On 31 May 2024, a new Belgian law was published transposing the EU Collective Redress Directive into national law. The new Belgian law does not introduce an entirely new framework to allow so-called class actions as, unlike many European Member States, Belgium had already enabled collective redress for consumers in 2014 and for SMEs in 2018. The most significant changes to the current regime include: (i) a broader scope of application, covering infringements of prospectus legislation (including MiFID rules), the Digital Markets Act and the Digital Services Act, (ii) a detailed definition of (foreign) qualified entities that may bring actions for collective redress in Belgium and (iii) an opt-in regime as the default option, but only after a court decision on liability. The new Belgian law will apply to any collective redress introduced as from 10 June 2024.
ON THIS PAGE
- The EU Collective Redress Directive and the Belgian class action regime
- Three key features of the new collective redress act
- The envisaged impact of the new law?
The EU Collective Redress Directive and the Belgian class action regime
To date, the development of collective redress litigation in Europe had been scarce and very fragmented in comparison to the U.S. or Canada. For many years, the European legislators have sought to create a uniform collective redress mechanism across the EU market to address the global shift towards collective actions in commercial litigation.
To ensure that all EU Member States would have access to a system of collective redress to enable the enforcement of consumer rights, the European Parliament and Council adopted the Directive (EU) 2020/1828 on representative actions for the protection of the collective interests of consumers and repealing Directive 2009/22/EC (the EU Collective Redress Directive) on 25 November 2020. The Member States had until 25 December 2022 to transpose the EU Collective Redress Directive into national law, and such national rules would then apply as from 25 June 2023 at the latest.
Before the EU Collective Redress Directive, half of the EU Member States had little or no such mechanism in place (see also our previous article on this topic
Unlike many European Member States, Belgium had already enabled collective redress for consumers in 2014 and for SMEs in 2018 by introducing a new title 2 in Book XVII of the Belgian Code of Economic Law (the CEL). Thus, Belgian law already complied with most principles of the EU Collective Redress Directive. Nevertheless, a few but significant changes have been made to the current regime.
Published Legislation:
- 29 April 2014 - Belgian law of 28 March 2014 inserting Title 2 "Action for Collective Redress" into Book XVII “Special Legal Proceedings” of the Code of Economic Law and inserting the definitions specific to Book XVII into Book I of the Code of Economic Law (the Collective Redress Act)
- 22 May 2018 - Belgian law of 30 March 2018 amending the Code of Economic Law with regard to the extension of the scope of the claim for collective redress to SMEs
- 4 December 2020 - Directive (EU) 2020/1828 of the European Parliament and of the Council of 25 November 2020 on representative actions for the protection of the collective interests of consumers and repealing Directive 2009/22/EC (the EU Collective Redress Directive)
- 31 May 2024 - Belgian law of 21 April 2024 amending Books I, XV and XVII of the Economic Code and transposing Directive (EU) 2020/1828 of the European Parliament and of the Council of 25 November 2020 on representative actions for the protection of the collective interests of consumers and repealing Directive 2009/22/EC (the New Collective Redress Act)
Three key features of the new collective redress act
Broadened scope of application: what types of infringements may be the subject of class actions?
The scope of Belgian “class actions” is limited to (i) harm caused by an undertaking to consumers or SMEs, (ii) breaches that occurred after 1 September 2014 and (iii) damage alleged by a group of claimants arising out of a contractual breach or a breach of one of the specific statutes and regulations exhaustively listed in the Collective Redress Act (article XVII.37 of the CEL).
Since its introduction in 2014, this closed list of Belgian statutes and European regulations has only been extended a handful of times: for example, to include EU competition rules (articles 101 and 102 of the Treaty on the Functioning of the European Union) in 2017 (Dutch/French) and the GDPR Directive in 2018 (Dutch/French).
