert exchange. That action is being taken both in the UK and the Netherlands. In the lawyers' press release when it was announced, they went through the team they have. It illustrates how big a team is required. It is a boutique competition law firm, Monckton Chambers in the UK, which is an extremely well-regarded barristers' chambers. It has funding from a third-party specialist litigation funder called Harbour. All of those things make it a serious case.

Photo of Louise O'ReillyLouise O'Reilly (Dublin Fingal, Sinn Fein)
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And all of those things cost money. I thank the witnesses; my time is up.

Photo of Ollie CroweOllie Crowe (Fianna Fail)
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I thank the representatives for giving of their time and expertise this morning. I have two questions for the Consumers' Association of Ireland. Has the CAI any estimates, and Deputy O'Reilly referenced this, on what level of funding would be required? Obviously, it would depend on what case the qualified entity takes and so forth, but is it possible to give an indication? I know it is a complex matter. Has research been done or is there a view on how many class actions could have been taken in recent years? With the situation being so complex, I am trying to get an understanding of how often it would be used in Ireland.

Mr. Dermott Jewell:

I thank the Senator. On what it costs, it very much depends on the case. One simple example I will give, and this is before anything, is an initiative taken by the Portuguese organisation just to advise the citizens in respect of their intention to take a case and ask them to opt in. The cost for the advertisement alone was €175,000. That was even before the case was taken. Some member states will take a single case in a very low court to see how the case and the argument fly, which is a smart way of doing it. It tries in some way to mitigate the cost and gauge the potential that a case will be successful or how long it will take. It informs those who want to try to plan. Obviously they need to engage with legal people who will advise what their costs and opinions would be. On the research side, there are quite a number of collective redress actions taken in member states. We could get detail for the committee on what those are. Italy and Germany have taken some, as have Belgium, the Austrians, the Greeks, Italians, Portuguese and Spanish. Quite a number of collective redress actions have been taken already.

Photo of Ollie CroweOllie Crowe (Fianna Fail)
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I thank Mr. Jewell. The Law Society of Ireland referred to broader reforms that are carefully balanced. Could its representatives speak further on that and how it might be achieved as part of the legislation?

Mr. Philip Andrews:

I thank the Senator for the question. The question of broader reforms involves balancing. There is a benefit in providing greater access to justice for small harm claims that otherwise would not be able to obtain access given the costs we are talking about. On the other hand, taken to the extreme, a regime can promote excessive litigation. That is not desirable either. The Law Reform Commission report from 2005, as accompanied by the Kelly report in 2020, provide what the Law Society of Ireland thinks is a balanced way in which consumers can have direct access to collective actions other than via the scheme in the Bill. This would involve a careful certification process by the President of the High Court and an opt-in arrangement rather than an opt-out, with a relatively strict legal test to be applied by the President of the High Court that would essentially be assessing if the multiparty action is fair, efficient and justified. On that test, we think there would be a reasonable balance struck between the two competing interests I mentioned earlier.

Photo of Richard BrutonRichard Bruton (Dublin Bay North, Fine Gael)
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I thank the witnesses for their presentations. They were very valuable. The Consumers Association of Ireland has made valid points about what we need to clarify in regulations to create some sort of transparency. Those points are well made.

I refer to the wider issue of it being too difficult to be a qualified entity, QE, and the level of Government support in that regard. I would be interested to hear the views of our guests on how that could be designed. I presume that if it were a body such as a legal aid board, it would, in effect, be adjudicating on a case before the case was taken. That seems to be a slightly difficult model. Are there models for support to QEs on which we could draw that would help us in this area?

Another issue that has been raised is that of court rules and the champerty and maintenance prohibition. What are the issues in respect of changing court rules and champerty and maintenance? Can the Oireachtas take an initiative to drive that or is it something that will have to come from the courts on an independent basis in whatever manner? Is it up to Oireachtas Members to try to shift the dial on this issue at this stage?

I would be interested to hear the views of the CCPC on whether qualified entities only is the way to go. That seems to be the issue. We have heard two different views but I would be interested to hear the thoughts of the CCPC, with its experience and knowledge, on what might be the options in a European context.

I would also like to hear the view of the CCPC on the issue, raised by Mr. O'Rourke, of having to consult before injunctive action is taken and not having a time limit on that. That seems extraordinary. From the point of view of the CCPC , which takes enforcement and other actions, is there a hidden reason those sort of obligations to consult should be there?

