I move: "That the Bill be now read a Second Time."
Tá áthas orm an Bille seo a thabhairt os comhair na Dála inniu, which is the Representative Actions for the Protection of the Collective Interests of Consumers Bill 2023. The Bill transposes EU Directive No. 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.
The directive requires member states to have a mechanism for consumers to seek collective redress when they claim to have been harmed by a business through breaches of certain EU consumer laws. The directive aims to ensure that consumers have access to an effective means to stop and remedy mass harm situations for breaches of these EU rights by traders. No new consumer rights are created in this Bill, and no new liabilities are placed on traders. The Bill will allow consumers to opt into a collective action and seek redress as a result of a trader’s breach of their rights.
Transposing this directive into our existing common law system is complex for a number of reasons. First, Ireland is required to create a completely new mechanism for representative actions brought by groups of consumers. This will be the first time that consumers can be represented collectively in an Irish court by a designated not-for-profit organisation. Second, the qualified entities who will bring the action on behalf of consumers will be non-profit organisations, meaning that they must bear the costs of bringing the action, including paying their legal fees, in order that consumers and not the entity will obtain the benefits of any court order. Third, the directive applies to consumer rights which are set out in 66 distinct EU laws. This long list comprises a broad range of sectors from financial services and travel right through to data protection. The transposition deadline for this directive was 25 December 2022. Unfortunately, Ireland, along with a majority of EU member states, did not meet that deadline and the Commission has commenced infringement proceedings.
The Bill allows the Minister for Enterprise, Trade and Employment to designate organisations as qualified entities to represent those consumers. Organisations that apply for this designation will need to meet set criteria, such as being independent in their activities, have a track record in representing the interests of consumers, and operate on a non-profit basis. The Department and the European Commission will publish a list of qualified entities designated in Ireland and all member states, respectively. The Bill provides for a comprehensive designation process, and monitoring of qualified entities, and it requires those qualified entities to publish information about their activities, funding, past cases and future cases, in order that consumers can have confidence in the entities who will represent them and their interests.
Qualified entities will only represent consumers who have opted to join an action. No consumer will be forced to be part of any action, and consumers who join an action will be entitled to redress obtained by the qualified entity. Qualified entities will be able to seek injunctions and-or redress measures for consumers. The redress measures can vary from repairs to compensation to replacement. Consumers will receive the direct benefit of any redress measures granted in the court.
When the legislation is in place, the High Court can hear domestic and cross-border representative actions brought by qualified entities, designated in Ireland and in other member states. In a representative action, a qualified entity will take the role of the plaintiff or claimant party, and it will have all the rights and obligations of any plaintiff bringing an action before the High Court. As is currently the case, the High Court will have the power to grant both injunctive relief and-or redress measures where it considers either of these measures to be justified, as well as having the power to strike out unsubstantiated claims. All representative actions will be heard before the High Court because of that court’s experience of managing and directing complex multi-party cases, and I am satisfied that the High Court will perform a vital role in ensuring that collective consumer grievances are dealt with in a way that ensures consumer rights are vindicated and so traders avoid dealing with unsubstantiated or vexatious cases.
As Deputies may already be aware, funding by third parties of civil litigation in Ireland is strictly controlled by the common law rules of champerty and maintenance. Maintenance refers to an unconnected third party assisting to maintain litigation, for example, by providing financial assistance to the litigant in an action. Champerty is where a person funds a civil action in return for a share of the proceeds even though they have no direct involvement in the action. The limitation on access to funding for civil litigation in Ireland is likely to discourage some not-for-profit organisations from stepping forward to seek designation as a qualified entity. This is fully understandable when one considers the legal costs involved in proceeding with civil claims through the court and taking responsibility for shouldering the inherent risks entailed if their claim is unsuccessful. The Minister for Justice has asked the Law Reform Commission to conduct a review of the law governing third party funding of civil litigation in Ireland. The commission will report in 2024 and the Minister for Justice will evaluate the matter in the context of reform of parts of the civil law system. I look forward to the recommendations of the Law Reform Commission in due course. However, in order to meet our obligations and transpose this directive, I unfortunately cannot wait for the outcome of that process before tabling this Bill.
