Cultural Dimensions of Group Litigation: the Belgian Case

• Citation: Vol. 41 No. 2
• Publication year: 2013
• topic: Civil Procedure

CULTURAL DIMENSIONS OF GROUP LITIGATION: THE BELGIAN CASE

Stefaan Voet^*

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Table of Contents¹

I. The Current Situation..............................................................435

A. European Background..............................................................435
B. Current Belgian Law................................................................440

1. Rigorous Supreme Court Interpretation............................440
2. Dealing with Mass Harms Without Class Actions.............442
3. Where That Leaves Belgium Right Now............................447

II. Proposals for a Belgian Class Action..................................448

A. Trigger-Effect...........................................................................448
B. Government Proposal...............................................................451
C. Opposition Proposal................................................................453
D. Proposal of the Flemish Bar Council.......................................454
E. Main Characteristics................................................................454

III. What Should a Belgian Class Action Look Like?...............456

A. Purposes of the Class Action Device and Why the Current Situation is Inadequate.............................................................456
B. Who Should Represent the Class?............................................457

1. Ideological Plaintiff as Class Representative....................457
2. Burns' "Decorative Figurehead"......................................459
3. Adequacy of Representation..............................................462

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C. How Should Class Action Litigation Be Financed? ................. 464

1. Financing By the Class Representative ............................. 465
2. Financing By the Class Counsel ........................................ 467
3. Financing By a Third Party ............................................... 468

D. What Remedies Should Be Allowed? ........................................ 469
E. What Role Should the Court Play?...........................................470

1. Which Court? .....................................................................470
2. Active Role of the Class Action Judge...............................472
3. Keeping the Litigation Moving Forward...........................474
4. Approving Class Action Settlements..................................475

IV. Conclusion...................................................................................477

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People assume that only the U.S. has class actions, and that assumption is increasingly wrong. The existence of mass harms with large numbers of claimants has created challenges for access to justice, judicial efficiency, and the enforcement of legal norms that make traditional individual litigation unworkable. Therefore, many European countries are struggling to craft procedural mechanisms to allow the resolution of group claims in a way that incorporates the helpful parts of U.S. class actions while avoiding its inefficiencies and potential abuses.

This Article will discuss the current debate in Belgium. It begins, in part I, by putting that debate in the European context and by describing the current Belgian dilemma. Part II sets out three proposals for a Belgian class action device, highlighting their common elements, as well as their difficulties. Part III analyzes those proposals in light of class action theory (class action goals, standing, funding and financing, remedies, and the role of the courts), arguing that none of the proposals have been sufficiently thought out and that each needs amendment or elaboration. Finally, part IV concludes by putting the civil class action in the larger context of processes for dealing with group harms and argues that a holistic approach is needed.

I. THE CURRENT SITUATION

A. European Background

In 2007, a prominent Dutch scholar wrote that resolving and administering mass cases in Europe is a priority. "It is clear that resolving mass cases must be prioritized, and that possible obstacles in the law must be cleared out, even when they have their foundation in important principles. It is clear that there is dynamism in this part of the law."²

In the European orbit, however, this dynamism differs significantly. Three categories can be discerned. First, some European countries have class action-like tools. With the exception of Iceland, the European frontrunners are the Scandinavian countries; Sweden, Norway, Denmark and Finland.³ All of them have some sort of class action mechanism, although there are substantial differences from the American-style class action, particularly with respect to standing (with a preference for associations and public actors as class representatives), and opt-in versus opt-out (with a preference for opt-in).⁴ Despite their clear power, or maybe because of it,

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these class actions are rarely filed as lawsuits and primarily serve as big sticks to encourage large corporations to avoid certain behaviors or to settle. In 2007, the Finnish Consumer Ombudsman was given exclusive standing to bring an opt-in class action.⁵ In 2009, the Finnish Consumer Agency assessed that "the mere presence of the shadow of class action gives the business sector an incentive for better legal compliance."⁶ The same is true in Denmark, where a public enforcer, the Danish Ombudsman, has exclusive standing to bring an opt-out class action.⁷ The Ombudsman uses the tool as a "nuclear bomb"⁸ to compel wrongdoers into a settlement that includes behavior modification and restitution.

