On 20 December 2022 the Council of Ministers approved the Preliminary Draft Law for the Collective Protection of Consumers (the “Draft Law“), which focuses on the defence of consumers’ rights, in order for actions brought collectively against a trader whose actions are considered unlawful to be more effective. The Draft Law will be subject to a public hearing up until 18 January 2023, in accordance with the provisions of article 26.6 of Law 50/1997, of 27 November, of the Government.
The Draft Law transposes the Directive 2020/1828 of the European Parliament and the Council of Europe of 25 November (the “Directive“) on representative actions for the protection of the collective interests of consumers which aims to improve the regulation of representative actions.
The main new features introduced by the Draft Law are the following:
- It has created a Public Register for Representative Actions to promote transparency and awareness of ongoing representative actions.
- The intervention of individual consumers and users in collective proceedings is expressly excluded in order to make them more effective.
- It has designed specific judicial proceedings in which representative actions for damages must be brought.
- Consumers and users affected by an unlawful act or omission of a trader will be bound by the representative action for damages brought by the qualified entity and by the decision issued, unless the consumers expressly request to be dissociated (“opt-out”).
- It establishes publicity requirements (via a unique electronic platform) which affect the relevant decisions issued in the proceedings.
- It introduces a new regulation for redress settlements which put an end to the dispute. In this regard, the Draft Law establishes the possibility for the qualified entity (claimant) and the defendant business to reach a redress settlement, which may be judicially approved by the court. This approved settlement will be binding for the parties and the affected consumers and users who have not expressed their wish to dissociate themselves.
- A new procedure for the judgements (monetary or non-monetary) and redress settlements is regulated. The aim is to avoid that consumers and users (who are the beneficiaries of a judgment or a redress settlement) have to initiate new proceedings to claim what they are entitled to. It also provides for the possibility of the court to impose fines on the convicted trader who has not complied with the judgment.
The Draft Law not only transposes the Directive, but also regulates, in a systematic, unitary and coherent manner, the judicial proceedings in which representative actions will have to be brought, thus overcoming the current dispersion across the Spanish Civil Procedural Act. To this end, the Spanish Civil Procedural Act, the Consolidated Text of the Law for the Defence of Consumers and Users –in relation to the regulation of the qualified entities that would bring actions for the protection of the collective interests of consumers– and other sectoral regulations are amended. The main issues introduced or modified by the Draft Law are addressed below.
In terms of standing to sue, the Draft Law amends the Consolidated Text of the General Law for the Defence of Consumers and Users. In this regard, the Draft Law specifies that representative actions must be brought by qualified entities, meaning those entities that are registered in the State Register of Consumer and User Associations or in the registers of the autonomous regions and the autonomous cities of Ceuta and Melilla of consumer associations, provided that they meet the appropriate requirements. The intervention of individual consumers and users in collective proceedings is expressly excluded, in order to make these proceedings more effective.
On the other hand, the Draft Law suggests a broad scope of application, covering representative actions brought against any type of infringement by the trader. Among these representative actions, two modalities are distinguished: (i) cease and desist actions –aimed at obtaining the condemnation of the trader to cease his unlawful conduct– and, (ii) actions for damages –through which compensation is requested for the damage suffered by the consumer as a consequence of an unlawful action by the trader–.
A key element of the new regulation is the creation of a Public Register for Representative Actions, the aim of which is to promote transparency and awareness of the representative actions which have been brought, both in general and by their possible beneficiaries. The design of this Register will be developed appropriately by regulation and is considered crucial for the protection of consumer and user rights.
Furthermore, the establishment of a mechanism to access information and sources of evidence in the possession of the opposing party or third parties, which will be subject to the appropriate judicial control, is particularly relevant. Its purpose is to avoid situations of asymmetry of information and evidence.
With regard to the specific provisions that will affect each of the representative actions regulated in the Draft Law, the following should be highlighted due to their novelty and speciality:
- In relation to injunctions, they will be processed through the channels of oral proceedings –albeit with a longer period to respond to the claim and with the need to hold a hearing– and the requirements necessary to obtain a precautionary injunction to stop an unlawful action or omission, prior to the claim, have been made more flexible.
In addition, there is a new requirement for the qualified entity to lodge a prior complaint with the trader whose action or omission has been found to be unlawful. This requirement is introduced in response to the importance currently attached to out-of-court dispute resolution.
The Draft Law also introduces a new procedure for the enforcement of non-monetary judgments whereby the beneficiary of the judgment may apply for enforcement by means of a form, without the need for the intervention of a lawyer and solicitor, or through the claimant qualified entity.
- As far as actions for damages is concerned, it should be noted that special judicial proceedings have been designed, due to the impossibility of fitting it into the ordinary or oral trial channels.
All parties with rights or interests that have been harmed by the unlawful conduct of the employer that led to the exercise of the action for damages, except those who expressly request to disassociate themselves from the process, will be linked to the action brought by the qualified entity, the process and its resolution (either by means of a redress settlement reached by the qualified entity and the trader, duly approved by the court, or by a court ruling). In order for this to be possible, special importance is attached to the establishment of requirements for the dissemination and publicity of the relevant decisions issued in the proceedings, and a specific electronic platform must be available for each of them, which must serve to pass on information to those affected. The so-called Certification Order is particularly relevant. It will be issued by the court after the Certification Hearing, the first procedural milestone following the lawsuit, and which is exclusively foreseen for the process initiated with the exercise of a compensation action. In it, the court will determine the subjective and objective scope of the proceedings. This Certification Order must be given the publicity among the consumers and users affected so that the representative action, which may affect their rights and interests and which has been brought by the claimant qualified entity, is considered legitimate.
In relation to the enforcement of the judgment or redress settlement, the Draft Law also provides for a procedure in which the beneficiary can request the court the enforcement of the judgment when the trader has failed to do so within the time limit. To this end, the beneficiary may use a form, without the need for a lawyer and solicitor, or do so through the claimant’s qualified entity.
In short, with the approval of the Draft Law, it seems that the Spanish Government has complied with the obligation to transpose the Directive on time, respecting and being faithful to its text, introducing, however, an express regulation of the judicial procedure relating to representative actions brought by qualified entities, seeking to establish agile and effective proceedings focused on the defence of the collective interests of consumers.
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