Changes in International Civil Justice Law: The Gathering Storm

Europe's approach to civil liability law and litigation is changing. As part of the European Union's (EU) move toward a common economic culture, virtually every aspect of EU civil justice law and procedure is under review. Thus far, the laws governing product safety and commercial dealings between businesses and consumers have begun tilting toward greater liability for businesses. Whether it is strict product liability, class actions, lawyer advertising, or variations on the contingent fee, many of these changes have been seen in the United States and are starting to migrate across the Atlantic.

Until recently, many of the aspects of the American legal system that led to its excesses and abuses did not exist in Europe. Tort law has played a less important role in Europe, where industry is extensively regulated and citizens can tap into a comprehensive social security system to recover costs for their injuries.

Jury trials are rare; discovery is limited; pain and suffering awards tend to be modest, and many countries discourage punitive damage awards. Nevertheless, as noted scholar on European and comparative law Geraint Howells remarked, “as the welfare state is being rolled back in Europe more attention is being paid to litigation as a means of satisfying the welfare needs of injured parties.”

Indeed, the UK insurance weekly Post Magazine reported that insurance companies in the United Kingdom have noted “a rapidly increasing claims and compensation culture,” and the London Daily Telegraph wrote of increasing concerns about civil liability and how rising insurance premiums have forced the cancellation of public events and school sports programs there. Entrepreneurial lawyers monitor developments in the American legal system and pattern their cases after high-profile lawsuits here. For example, 12 alleged alcoholics sought to sue the alcohol industry for failing to warn of the risks of alcohol, using arguments used against tobacco companies in American courts. Their lawyers told the Glasgow Daily Record: “The purported illness our clients suffer follows the same pattern as the smoking arguments did.”

The negative consequences associated with the excesses of the American civil justice system are well known among the U.S. policy-makers; however, Europeans may not be aware of some of these consequences. European policy-makers are less familiar with the fact, for example, that excessive liability raises consumer costs, causes beneficial products to be removed from the market, discourages innovation, and leads to corporate layoffs and bankruptcies.

Why Is the Law Changing?

A strong pro-consumer lobby is driving many of the changes in EU civil justice laws. Lawmakers are drafting EU-wide legislation to remove differences in the national laws of member countries and to encourage the growth of the Single Market. The Warsaw Business Journal credited the “gathering force” of the pro-consumer movement as successfully persuading the European Commission that “[c]onsumer policy is not a luxury but rather an essential element of overall EU policy.” As one commentator explained in the Glasgow Daily Record: “Brussels has swung very strongly in favour of a highly interventionist approach in order to impress the people of Europe that the EU is about something which touches their everyday lives, and which generates an esprit de corps around the grand concept of an ever closer union.”

In the EU, changes in both substantive and procedural laws have recently taken place and are likely to continue in the next 5 years. The London Times quoted one practitioner as saying these changes are “likely to increase litigation risk and regulatory compliance costs for business, but make lawsuits and prosecutions that bit more common.” These changes include the areas of products liability law, consumer protection law, contract law, choice of law guidelines, punitive damage awards, mass litigation, legal aid availability, and lawyer advertising.

General Product Safety Directive

Changes to a general product safety Directive regulating consumer products became effective on Jan. 15, when the European Parliament and the Council on General Product Safety's Directive 2001/95/EC went into effect. (See article by Stele in November 2003 issue of Product Liability Law & Strategy.) This Directive assigns additional consumer-protection responsibilities to product manufacturers and distributors. The Directive applies if there are no product-specific safety provisions in Community regulations, or if sectoral legislation is insufficient.

The previous version of the Directive, 92/59/EC on General Product Safety, required product manufacturers to place safe products on the market, warn consumers about product risks, and establish procedures to identify and respond to product hazards, including taking them off the market if necessary. The new Directive reaffirms these responsibilities and also requires manufacturers, importers and distributors to monitor the safety of products already placed on the market, notify authorities if they find any that are dangerous, and comply with government enforcement actions. The new monitoring and notification requirements are likely to lead to increased expense and administrative burdens for companies. Equally important, this information will be made public. As a result, consumer groups and plaintiffs' lawyers will undoubtedly use it to file one-on-one lawsuits, multiparty actions or representative actions. These changes are likely to lead to increased product liability claims during the next 10 years.