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Second, various jurisdictions have created instruments (sometimes experimental) to achieve collective redress. Three examples are worth mentioning: England and Wales, Germany, and the Netherlands. Despite an ineffective and inactive representative action procedure,⁹ England and Wales have a Group Litigation Order procedure as a management tool to coordinate the adjudication of individual procedures that give rise to common issues.¹⁰ In November 2008, the Civil Justice Council proposed to introduce an opt-out class action applicable in all areas of the law.¹¹ The English Ministry of Justice was reluctant, and believes that class actions should only be considered in specific areas of the law, "only where there is evidence of need, and [only] following an assessment of economic and other impacts and consideration of alternative approaches."¹²

The 2005 German Act on Model Case Proceedings in the Capital Markets (KapMuG) established a model, or test case procedure, of which the core is to detect common issues of law in a multitude of individual cases, have them decided by a higher court, and resolve the previously suspended individual cases taking into account the outcome of the test case.¹³ The KapMuG was

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an experimental act for five years. In 2012, the KapMuG was not only extended to 2020, but the German legislature also modified the procedure.¹⁴ The most salient amendment, and one probably inspired by the Dutch Collective Settlements Act, is the possibility for the court to approve a settlement between the model claimant and the defendant that becomes binding on all parties, unless they opt-out.

The 2005 Dutch Collective Settlements Act provides for settlement-only class actions.¹⁵ An association or (special purpose) foundation, representing the victims of a mass harm, tries to reach an all-embracing settlement with the wrongdoer. This settlement is then approved by the Amsterdam Court of Appeal, which has exclusive jurisdiction. Class members who disapprove of the settlement can opt out. If not, they are bound by the court decision approving the settlement.¹⁶ To date, six high

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profile cases have been treated under this act.¹⁷ The most recent decision of the Amsterdam Court of Appeal in Converium appears to have had an impact on global securities class actions. In its November 2010 decision, the court ruled, based on the EEX and EVEX Regulations,¹⁸ it had international jurisdiction to approve the settlement for non-U.S. class members, even though the class mainly consisted of non-Dutch class members.¹⁹ In its final decision of January 2012, the court declared the settlement binding on all class members.²⁰ In a decision that surprised many European commentators, the court demonstrated it had no problem with the contingency fee arrangement for the American lawyers, which involved up to 20% of the amount of the settlement.²¹ After the U.S. Supreme Court's decision in Morrison v. National Australia Bank, Ltd. invalidated class actions brought in the U.S. on behalf of foreign class members,²² Amsterdam is poised to become the settlement hub for claims involving non-U.S. class members in mass securities cases.²³

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Third and finally, some European states have no adequate instruments to tackle mass cases. Although in June 2012 the new French Minister of Justice, Christiane Taubira, re-launched the idea of introducing class actions,²⁴ and in May 2013 a concrete proposal for a consumer class action was presented to the Council of Ministers,²⁵ France, for the moment, only has a joint representative action for consumers and investors (action en représentation conjointe).²⁶ Its scope is very limited.²⁷ Only national nonprofit organizations representing consumers or investors have standing.²⁸ Moreover, they work on an opt-in basis by soliciting for individual mandates. This can only be done through newspapers and magazines, but not via TV or radio.²⁹

Belgium also belongs to this last category. Together with France, it is one of the last Mohicans in the European collective redress orbit.³⁰ As discussed hereafter, this is caused by the Belgian Supreme Court's rigorous interpretation of the existing standing rules and the deficient instruments to deal with mass cases.

B. Current Belgian Law

1. Rigorous Supreme Court Interpretation

Traditional Belgian requirements...