Luxembourg implements collective redress in consumer law

On 30 October 2025, Luxembourg’s Parliament unanimously adopted Bill No. 7650, introducing a collective redress mechanism in consumer law for the first time. The new law transposes Directive (EU) 2020/1828 and marks a major milestone in Luxembourg’s consumer protection framework. This mechanism enables multiple consumers harmed by the same professional misconduct to pursue redress through a single, coordinated action.

 

A measured and business-conscious approach

Unlike U.S.-style class actions, the new regime preserves Luxembourg’s procedural safeguards: no punitive damages, no contingency-fee litigation, and strict admissibility filters to prevent abusive claims. The District Court of Luxembourg will act as gatekeeper, assessing the representativeness, independence, and funding of claimants before any collective claim proceeds.

By favoring a single, coordinated procedure over a multitude of individual claims, the system aims to enhance legal certainty for professionals while ensuring efficient compensation for consumers. The law also explicitly encourages amicable resolution, introducing a dedicated out-of-court collective settlement process supervised by certified mediators and approved by the court.

 

Key features of the new regime

Standing to bring such action is granted to five categories of applicants:

1. individual consumers, acting on their own behalf,
2. approved consumer associations, formally recognised under national law,
3. sectoral regulatory bodies, empowered to act within their field of supervision,
4. non-profit associations meeting defined governance and independence requirements, and
5. qualified entities designated by another Member State of the European Union or the European Economic Area.

The procedure unfolds in three distinct phases, each under the supervision of the District Court of Luxembourg:

• Phase 1: Admissibility and Judgment on the Merits
  • The District Court first determines whether the action meets the statutory admissibility criteria, verifying that it concerns a potential breach of legal or contractual obligations affecting multiple consumers, that a qualified and independent representative brings the claim, and that a collective procedure would be more efficient than individual proceedings. This early screening filters out unfounded or speculative actions, providing businesses with greater procedural certainty.
  • If the court finds the professional liable, it defines the compensation framework, including which participation model applies (opt-in, where consumers must actively join, or opt-out, where they are included unless they decline), as well as the timelines for notification and payment.
  • A liquidator and a supervising judge are appointed to oversee the following stages.

• Phase 2: Implementation of the Judgment and Mediation
  • The professional must inform consumers and finance the communication measures ordered by the court.
  • Consumers then exercise their right to opt in or opt out within the timelines set in the liability judgment.
  • The liquidator manages compensation under the supervision of the judge, who can intervene in case of implementation difficulties.
  • In parallel, the law establishes a collective mediation mechanism: the parties must attend an initial information meeting and may, at any time, choose to engage in an out-of-court collective settlement.
  • Any resulting agreement requires judicial approval to become enforceable, encouraging early, reputation-friendly resolutions.

• Phase 3: Enforcement and Closure of Proceedings
  • Once compensation has been executed, the supervising judge issues an order closing the proceedings.
  • If outstanding claims remain, the District Court settles them through a final judgment, after which ordinary enforcement measures may apply

 

What does this mean for businesses

The reform does not create new consumer rights or statutory obligations. It instead provides a structured, predictable pathway for resolving mass consumer claims.

For businesses active in Luxembourg, the new framework offers early visibility on potential exposure, centralized management of disputes, and a platform for constructive settlement before reputational risks escalate.

Organizations should review their consumer-facing terms, complaint-handling and communication processes, and prepare internal escalation procedures to anticipate potential collective actions.

For further information on how the new collective redress framework may affect your business, please reach out to Olivier Reisch and Amin Bouazza, who can assist you in assessing exposure and developing effective response strategies.