I am not sure which of our guests wishes to address the alternative models. The CAI or the CCPC may wish to comment on how the State might support a QE.

Mr. Raymond O'Rourke:

I will let Mr. Godfrey go first.

Mr. Jeremy Godfrey:

I thank Mr. O'Rourke. The directive sets out a number of options for financial support for QEs.

On the Deputy's question regarding champerty and maintenance, Mr. Andrews spoke about the collective action that is being funded by a specialist third party litigation fund. My understanding is that model would not be possible in Ireland at the moment. The question of how to reform champerty and maintenance is very much on the table. It was recommended by the Kelly report. It is a matter for the Department of Justice in the first instance to consider that and come forward with proposals, rather than it being a matter for the Department that has the policy area for this Bill.

The Deputy raised a couple of other matters. As well as representative actions, there is always the role of public bodies in taking enforcement to achieve consumer redress. There are 60 pieces of European legislation in the annexe. There are 20 public bodies in Ireland responsible for enforcing that legislation, with varied powers. For example, last month ComReg achieved an outcome of €2 million in compensation having to be paid by Vodafone to customers in the context of a breach of the specific rules of the telecoms regulation. Another limb of serving customers is to look at the enforcement powers those 20 public bodies have so that they can use those powers to get enforcement. As the CAI stated, representative actions should be a rare backstop rather than the first port of call.

That is probably all I have to say in response to the Deputy.

Photo of Richard BrutonRichard Bruton (Dublin Bay North, Fine Gael)
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It may be within the principles of a model that is permitted under the directive to have support directed to a qualified entity to take this action.

Mr. Jeremy Godfrey:

One of the models in the directive is legal aid, as the Deputy noted. In any legal aid, the funding body has to judge whether the case meets the criteria and has a reasonable prospect of success and so forth. That is one possible model but there is obviously a policy issue with public funding of that nature. There are models that enable third parties to fund litigation and recover the costs of the funding if the litigation is won.

We would be cautious about models where funders get a percentage of the damages awarded. Then it becomes a more entrepreneurial thing and we slide into the American-style system. The CCPC has long had concerns about the cost of litigation in Ireland and how a litigation culture and a "compo" culture can increase the cost of doing business, which, ultimately, does not serve consumers' interests. The issues surrounding how to reform litigation funding in a way that strikes an appropriate balance are important but they are for the Department of Justice rather than for us.

Photo of Richard BrutonRichard Bruton (Dublin Bay North, Fine Gael)
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Is Mr. Godfrey going to be drawn on consultation before injunction or whether we should have QE-only models?

Mr. Jeremy Godfrey:

When we take enforcement action, we always engage with the entity. There are due process rights in the public sphere. The CAI made the point that it is not against consultation prior to injunction but is against the consultation process being so extended that it renders injunctions pointless. We would obviously agree that if injunctions are appropriate, the consultation process should not be unduly prolonged.

Mr. Raymond O'Rourke:

The preamble mentions two weeks. I know that the preambles do not have to be transposed but I transposed lots of legislation in the Balkans and that is the thought process of the Commission. If it puts two weeks, Ireland might say three or four weeks but it is within that. What is in the Bill is very breezy and easy. It is really up to yourselves. You know that if you are in these situations, the other side might start doing a bit of a Trump, appealing, going back and forth and just using up the time and then the injunctive relief is of little use.

In Persona Digital Telephony Limited v.the Minister for Public Enterprise, the Supreme Court ruled that third-party funding to support a plaintiff's legal costs and disbursements, that is, payments by a solicitor to a third party and claim back from a client, is unlawful. This judgement causes a bit of friction, which is why things are not very clear here.

I hear the Law Society talking again about the multiparty Bill and how we can do things with the High Court judge. What can I say? The committee knows I am a very strong European. Why have a directive if you are going to have your own legal system decide how you do things? This directive has come from Europe and we are part of the EU and must implement it in some ways. Dare I say it, it is a bit like a spurious Brexit way of doing it - a case of we have a different legal system and we will just do it our own way and give consumers their rights in that way. The consumers' rights are highlighted in this. I know, as does the Deputy having been a Minister in this area, that it is minimum harmonisation. It is full harmonisation in the food area. Minimum harmonisation has always been in the area of consumers because the Swedes do things and the UK used to do things much more strongly than other countries and, therefore, there had to be this balance. Regarding getting a balance, it is a bit of a cop-out to say our legal system is different from that of everybody else. It is common law, we have these High Court rules and we are looking after the consumer. I find this to be an incorrect way of transposing the directive.

