Sparked by the “New Deal for Consumers” initiative launched in the EU in April 2018, the EU Directive on Representative Actions for the Protection of the Collective Interests of Consumers (“RAD”) was first introduced in December 2020 and was adopted to ensure that EU Member states have efficient systems for their citizens to seek redress in collective actions, specifically in the financial services, passenger rights, data protection, medical devices, telecommunications, and energy sectors. Although many European countries had collective action systems in place prior to RAD, only Hungary, the Netherlands, and Lithuania met the first transposition deadline of December 25, 2022.

In our last update on RAD, we discussed the Netherlands’ amendments to the Resolution of Mass Damage in Collective Action Act (“WAMCA”), highlighting the country's strong commitment to collective redress and its role as a venue for many shareholder litigations. However, we noted that over three-quarters of all EU member states remain noncompliant with RAD, and several other countries are still in various stages of implementation.

Current State of RAD

Although RAD has stated the core requirements that each jurisdiction must enact to be compliant, such as the need to designate what meets the standard of a “qualified entity” to bring a collective action, not allowing individual consumers to bear the cost of collective actions, and rules tailored to avoiding “abusive” mass litigation, each jurisdiction also maintains some procedural flexibility.¹

RAD member states reserve the right to determine their status as either opt-in or opt-out jurisdictions, establish the minimum requirements for class certification, implement safeguards for third-party funding of collective actions, and set the level of detail for the process of disclosure and discovery.²

Several key countries in the European Union’s collective action landscape—Belgium, Germany, Italy, the Netherlands, Portugal, and Sweden—have already enacted RAD-compliant legislation, while France, Poland, and Spain are well advanced in the process of implementing their own compliant measures. ³ This update will concentrate on recent legislation from Belgium and Germany, as both jurisdictions have specifically addressed collective redress for shareholder claims.

Belgium

In the New Collective Redress Act, Belgium’s RAD compliant legislation published May 31, 2024, the country broadened the scope of its existing class action regime and created a way for securities class actions to be brought by a class of harmed shareholders.⁴ The New Collective Redress Act now allows for investment claims to face less obstacles in Belgium, such as eliminating the previous requirement of every claimant having to individually prove their right to redress.⁵ Shareholders are welcoming these legislative changes, noting that if the new rules had been in effect in 2021, a class of 800,000 Arco shareholders would not have had their claims deemed inadmissible. Under the new framework, these shareholders could have relied on Belgian class action law instead of the previous reliance on Belgian judicial law.⁶

Germany

The German Capital Market Model Case Act (KapMuG) was enacted in 2005 to specifically address suits filed against Deutsche Telekom AG and has been the main mechanism for managing other capital markets collective actions since. In 2023, the German parliament, or Bundestag, both adopted the Consumer Rights Enforcement Act (VDuG) and extended the KapMuG for another three years. Originally it was unclear whether the VDuG and KapMuG would coexist once the KapMuG extension on August 31, 2024, however on June 13, 2024, Germany released a new KapMuG, which will operate indefinitely alongside the VDuG.

The new KapMuG also contains an extended scope, with additional recourse added for those investors harmed by cryptocurrency assets, and, arguably more importantly, provides ways for proceedings to occur faster, a significant problem with the old KapMuG. Through the new legislation, Germany is strengthening its higher regional courts, where most of the test case proceedings are originally conducted, instructing these courts to only initiate applications for model case proceedings if they it to be expedient, and are tasked with formulating the objectives of the model case through an initiation order. ⁷ 

As more countries craft RAD-compliant legislation, certain forums may become more popular for collective actions due to nuances in their regimes. ⁸ Broadridge’s Global Securities Class Action will continue to monitor how RAD legislation is implemented throughout Europe, and our experience, global footprint, and advocacy model will ensure that you get the most out of your class action claims.

1 Emilie Jones & Johanna Weißbach, The Impact of the New EU Mass Actions Directive Across Europe, Pinsent Masons (May 7, 2024, 1:58 PM), https://www.pinsentmasons.com/out-law/guides/the-impact-of-new-eu-mass-actions-directive-across-europe.

2 Id.

3 Mirjam Erb, The Collective Redress Directive: Implementation in Selected EU Member States, Linklaters (May 16, 2024), https://www.linklaters.com/en-us/knowledge/publications/alerts-newsletters-and-guides/2023/january/27/the-collective-redress-directive (Click “Download Implementation Tracker”) .

4 Lauren Rasking & Lore Van Espen, New Law Expands Belgian “Class Actions” Framework, A&O Shearman (Jun. 7, 2024),https://www.aoshearman.com/en/insights/new-law-expands-belgian-class-actions-framework .

5 Id.

6 Werner Eyskens & Evelien Van Espen, Collective Actions in Belgium: The Second Arco Case – Will Deminor Chart a New Course?, Crowell (Dec. 19, 2022), https://www.crowell.com/en/insights/client-alerts/collective-actions-in-belgium-the-second-arco-case-will-deminor-chart-a-new-course .

7 Henner Schläfke et. al, Bundestag Passes New Capital Markets Model Case Act – Faster Model Case Proceedings and Broader Scope, Noerr (Jun. 14, 2024), https://www.noerr.com/en/insights/bundestag-passes-new-capital-markets-model-case-act-faster-model-case-proceedings-and-broader-scope .

8 Lauren Rasking & Lore Van Espen, supra note 4.