Irish Consultation on Collective Redress Directive (CRD)

Ireland has launched an important public consultation on the implementation of the recently adopted EU Collective Redress Directive (CRD).

The CRD modernises the current European Injunctions regime and will enable collective redress actions to be launched in the Irish Courts by qualified entities to protect the collective interests of consumers under EU consumer protection legislation.

In this brief update, we recap on the CRD and its expected impact on businesses in Ireland. We outline why Irish and international businesses now have a real opportunity to contribute towards shaping how Ireland will transpose the CRD and to ensure that appropriate protections are put in place.

The CRD

To briefly recap, the CRD and national implementing rules will introduce major changes:

• A pan-European jurisdiction for consumer class action litigation is envisaged,
• Any company with a European footprint may be subject to future mass litigation,
• Consumers will have the right to collectively sue for damages on a national and EU cross-border basis for breach of EU law,
• Consumer claims will benefit from common law-style discovery procedures,
• Consumer actions will be restricted to certain designated “Qualified Entities”, comprised of consumer organisations or public bodies,
• Designation for Qualified Entities will depend on whether the action is cross-border or domestic,
• For cross-border actions, qualified entities must comply with a set of harmonised criteria prescribed by the CRD such as (a) demonstrating 12 months’ activity in protecting consumers’ rights, (b) being a non-profit organisation and (c) ensuring that they are independent from any third parties whose commercial interests may be said to oppose the consumers’ rights,
• For domestic actions, EU Member States may set criteria consistent with the objectives of the CRD.

For further detail, we previously discussed the changes introduced by the CRD (here).

Impact on businesses in Ireland

The changes introduced by the CRD pave the way for large scale class actions across the EU. We expect this will have a major impact on how European firms approach litigation risk in future. In most of Europe, collective redress is a novel concept with significant legal uncertainties.

For Ireland, and other EU Member States where consumers are not yet able to effectively access collective or group redress, the CRD is an important step towards the development of a coherent legal regime to enable better redress. The Irish litigation landscape is expected to develop significantly and detailed national rules will be needed.

Consumer associations across the EU are already gearing up themselves to bring claims once the CRD is in effect. Given that outlook, businesses are already taking steps to address where significant risk lies and mitigate potential group claims before the CRD deadline for transposition on 25 December 2022.

As litigation funding markets are global in nature, there will be a need for enhanced risk assessment and monitoring of litigation risks. We expect firms will need to evaluate, enhance and implement strong operational controls, risk management, governance and compliance systems as the first and best line of defence against funded mass litigation.

Key risk areas are product safety, data protection, food and beverage manufacturing, financial services, travel and leisure, hospitality, environment and health and telecommunications.

The CRD anticipates a framework which allows for third party and permits but restricts the use of third party funding. As third party funding is not currently permitted under Irish law, it is important to engage in the public consultation to consider and influence how third party funding might operate.

Opportunity to comment

Given the significant changes envisaged, we are working with clients seeking to respond to the Irish public consultation document.

DLA Piper has one on Europe’s largest class actions team. We have in-depth experience on the largest and most sophisticated multi-party litigations in train. Our team in Ireland is available to provide clients with a confidential briefing regarding any aspect of the CRD.

Do not hesitate to reach out to Caoimhe Clarkin or your usual DLA Piper Ireland contact.