Photo of David StantonDavid Stanton (Cork East, Fine Gael)
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I thank our witnesses for their presentations. Deputy Bruton referred to the champerty and maintenance prohibition.

The witnesses said this law is ancient and goes back to 1495 or some date like that. Perhaps it is time, therefore, that we had a look at it to consider making changes to the third-party funding aspect. We have an opt-in system here. Am I correct that other jurisdictions have an opt-out system? There are certain time limits in the procedures here under which people can apply to opt-in. If those deadlines are missed, however, people miss out on the opportunity. Would the witnesses like to comment on this aspect and whether we should look at it? Am I correct that the UK has an opt-out rather than an opt-in system? I know it is not in the EU anymore and is not covered by this.

Regarding funding, I also noted the Quebec model in Canada, which is a central justice fund for funding this type of action. Has any consideration been given to that system or have the witnesses any knowledge of how it operates? I would also be interested to know what the CAI representatives might say regarding the impact this might have on insurance costs for traders and businesses. Am I correct that traders and businesses could experience an increase in their insurance premiums, which could impact on costs for consumers in the long term? I have noted comments on this aspect in some of the literature. Everything else I wanted to ask about has been covered, except for whether this measure might be partially retrospective. Could this legislation have retrospective application even though it is coming into place in 2023?

Mr. Philip Andrews:

Before I address that question, my understanding of the case heard in the Supreme Court, which was referred to earlier, is that the former Chief Justice, Mrs. Justice Denham, recognised that a statute dealing with maintenance and champerty, the Maintenance and Embracery Act 1634, prohibited this type of activity. The former Chief Justice, therefore, said that this would need to be changed by the Legislature. At the same time, it is also clear that the Irish courts, particularly in the context of more recent judicial appointments, are taking a more activist view on what might be permissible in respect of funding. I refer the committee to the 2022 case of Atlas GP Limited v. Kelly & Ors. In her judgment, Ms Justice Egan said: "The range of interests and relationships which may justify the provision of funding is not closed and is properly the subject of development by the common law". She also noted that the law in this field has undergone, and will undergo, considerable development. Regarding the Law Society's position, I apologise if I have said it wrong, but we are in favour of the Bill. It seems to us to be a good step, but we think the legislation could go further. Our view simply reiterates what was previously set out in the LRC report and endorsed by the Kelly report, which is to give consumers direct access to collective, multiparty actions for themselves.

That brings me to the Deputy's question on the opt-out system. My understanding is that the UK, even if it is not a member state of the EU anymore, has a possibility for opt-out in the context of its competition appeal tribunal. The benefit of that opt-out system, and there is one, is that many of these cases may be settled, and a settlement is generally better in that it avoids the litigation costs. If an opt-out class action case is settled, then the entire action has been settled. It does have that efficiency option.

If an opt-in action is settled, there may still be others remaining outside of that tent that will come after you again. There are benefits and arguments on either front. However, it is clear in the heads that the Department is going for the opt-in process.

I cannot say I know anything about the funding in Quebec. I know the funding in the UK is significant third-party funding. A wave of consumer collective actions has been taking place in the two years since the UK Supreme Court took a lenient assessment on certification. Those actions are being backed by large funding, effectively venture funds which will take some of the profit from those actions if they win.

Photo of Maurice QuinlivanMaurice Quinlivan (Limerick City, Sinn Fein)
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Deputy Stanton’s time is up but he may contribute again later if he wishes.

Photo of Paul MurphyPaul Murphy (Dublin South West, RISE)
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I thank our guests for their presentations. I will start by asking them their opinion on why the Government has adopted such a narrow approach to qualified entities. What is their attitude to whether the Government should have gone further, in particular on the question of the possibility of ad hocdesignation. It is clear in the directive that for domestic actions, member states could allow qualified entities on an ad hoc basis. My assumption in terms of what that would look like – I could be wrong, so I am interested in the guests describing it to me – is that an issue could emerge where, for example, a bunch of apartment owners across the State affected by the same issue want to take an action against a designated construction company, builder or whatever, and they form an association. There would then be some process whereby the State would determine that the association is a designated or qualified entity that can pursue an action on that basis. Is that what is meant in that regard? Do the witnesses have an opinion on why the Government has opted to take a much narrower approach by applying what is set out in the directive as the rule for cross-border actions to domestic actions as well? Should that be expanded? Our guests need not all rush at once to respond.