The new rules also allow governments to ban the marketing of products that are potentially dangerous, or to order a recall or the withdrawal of a “dangerous” product from the market. They set up a method for countries to share information quickly, and states that action taken under these provisions must be done in a manner “proportionate to the assignment of the risk and take deep account of the precautionary principle.”

The precautionary principle, used in many areas of European law, is supposed to help authorities determine whether and how to take regulatory action in cases where risks are unknown. It is controversial, as many believe it is as-yet vaguely defined, and is somewhat akin to the adage “better safe than sorry.” Christopher Hodges, a high-profile London lawyer and adviser on European and UK product regulation and liability law, said in a quote in the New York University Law Review, the “ultimate point is that decisions on the acceptability of risks ' ie, to take regulatory action where there are uncertain risks – are political judgments, so it is implied that decisions should be taken by politicians rather than scientists or administrators.”

Product Liability Directive

European law had no cause of action for strict products liability until 1985 when the EU introduced a Directive on liability for defective products (85/374/EC). This Directive established a EU-wide strict products liability system similar to American strict liability law, where product manufacturers and distributors may be held liable for injuries caused by a product defect, regardless of fault or privity with the plaintiff. The key question, now, is not whether the producer is at fault. It is whether a product “defect” exists. Under the Directive, a product is defective when it does not provide the safety a person is objectively entitled to expect under the circumstances ' taking into account such things as the product's marketing, its instructions and warnings, reasonable use of the product, and the date the product was put on the market.

The Directive gives a defendant several defenses to liability. The most controversial defense is the so-called “development risks” defense, which absolves defendants of liability if the defect could not have been scientifically discovered at the time of product circulation. Other defenses include: that the defendant did not put the product into circulation, manufacture the product for sale, manufacture or distribute the product in the course of business, or contribute to the design of the product (a defense limited to component part makers).

The “development risks” defense is similar to the so-called “state-of-the-art” defense under the Restatement Second and Third in the United States. In the United States, this defense does not mean that a defendant can win a case by showing that it did what everyone else did. That is merely custom. It must show that it used the latest and most advanced scientific knowledge, even if the industry lagged behind and failed to take advantage of it. Similarly, the development risks defense in Article 7(e) of the Directive provides that the producer of a defective product shall not be liable if it proves “that the state of scientific and technical knowledge at the time he put the product into circulation was not such as to enable the existence of the defect to be discovered.”

This defense was added to address concerns that the Directive could create liability exposure that was even greater than that which exists in the United States. Nevertheless, as stated in the preamble, the development risks defense was made optional out of deference to those member states that might feel its inclusion would “restrict unduly the protection of the consumer” by raising the bar for successful claims. Most Member States adopted the defense. Only Luxembourg and Finland declined to do so. Spain excluded the defense for claims involving high-risk products such as food and pharmaceuticals.

The strict liability Directive was largely ignored until 2001, when a landmark multiparty lawsuit in the United Kingdom set forth guidelines for applying the Directive and strictly limited the “development risks defense.” As a result of this lawsuit, the use of the Directive is expected to increase in the coming years. In addition, after the EU's most recent review of the Directive, it is considering whether to abolish the “development risks” defense and the cap on total damages for multiple claims in the same jurisdiction. Any such changes could have a domino effect on countries modeling their laws on the Directive, including Japan, China, Australia, and the Central European states.

Consumer Protection Proposals

As part of its effort to eliminate differences in the laws of different EU countries, the EU is considering new and far-reaching consumer protection proposals. One such proposal is to provide a uniform general requirement that businesses engage in fair trade. The proposal also suggests specific rules covering information disclosure, trade practices, undue influence, and fair advertising. This proposal would provide voluntary codes of good practice and an increased role for consumer groups. Many are concerned that the generality of this proposal will create enormous uncertainty by allowing enforcement authorities and courts to develop widely different interpretations of it, creating another layer of regulation, more legal uncertainty, and higher costs of compliance for businesses.