The New Collective Redress Act further broadens the scope of application of the Belgian “class action” regime by supplementing the current exhaustive list with the 66 EU directives and regulations referred to in Annex I of the EU Collective Redress Directive. Consequently, collective actions may now also be brought against issuers that infringe the MiFID II Directive (Directive 2014/65/EU), the UCITS Directive (Directive 2009/65/EC), or the Prospectus Regulation (Regulation (EU) 2017/1129). This means that, even though the Collective Redress Act was initially not designed for shareholder actions (See the preparatory works: Doc. Parl. Ch. Repr., n° 53-3300/001, p. 22), securities class actions are now possible under the New Collective Redress Act. Likewise, infringers of the Digital Markets Act (Regulation (EU) 2022/1925) and the Digital Services Act (Regulation (EU) 2022/2065) now also risk Belgian class actions under the New Collective Redress Act.
Moreover, the list included in Annex I of the EU Collective Redress Directive is not static. Each time that a new EU act that is relevant to the protection of the collective interests of consumers is adopted, the European legislator may amend Annex I to place the new Union act within scope of the EU Collective Redress Directive. The Belgian legislator also acknowledges that the list included in Annex I of the EU Collective Redress Directive – and hence the scope of application of the Belgian class action regime - may still evolve over time.
Definition of qualified entities: who can bring a class action?
A group of consumers or SMEs may only be represented by so-called “qualified entities”. In line with the EU Collective Redress Directive, the New Collective Redress Act establishes new requirements for qualified entities to represent a class in court in Belgium or in other Member States.
A legal person may be recognized as a qualified entity (i) by the competent minister in Belgium, (ii) on an ad hoc basis by the Brussels enterprise court or the court of appeal (that has exclusive jurisdiction), provided it meets the requirements set out in the New Collective Redress Act, or (iii) by another Member State. The legal person must:
- demonstrate at least 12 months of actual public activity in the protection of consumer interests;
- have as statutory purpose, the protection of consumer interests;
- have a non-profit making character;
- be solvent;
- have procedures in place to avoid any conflict of interests with other interested parties such as funding providers, for example; and
- make information publicly available that (i) demonstrates that the entity complies with these criteria and (ii) reveals the sources of its funding in general, its organisational, management and membership structure, its statutory purpose and its activities.
Opt-in class action as default: what type of class action can be brought?
Under the Collective Redress Act, the Belgian courts decided to apply the opt in/opt out mechanism on a case-by-case basis.
The New Collective Redress Act aims to give more negotiating power to the parties during a cooling-off period. From now on, it will no longer be the courts, but the parties who decide on the applicable system. As was already the case under the Collective Redress Act, the opt-in mechanism applies in any event when (i) consumers do not reside in Belgium, (ii) SMEs do not have their main establishment in Belgium and (iii) an action for collective redress for physical injury or moral damages has been filed.
In the absence of an agreement between the parties on the applicable system, the case will be litigated on the merits before courts. If the court finds the defendant(s) liable, the opt-in system will serve as the default system. Following the publication of the court’s judgment holding the defendant(s) liable, victims are granted a four-month period within which to determine whether they wish to join the group to claim compensation.
The envisaged impact of the new law?
The New Collective Redress Act will apply to claims that are initiated as from 10 June 2024.
Since its creation in 2014, only about a dozen actions have been brought under the Collective Redress Act (most of which have been brought by consumer protection organisation Test Aankoop/Test Achats). However, this number is expected to increase in the future due to the broader scope of the New Collective Redress Act.
In particular, the extended scope of application of the New Collective Redress Act will enable securities class actions in Belgium. Investment claims, such as the actions brought by Deminor for a subset of the 800,000 Arco shareholders, would fall under the Belgian class action regime. This means that important procedural obstacles disappear, such as meeting the individual burden of proof (ie setting out the relevant facts, producing documentation and demonstrating the various grounds for redress for each of the hundreds or thousands of claimants individually) – a requirement that led to the inadmissibility of the ‘Arco claim’ in 2021.
Finally, there is a potential risk of forum shopping, arising from the differentiated implementation of the EU Collective Redress Directive in the different Member States. This could prompt entities to initiate cross-border class actions in jurisdictions with more lenient or favourable legal frameworks, especially where a broader spectrum of infringements is recognized.
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