Mr. Raymond O'Rourke:

In my presentation, I highlighted Article 4 in the directive about qualified entities' representative actions and linked it with head 16. Again, I do not want to be Mr. Preamble, as it were, but I will read out preamble 24, which takes into account the Deputy’s issue. As I said, the preambles are the philosophy. Preamble 24 states:

Consumer organisations in particular should play an active role in ensuring the relevant provisions of [European] law are complied with. They should all be considered well placed to apply for status of qualified entity in accordance with national law. Depending on national legal traditions, public bodies could also play an active role in ensuring that relevant provisions of the Union law are complied with...

Regarding “public bodies”, we have brought up the possibility of the CCCP being involved in some way through a memorandum of understanding. Looking at the preamble and then Article 4(3), it specifies those bodies or NGOs that have public activity in the protection of consumer interests. The Department correctly has gone down that line because that is the philosophy behind it.

What the Deputy and I are asking is that the Minister possibly open the doors a little bit through the ministerial regulations. However, as the consumers’ association in Ireland, we would like this to be kept to bodies that are protecting consumers’ interests. If the Deputy looks at the long list of legislation at the back of the document, it is all consumer protection legislation.

Mr. Jeremy Godfrey:

In our response to the consultation, we supported the idea that there might be ad hocdesignation, as the Deputy said, for a specific group of consumers who are particularly interested in one issue.

Such a group could, for example, slide into an association of aggrieved burger buyers. It is important then that the Bill does not facilitate a compensation culture and vexatious litigation. A question was asked earlier about the impact on insurance costs. There must be a balance to make sure cases are taken when there is a genuine grievance rather than on a speculative basis. Subject to this, there may be cases in which an association formed for the purposes of a narrow issue that did not meet all of the criteria for a general purpose qualified entity might be designated. We would not be opposed to that.

Mr. Philip Andrews:

I would consider it to be not so much a restrictive but a cautious approach. It goes back to the difficulties that would arise if a real US-style class action culture took root. It is taking root across Europe now. It is taking root in the UK, Germany and the Netherlands. The example I used in my paper was to illustrate the challenges in getting the balance right. The Wendy's case has been held up as a pin-up of excessive and abusive shakedown-type litigation in which the harm is imperceptibly low. At the same time, it is also being held up as a case where a food lawyer sought to vindicate the rights of those who had been injured. The Law Society is saying we should not rush into anything because law has a tendency to evolve beyond its original intention. A cautious approach is not necessarily a bad one. At the same time, I reiterate the possibility of implementing the reforms spoken about and reflected in a Private Members' Bill, which are also reasonably cautious and balanced. They allow for a fairly comprehensive and strict legal test to be applied in the case of certification. It is the certification point in the US that is very lenient.

Photo of Paul MurphyPaul Murphy (Dublin South West, RISE)
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I thank the witnesses. I will jump off from this issue of direct access to multiparty actions. The Consumer Association of Ireland stressed in its opening statement that it is not looking for this and that it does not want it and is not in favour of it. What is so bad about giving people direct access to taking cases together? It is often spun that there is a culture in the US of people taking vexatious claims. There is the classic case of the woman getting burned by the coffee in McDonald's. However McDonald's knew the coffee was dangerously hot and the woman suffered third degree burns. It was spun to make it look bad but in a country where things are balanced very much in favour of business against ordinary people the ability of US consumers to take class action suits rebalances them a little bit. What is the downside of direct access?

Mr. Raymond O'Rourke:

I do not want to name the Deputy but on 17 February a parliamentary question was asked as to whether the EU directive allowing for class-action lawsuits was still scheduled to be transposed into Irish law. I highlight this because the two things are being mixed together. The Law Society has its views on multiparty actions, as does the Deputy. I am a lawyer and that is great. We are speaking about a particular directive that introduces the right for consumers to take representative actions.