In its 2003 report on the safety of services for consumers, the European Commission explained it was also studying ways to improve the safety of consumer services, as it believes that “[i]mproving consumer confidence in the safety of services through the EU is an important objective for the internal market, particularly in areas like tourism, leisure and sports activities.” Currently, there is no EU-wide safety legislation governing consumer services except for transportation. Though the Commission recently reported it did not find enough evidence to justify enacting such legislation immediately, it recommended setting up an information-gathering system so lawmakers will have a basis for initiatives on consumer services safety legislation in the future.

Contract Law Proposals

Similarly, the Commission is working on a long-term plan to establish a single European Code on contract law, and, eventually, on tort law. The goal of the European Code is to eliminate the current differences in contract-related Directives and national laws and to establish common principles of law and terminology. Consumer interests again play a large role here; for example, the Commission emphasized in its 2002 communication on consumer policy strategy that the need to harmonize consumer laws “would notably imply a review of existing consumer contract law, in order to remove existing inconsistencies, to fill in gaps, and to simplify legislation.” If the European Code is widely accepted, national legislatures within the EU and in Third World countries could refer to it when they enact or amend contract laws. The Commission also has proposed developing EU-wide standard contract terms that can be used in cross-border or same-state transactions. The Commission also is looking for opportunities to legislate generally in the area of contract law, in addition to its current practice of legislating to address problems in specific industries.

Choice of Law Proposals

To prevent parties from forum shopping among different countries' legal systems, the Commission recently proposed new, uniform choice-of-law rules for tort cases, products liability cases, unfair competition, and other non-contract cases.

In general, the proposal would apply the law of the place where the damage arises or is likely to arise ' not necessarily where the event giving rise to the damage occurred. These choice-of-law rules would apply to actions brought under the Product Liability Directive or the national laws of a Member State. The substantive legal areas covered include the conditions and extent of liability; liability defenses, limitations and apportionment; the existence and types of compensable injuries; the procedural measures available to the court to prevent or stop injury or damages or ensure compensation is provided; the assessment of damages; assignment and inheritance of a cause of action; liability for another person's acts; and rules of prescription and limitation. The proposed regulation states that it is contrary to Community policy to apply it to force one country's courts to allow the award of punitive or exemplary damages under another country's law.

Punitive Damages Proposals

While punitive or exemplary damages are still discouraged in Europe, the door is slowly opening to such claims. In the United Kingdom, punitive damages have been excluded from negligence and strict product liability cases under the principle that exemplary damages could not be awarded for any cause of action in which they had not been awarded before 1964. However, the advisory Law Commission has recommended making punitive damages widely available if a defendant deliberately and outrageously disregards a plaintiff's rights in any tort, equitable wrong, or statutory wrong (if consistent with the statute's policy). Parliament left the issue to the courts. The courts have acted on this suggestion, ruling in 2001 in Kuddus v. Chief Constable of Leicestershire that there was no pre-1964 cause of action bar to exemplary damages, with one judge noting that: “To adopt such a rigid rule seems … to limit the future development of the law … in a way which is contrary to the normal practice of the courts.”

Mass Litigation Proposals

There is a movement in the EU and some member states to introduce procedures for multiparty lawsuits with the goals of allowing access to justice while avoiding the excesses of the American class action system. The movement toward mass litigation includes representative actions brought by consumer groups and procedures for group actions.

The EU has allowed representative actions by organizations such as consumer groups on certain issues. Under the EU Injunction Directive 98/27/EC, member states can choose to allow consumer associations and other “qualified organizations” to sue to enjoin violations of certain consumer-protection laws. This practice does not reflect the American concept of “standing,” which requires specific harm to individuals in order to bring a lawsuit. Nevertheless, there are several restrictions on the consumer groups, including the requirement that enjoining organizations must be “qualified” to bring such a suit and certain requirements that the organizations must first consult with the defendant or the independent public body responsible for protecting consumer interests prior to filing a lawsuit. The EU Injunction Directive does not apply to product liability actions, and the Commission has considered but tabled the idea of allowing representative actions, multiparty or “group actions,” or even American-style class actions against producers of allegedly defective products.

Several European states have adopted rules for multiparty actions, or “group actions.” Group actions generally permit groups of plaintiffs to consolidate their claims in a single proceeding. They are not like American class actions that can bind absent persons unless the class members “opt out.”

