Opt in vs. Opt out Emmanuel Gybels

2 Introductionary remark : there is not one answer to this question – approach varies depending on type of claim and area of the law

3 Opt out collective redress : advantages Access to Legal System Note that I did not say « Access to Justice » It is undeniable that a great number of claims are not brought – distance, cost, limited amount of claim, language, If it is true that a number of claims are brought, successfully, in an individual manner, or according to existent framework, it is simply unknown how many are not; One can only note that private enforcement is something that works in the US (notably in AT) and is not working in EU; Efficiency It simply cannot be denied that it is more efficient if all claims pertaining to the same issue, in various jurisdictions, brought by numerous parties are grouped together – less court time, less lawyers, one proceeding, etc Increased compliance by corporations A more efficient redress system/private enforcement brings increased compliance Corporations or trade associations who are opposing this represent the wrongdoers. The rightdoers should not be afraid. If sufficiently frightening will not risk infringement

Opt out advantages Settlement A centralised class approach brings, with the exception of people opting out, the possibility of final settlements, turning the page, incentive to settle; More efficient competition Increased compliance brings a level playing field in which all corporations, large and small, national or multinational, have to comply with the same rules and competitive advantages It benefits mainly small corporations, majority in EU Reality 99% of claims would not be brought if no opt out system 4

Issues / Challenges Concept is alien to some fundamental principles of European legal systems  « Nul ne plaide par procureur »  Art. 6 ECHR Everybody is entitled to defend his own case; What is intrinsically wrong with private enforcement /collective redress?  Technical solutions can be found Damages  Treble / Punitive damages Again, this is parallel with US antitrust rules, where the law forces judges to pronounce treble damages in certain cases, because it is considered to be crucial to economic life; If the only incentive is to pay damages suffered, this is not really a threat; Treble damages are rarely paid – case is settled before trial – treble damages are first to go.  Civil Jury Lots of the astronomical damages are due to fact that there are civil juries – this is not our tradition – we should not install them 5

Challenges / Issues Procedure  Jurisdiction/language/speed/ cost efficiency … How is this going to be organized; how will we harmonize procedural differences of various EU countries  Evidence gathering / discovery / shift of the burden of proof Fear of discovery type actions and associated cost and business secrets – could be circumvented by shift of burden of proof – once wrongdoing plausible defendant needs to make his case; AT proceedings– commission file; Lawyers / Client Relationship / Fees  Most of these issues are ethical – let’s change the ethical rules  Ownership of the case – again – fear of US opt out system – there is an opt out – maybe should make it easier – importance of information / advertising ?  Contingency fees This type of cases requires, per definition, high investments (experts, travel, document reviews, pleadings, etc. …), unless the authorities are prepared to fund it will naturally come from lawyers/third party financing However, this can be curtailed. It would be hypocrisy to think that is not circumvented right now. 6

Opt in Opt out : conclusion Misconception : opt out automatically results in US type litigation excesses Opt in : at present stage of development will only work in very limited circumstances; practical adjustments will be needed to make it successful 7