I will highlight to the Deputy the kind of action I would be hoping to do. Last weekend Aer Lingus obviously had some difficulties at the airport. That is covered under EU legislation and maybe the airline will compensate people in the correct way, but there could be people who will not be compensated correctly. That is something I would hope a certain number of consumers would come forward about and there would be a representative action. I am aware the issue is that such an action could go the High Court, so you are immediately into a very difficult area. Possibly, however, even just taking representative action involving so many consumers or whatever would make the trader, in this case Aer Lingus, negotiate because it does not want to go down this route and will instead put its hands up and say "Yes". That, in a way, is what we want to do.

There will be some cases that may go to the High Court if they are for €75,000 or more. The Deputy knows himself how tedious and long that can be and all the documentation involved, so it is not a quick process. We would have preferred, even with the directive or whatever, something at a lower level. In some member states this is done via administrative courts. Parties can go to an administrative court and have a little ruling and then they go to the other court about compensation or whatever. However, we are were where we are and that is why we would like the directive to be transposed and in line with that. Multiparty actions might help consumers in the long run but-----

Photo of Paul MurphyPaul Murphy (Dublin South West, RISE)
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Mr. O'Rourke is not against them necessarily but definitely he is saying the directive is not it.

Mr. Raymond O'Rourke:

We are not against them but they are a different-----

Photo of Paul MurphyPaul Murphy (Dublin South West, RISE)
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Yes, that is fine.

Mr. Raymond O'Rourke:

What I have constantly tried to say, as has Mr. Kilcoyne, is that we did not want this to become a discussion about class actions and the great class actions in the US because, in a way, it is minimum harmonisation from Europe and it looks like we are not hitting the ball, as Deputy Bruton has said. We are falling under and that is a sad situation. The multiparty action is a different thing.

Photo of David StantonDavid Stanton (Cork East, Fine Gael)
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I asked earlier about the possibility of this being partially retrospective. In its submission A&L Goodbody said:

It is important for consumer-facing businesses to note that the system proposed is likely to be partially retrospective – so breaches of consumer law that occur even before the system is implemented in June 2023 may form the basis for claims under the new system, subject only to the time limits imposed by the Statute of Limitations.

Should traders and others be gearing up for this? As we speak there could be activities occurring that come under this new legislation even before it is implemented. It is an interesting point that people may not know about. I made the point, which comes up again further on here, that insurance costs may rise because of this. It would be an unwelcome development but is something we should keep an eye on and perhaps discuss as well to ensure it is limited to the maximum because insurance is having a massive impact on businesses. That indirectly falls on consumers because of higher costs.

Mr. Jeremy Godfrey:

I made a comment on insurance already to say it is important consumers get redress. What would be what we call a disproportionate impact on insurance is if we ended up with effectively vexatious actions, or nuisance actions, that people felt they had to settle as it was cheaper to settle them than fight them in court, so it is important that balance is struck, and the mechanisms in the Bill strike that balance adequately.

I do not have a view on retrospection. Whenever anyone says "retrospection", I always think there are legal issues about retrospection, and perhaps the Law Society may have a view. Of course, if people have breached consumer law, they will certainly be at risk of public bodies enforcing the obligations. Where those obligations include payments of compensation, they can be enforced by public bodies anyway.

Of course the real message to businesses is that they should comply with the law and then they will not need to worry about whether anyone can take retrospective action.

Mr. Raymond O'Rourke:

I would like to highlight the point made by Deputy Stanton by referring the committee to Article 22 of the directive, which states:

Member states shall ensure that laws, regulations or administrative provisions ... only apply to claims for redress based on infringements as referred to in Article 2(1) that occurred on or after 25 June 2023. This shall not preclude the application of national provisions [I am sure the Deputy understands what is meant by "national provisions"; he will have to talk to the Minister] on suspension or interruption of limitation periods which applied prior to 25 June 2023 ...

The Deputy has his parliamentary question.

Photo of Maurice QuinlivanMaurice Quinlivan (Limerick City, Sinn Fein)
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I call Deputy Bruton.

Photo of Richard BrutonRichard Bruton (Dublin Bay North, Fine Gael)
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A few points just came up. Mr. Godfrey said that in some cases, enforcement can deliver compensation to consumers. Where does that interact with a class of people who might be affected by something? If an individual takes an action and wins the case, does it require a qualified entity to take a case on behalf of a group of consumers who are similarly aggrieved, or does that individual's success knock on to all the consumers who are in a similar category? That is the first question.