'Access to Justice' Rules

Traditional loser-pays rules have been a deterrent for lawsuits in Europe. Currently, both the Commission and national governments are reviewing methods of funding litigation in order to “increase” access to justice by allowing plaintiffs to sue more easily. This includes the possibility of introducing or extending contingent fees, legal insurance, or market solutions designed to reduce lawyers' fees.

Council Directive 2002/8/EC established minimum standard rules for the availability of legal aid for litigants in cross-border civil and commercial lawsuits, to assure that all persons can “assert their rights in the courts even if their personal financial situation makes it impossible for them to bear the costs of the proceedings.” Legal aid would cover all court costs from pre-litigation advice to appeal costs to costs directly connected with the cross-border dimension of the dispute. Member states can reject applications for legal aid for “manifestly unfounded” actions or on grounds related to the merits of the case, as long “as pre-litigated advice is offered and access to justice is guaranteed.”

Lawyer Advertising

Lawyer advertising, which traditionally had been discouraged or prohibited in Europe, is starting to be allowed in some Member States because of concerns about differing countries' rules and their effect on competition among lawyers engaged in practice across national borders. As legal scholar Geoffrey Hazard has argued on various occasions, “the practical necessity of information exchange in modern, impersonal society” has “penetrated the traditional prohibition on lawyer advertising in Member States of the EU.” As a result of relaxing these rules, personal injury advertisements have become rampant in the UK. One lawyer, Stephen Alexander, the founder of ClassLaw, was characterized by the London Times as having “unashamedly copied the methods of U.S. lawyers, courting publicity to bring groups of plaintiffs together to fight actions.”

Conclusion

The gathering storm of an Americanized civil justice system in Europe, featuring substantive legal changes as well as class actions, punitive damages and contingent fees, should neither be exaggerated nor ignored. Such changes have been instituted, or are being considered, by European authorities. How they are defined will be up to the policy-makers as well as involved business and consumer communities. The EU, its member states, and the business and consumer community can benefit from studying the American example, both good and bad, before making new and major changes in their respective legal systems.

Europe's approach to civil liability law and litigation is changing. As part of the European Union's (EU) move toward a common economic culture, virtually every aspect of EU civil justice law and procedure is under review. Thus far, the laws governing product safety and commercial dealings between businesses and consumers have begun tilting toward greater liability for businesses. Whether it is strict product liability, class actions, lawyer advertising, or variations on the contingent fee, many of these changes have been seen in the United States and are starting to migrate across the Atlantic.

Until recently, many of the aspects of the American legal system that led to its excesses and abuses did not exist in Europe. Tort law has played a less important role in Europe, where industry is extensively regulated and citizens can tap into a comprehensive social security system to recover costs for their injuries.

Jury trials are rare; discovery is limited; pain and suffering awards tend to be modest, and many countries discourage punitive damage awards. Nevertheless, as noted scholar on European and comparative law Geraint Howells remarked, “as the welfare state is being rolled back in Europe more attention is being paid to litigation as a means of satisfying the welfare needs of injured parties.”

Indeed, the UK insurance weekly Post Magazine reported that insurance companies in the United Kingdom have noted “a rapidly increasing claims and compensation culture,” and the London Daily Telegraph wrote of increasing concerns about civil liability and how rising insurance premiums have forced the cancellation of public events and school sports programs there. Entrepreneurial lawyers monitor developments in the American legal system and pattern their cases after high-profile lawsuits here. For example, 12 alleged alcoholics sought to sue the alcohol industry for failing to warn of the risks of alcohol, using arguments used against tobacco companies in American courts. Their lawyers told the Glasgow Daily Record: “The purported illness our clients suffer follows the same pattern as the smoking arguments did.”

The negative consequences associated with the excesses of the American civil justice system are well known among the U.S. policy-makers; however, Europeans may not be aware of some of these consequences. European policy-makers are less familiar with the fact, for example, that excessive liability raises consumer costs, causes beneficial products to be removed from the market, discourages innovation, and leads to corporate layoffs and bankruptcies.

Why Is the Law Changing?

A strong pro-consumer lobby is driving many of the changes in EU civil justice laws. Lawmakers are drafting EU-wide legislation to remove differences in the national laws of member countries and to encourage the growth of the Single Market. The Warsaw Business Journal credited the “gathering force” of the pro-consumer movement as successfully persuading the European Commission that “[c]onsumer policy is not a luxury but rather an essential element of overall EU policy.” As one commentator explained in the Glasgow Daily Record: “Brussels has swung very strongly in favour of a highly interventionist approach in order to impress the people of Europe that the EU is about something which touches their everyday lives, and which generates an esprit de corps around the grand concept of an ever closer union.”

In the EU, changes in both substantive and procedural laws have recently taken place and are likely to continue in the next 5 years. The London Times quoted one practitioner as saying these changes are “likely to increase litigation risk and regulatory compliance costs for business, but make lawsuits and prosecutions that bit more common.” These changes include the areas of products liability law, consumer protection law, contract law, choice of law guidelines, punitive damage awards, mass litigation, legal aid availability, and lawyer advertising.

General Product Safety Directive

Changes to a general product safety Directive regulating consumer products became effective on Jan. 15, when the European Parliament and the Council on General Product Safety's Directive 2001/95/EC went into effect. (See article by Stele in November 2003 issue of Product Liability Law & Strategy.) This Directive assigns additional consumer-protection responsibilities to product manufacturers and distributors. The Directive applies if there are no product-specific safety provisions in Community regulations, or if sectoral legislation is insufficient.

The previous version of the Directive, 92/59/EC on General Product Safety, required product manufacturers to place safe products on the market, warn consumers about product risks, and establish procedures to identify and respond to product hazards, including taking them off the market if necessary. The new Directive reaffirms these responsibilities and also requires manufacturers, importers and distributors to monitor the safety of products already placed on the market, notify authorities if they find any that are dangerous, and comply with government enforcement actions. The new monitoring and notification requirements are likely to lead to increased expense and administrative burdens for companies. Equally important, this information will be made public. As a result, consumer groups and plaintiffs' lawyers will undoubtedly use it to file one-on-one lawsuits, multiparty actions or representative actions. These changes are likely to lead to increased product liability claims during the next 10 years.

The new rules also allow governments to ban the marketing of products that are potentially dangerous, or to order a recall or the withdrawal of a “dangerous” product from the market. They set up a method for countries to share information quickly, and states that action taken under these provisions must be done in a manner “proportionate to the assignment of the risk and take deep account of the precautionary principle.”

The precautionary principle, used in many areas of European law, is supposed to help authorities determine whether and how to take regulatory action in cases where risks are unknown. It is controversial, as many believe it is as-yet vaguely defined, and is somewhat akin to the adage “better safe than sorry.” Christopher Hodges, a high-profile London lawyer and adviser on European and UK product regulation and liability law, said in a quote in the New York University Law Review, the “ultimate point is that decisions on the acceptability of risks ' ie, to take regulatory action where there are uncertain risks – are political judgments, so it is implied that decisions should be taken by politicians rather than scientists or administrators.”

Product Liability Directive

European law had no cause of action for strict products liability until 1985 when the EU introduced a Directive on liability for defective products (85/374/EC). This Directive established a EU-wide strict products liability system similar to American strict liability law, where product manufacturers and distributors may be held liable for injuries caused by a product defect, regardless of fault or privity with the plaintiff. The key question, now, is not whether the producer is at fault. It is whether a product “defect” exists. Under the Directive, a product is defective when it does not provide the safety a person is objectively entitled to expect under the circumstances ' taking into account such things as the product's marketing, its instructions and warnings, reasonable use of the product, and the date the product was put on the market.

The Directive gives a defendant several defenses to liability. The most controversial defense is the so-called “development risks” defense, which absolves defendants of liability if the defect could not have been scientifically discovered at the time of product circulation. Other defenses include: that the defendant did not put the product into circulation, manufacture the product for sale, manufacture or distribute the product in the course of business, or contribute to the design of the product (a defense limited to component part makers).