The second question relates to what Mr. Jewell said about people starting in a low court. If a person has a victory in a low court but obviously only took the worst case, has the risk been considerably narrowed for a qualified entity taking a case for a much wider class of people for whom the same evidence effectively applies? What is the dynamic of that process?

Mr. Dermott Jewell:

I will explain the dynamic behind it. The approach that has been taken in other member states involves trying to understand the potential costs of funding a group action or collective action through the courts, usually the equivalent of our High Court. Several methods have been flagged. One method involves taking an initial case on an opt-out basis, which means that they take a case to a lower court, present it and see what comes from it. Another method involves taking a case on behalf of a pocketful of their members and seeing what the position is. This is done to inform their legal advisers on how to proceed, what the timeframe and the costs are potentially going to be, and the depths to which they will have to invest to take a full class action, certainly if it is going to be a cross-border action.

Mr. Jeremy Godfrey:

I will answer the Deputy's question about how public enforcement and representative actions complement one another. The annex refers to 60 pieces of legislation and they are all different. As they all involve different public bodies, one answer probably does not apply to all of the pieces of legislation. Broadly speaking, when enforcement action is taken, sometimes the trader concerned settles the case. As part of that settlement, the trader might agree to pay compensation to all the affected consumers, which means there is no need for follow-on action. In other cases, there might be enforcement action. It can be the case that the obligation is to pay compensation. I refer, for example, to statutory amounts of compensation for delayed flights. The consumer rights Bill proposes to introduce a requirement for refunds in some circumstances, or price reductions in appropriate circumstances. If a trader is not complying with those obligations, the enforcement action can order them to comply with those obligations. It is all quite complicated because there are different enforcement mechanisms for different pieces of legislation.

An order to comply with an obligation to pay compensation might obviate the need for follow-on class action. There are other mechanisms in the legislation for which the Competition and Consumer Protection Commission, CCPC, is responsible. One sometimes sees compensation orders on foot of a criminal conviction, for example. There are a number of different routes that might result in consumers getting redress without needing a representative action.

Photo of Richard BrutonRichard Bruton (Dublin Bay North, Fine Gael)
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Can a qualified entity get onto the bandwagon without the same degree of risk?

Mr. Jeremy Godfrey:

Yes. If the courts or, on the competition side, the CCPC through its new adjudication mechanism find an infringement and valid evidence in a follow-on action - and this is certainly seen on the competition side which is outside the scope of this Bill - the qualified entity, QE, would not have to prove the infringement. It would be able to rely on the previous finding. Again that will depend very much on the precise nature of the-----

Photo of Richard BrutonRichard Bruton (Dublin Bay North, Fine Gael)
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Does it require any sort of legislative provision now to facilitate that sort of co-operation and sharing of information between a regulator and a qualified entity?

Mr. Jeremy Godfrey:

To share information about a concluded enforcement action is not problematic because we always make them public anyway. The question of whether or not prior findings of infringement can be used as evidence in representative actions is worth thinking about. I could not tell the Deputy whether legislative provision is necessary.

Mr. Raymond O'Rourke:

I mentioned a memo of understanding, more that even if there is co-operation at an early stage, one would not then want to go to the High Court where they might say "oh you are involved with them" and "who are you?" and that kind of thing. Something being written down is probably good in order that both sides know where they are on the page. I do not know, I have not asked them but I doubt that they are going to be concerned. For a public body it is better to have something clear on paper, particularly in terms of GDPR; that comes into play in everything so it is always useful to have things down on paper. There will possibly be data from consumers and somebody might say that it falls foul of that.

Photo of Maurice QuinlivanMaurice Quinlivan (Limerick City, Sinn Fein)
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That concludes consideration of the matter today. I thank the representatives of the Law Society, the Competition and Consumer Protection Commission and the Consumers' Association of Ireland for assisting the committee in its consideration of this important matter today. The committee will further consider this matter as soon as possible. Is that agreed? Agreed.

That concludes the committee's business in public session for today. I propose the committee goes into private session. Is that agreed? Agreed.

The joint committee went into private session at 11.08 a.m. and adjourned at 11.30 a.m sine die.