The “development risks” defense is similar to the so-called “state-of-the-art” defense under the Restatement Second and Third in the United States. In the United States, this defense does not mean that a defendant can win a case by showing that it did what everyone else did. That is merely custom. It must show that it used the latest and most advanced scientific knowledge, even if the industry lagged behind and failed to take advantage of it. Similarly, the development risks defense in Article 7(e) of the Directive provides that the producer of a defective product shall not be liable if it proves “that the state of scientific and technical knowledge at the time he put the product into circulation was not such as to enable the existence of the defect to be discovered.”

This defense was added to address concerns that the Directive could create liability exposure that was even greater than that which exists in the United States. Nevertheless, as stated in the preamble, the development risks defense was made optional out of deference to those member states that might feel its inclusion would “restrict unduly the protection of the consumer” by raising the bar for successful claims. Most Member States adopted the defense. Only Luxembourg and Finland declined to do so. Spain excluded the defense for claims involving high-risk products such as food and pharmaceuticals.

The strict liability Directive was largely ignored until 2001, when a landmark multiparty lawsuit in the United Kingdom set forth guidelines for applying the Directive and strictly limited the “development risks defense.” As a result of this lawsuit, the use of the Directive is expected to increase in the coming years. In addition, after the EU's most recent review of the Directive, it is considering whether to abolish the “development risks” defense and the cap on total damages for multiple claims in the same jurisdiction. Any such changes could have a domino effect on countries modeling their laws on the Directive, including Japan, China, Australia, and the Central European states.

Consumer Protection Proposals

As part of its effort to eliminate differences in the laws of different EU countries, the EU is considering new and far-reaching consumer protection proposals. One such proposal is to provide a uniform general requirement that businesses engage in fair trade. The proposal also suggests specific rules covering information disclosure, trade practices, undue influence, and fair advertising. This proposal would provide voluntary codes of good practice and an increased role for consumer groups. Many are concerned that the generality of this proposal will create enormous uncertainty by allowing enforcement authorities and courts to develop widely different interpretations of it, creating another layer of regulation, more legal uncertainty, and higher costs of compliance for businesses.

In its 2003 report on the safety of services for consumers, the European Commission explained it was also studying ways to improve the safety of consumer services, as it believes that “[i]mproving consumer confidence in the safety of services through the EU is an important objective for the internal market, particularly in areas like tourism, leisure and sports activities.” Currently, there is no EU-wide safety legislation governing consumer services except for transportation. Though the Commission recently reported it did not find enough evidence to justify enacting such legislation immediately, it recommended setting up an information-gathering system so lawmakers will have a basis for initiatives on consumer services safety legislation in the future.

Contract Law Proposals

Similarly, the Commission is working on a long-term plan to establish a single European Code on contract law, and, eventually, on tort law. The goal of the European Code is to eliminate the current differences in contract-related Directives and national laws and to establish common principles of law and terminology. Consumer interests again play a large role here; for example, the Commission emphasized in its 2002 communication on consumer policy strategy that the need to harmonize consumer laws “would notably imply a review of existing consumer contract law, in order to remove existing inconsistencies, to fill in gaps, and to simplify legislation.” If the European Code is widely accepted, national legislatures within the EU and in Third World countries could refer to it when they enact or amend contract laws. The Commission also has proposed developing EU-wide standard contract terms that can be used in cross-border or same-state transactions. The Commission also is looking for opportunities to legislate generally in the area of contract law, in addition to its current practice of legislating to address problems in specific industries.

Choice of Law Proposals

To prevent parties from forum shopping among different countries' legal systems, the Commission recently proposed new, uniform choice-of-law rules for tort cases, products liability cases, unfair competition, and other non-contract cases.

In general, the proposal would apply the law of the place where the damage arises or is likely to arise ' not necessarily where the event giving rise to the damage occurred. These choice-of-law rules would apply to actions brought under the Product Liability Directive or the national laws of a Member State. The substantive legal areas covered include the conditions and extent of liability; liability defenses, limitations and apportionment; the existence and types of compensable injuries; the procedural measures available to the court to prevent or stop injury or damages or ensure compensation is provided; the assessment of damages; assignment and inheritance of a cause of action; liability for another person's acts; and rules of prescription and limitation. The proposed regulation states that it is contrary to Community policy to apply it to force one country's courts to allow the award of punitive or exemplary damages under another country's law.

Punitive Damages Proposals

While punitive or exemplary damages are still discouraged in Europe, the door is slowly opening to such claims. In the United Kingdom, punitive damages have been excluded from negligence and strict product liability cases under the principle that exemplary damages could not be awarded for any cause of action in which they had not been awarded before 1964. However, the advisory Law Commission has recommended making punitive damages widely available if a defendant deliberately and outrageously disregards a plaintiff's rights in any tort, equitable wrong, or statutory wrong (if consistent with the statute's policy). Parliament left the issue to the courts. The courts have acted on this suggestion, ruling in 2001 in Kuddus v. Chief Constable of Leicestershire that there was no pre-1964 cause of action bar to exemplary damages, with one judge noting that: “To adopt such a rigid rule seems … to limit the future development of the law … in a way which is contrary to the normal practice of the courts.”

Mass Litigation Proposals

There is a movement in the EU and some member states to introduce procedures for multiparty lawsuits with the goals of allowing access to justice while avoiding the excesses of the American class action system. The movement toward mass litigation includes representative actions brought by consumer groups and procedures for group actions.

The EU has allowed representative actions by organizations such as consumer groups on certain issues. Under the EU Injunction Directive 98/27/EC, member states can choose to allow consumer associations and other “qualified organizations” to sue to enjoin violations of certain consumer-protection laws. This practice does not reflect the American concept of “standing,” which requires specific harm to individuals in order to bring a lawsuit. Nevertheless, there are several restrictions on the consumer groups, including the requirement that enjoining organizations must be “qualified” to bring such a suit and certain requirements that the organizations must first consult with the defendant or the independent public body responsible for protecting consumer interests prior to filing a lawsuit. The EU Injunction Directive does not apply to product liability actions, and the Commission has considered but tabled the idea of allowing representative actions, multiparty or “group actions,” or even American-style class actions against producers of allegedly defective products.

Several European states have adopted rules for multiparty actions, or “group actions.” Group actions generally permit groups of plaintiffs to consolidate their claims in a single proceeding. They are not like American class actions that can bind absent persons unless the class members “opt out.”

'Access to Justice' Rules

Traditional loser-pays rules have been a deterrent for lawsuits in Europe. Currently, both the Commission and national governments are reviewing methods of funding litigation in order to “increase” access to justice by allowing plaintiffs to sue more easily. This includes the possibility of introducing or extending contingent fees, legal insurance, or market solutions designed to reduce lawyers' fees.

Council Directive 2002/8/EC established minimum standard rules for the availability of legal aid for litigants in cross-border civil and commercial lawsuits, to assure that all persons can “assert their rights in the courts even if their personal financial situation makes it impossible for them to bear the costs of the proceedings.” Legal aid would cover all court costs from pre-litigation advice to appeal costs to costs directly connected with the cross-border dimension of the dispute. Member states can reject applications for legal aid for “manifestly unfounded” actions or on grounds related to the merits of the case, as long “as pre-litigated advice is offered and access to justice is guaranteed.”

Lawyer Advertising

Lawyer advertising, which traditionally had been discouraged or prohibited in Europe, is starting to be allowed in some Member States because of concerns about differing countries' rules and their effect on competition among lawyers engaged in practice across national borders. As legal scholar Geoffrey Hazard has argued on various occasions, “the practical necessity of information exchange in modern, impersonal society” has “penetrated the traditional prohibition on lawyer advertising in Member States of the EU.” As a result of relaxing these rules, personal injury advertisements have become rampant in the UK. One lawyer, Stephen Alexander, the founder of ClassLaw, was characterized by the London Times as having “unashamedly copied the methods of U.S. lawyers, courting publicity to bring groups of plaintiffs together to fight actions.”

Conclusion

The gathering storm of an Americanized civil justice system in Europe, featuring substantive legal changes as well as class actions, punitive damages and contingent fees, should neither be exaggerated nor ignored. Such changes have been instituted, or are being considered, by European authorities. How they are defined will be up to the policy-makers as well as involved business and consumer communities. The EU, its member states, and the business and consumer community can benefit from studying the American example, both good and bad, before making new and major changes in their respective legal systems.