This Bill is divided into three parts and contains 34 sections. The Bill also contains a significant schedule of relevant enactments. I will now set out some of the main components of the Bill.
Part 1 is the preliminary and general part of the Bill. Sections 1 to 6, inclusive, provide for standard provisions such as the Short Title and definitions, regulation-making powers, and the scope of the Bill. Section 7 deals with expenses incurred by the Minister for Enterprise, Trade and Employment in context of the Bill.
Part 2 deals with qualified entities. Section 8 sets out the criteria that an entity seeking to be designated as a qualified entity must satisfy and how the designation process will be conducted by the Minister.
The Minister can refuse designation, which is laid out in section 9. He or she can revoke it, as laid out in section 11. There is also the option of reviewing designation, as laid out in section 13.
Section 10 provides that the Minister can issue a directions notice if it seems a qualified entity no longer complies with any of the criteria for designation. Under section 12, qualified entities can make representations if they are notified that the Minister intends to refuse or revoke designation. Section 14 provides that the qualified entities can also seek an independent review of the refusal or revocation. Section 15 provides that the Minister can request further information to assess continued compliance with the designating criteria.
Section 16 requires that the Minister should establish or maintain a register of qualified entities in Ireland. Once designated by the Minister, a qualified entity will be permitted to bring a representative action in Ireland and before the nominated courts and administrative authorities of all other European member states. Section 18 requires qualified entities to publish certain information on their website about their structure, remit and past and future representative actions.
Part 3 deals with representative actions. Section 19 of Part 3 allows qualified entities designated in Ireland or another member state to bring a representative action before the High Court. Section 20 provides that multiple qualified entities can join together to take one representative action. Section 21 sets out that before seeking an injunction against a trader, a qualified entity must attempt to enter into consultations with that trader to resolve the issue in order that the trader is given an opportunity to cease a practice before the case is formally brought before the court.
Part 3 also sets out the process for disclosure of evidence between the parties and for the High Court to deal with injunctions, redress measures, settlements and allocations of costs in representative actions. Where the Bill is silent on any issue, existing High Court rules, orders, practice and procedure will apply in the normal way.
Section 24 of Part 3 sets out the steps a consumer must follow in their request to join a representative action. Section 25 provides that consumers must also declare that they have not already received redress from the same trader for the same issue and joining an action will preclude a consumer from receiving double compensation by separately bringing their own action against the same trader for the same cause of action.
Section 27 requires that certain disclosures must be made to the High Court about the qualified entity’s funding at the commencement of the case and so satisfy that no potential conflicts of interest arise.
Section 28 sets out that the time periods for the Statute of Limitations are paused for the duration of the representative action. Consumers may be charged a modest fee when joining the representative action, and a cap on such a fee will be set by way of regulation under section 29.
Arrangements are set out in section 32 to deal with the admissibility of decisions of courts in other member states. Section 33 allows for the court to order that the outcome of representative action decisions is published by the trader or qualified entity and, if compensation is to be paid to consumers, how and when they can obtain that compensation.
In spring 2021, my Department commenced a public consultation on how the directive should be transposed. While much of the directive is mandatory in nature, some elements of the detail of transposition provide member states such as ourselves with a degree of discretion as to how we do this. Comprehensive submissions were received from industry representative organisations, consumer representative organisations and legal and insurance firms. These submissions with different perspectives have informed the policy decisions taken by my Department when transposing those discretionary elements of the directive.
The Joint Committee on Enterprise, Trade and Employment held hearings on the general scheme of this proposed legislation in June and September 2022. I thank the Chair, members and secretariat of the committee for facilitating that. The committee identified a known limitation in the Bill in respect of the lack of provision for litigation funding. As I mentioned, the broad issue of third-party funding of litigation is within the policy responsibility of the Minister for Justice, and work is under way in that respect. I wrote to the Minister of State at the Department of Justice with responsibility for law reform, Deputy James Browne, in September 2022 and underlined the importance of reform in this area in support of consumers exercising their rights through a qualified entity under this legislation. In his response, the Minister of State noted the matter as important and informed me the Law Reform Commission is reviewing the current situation and is due to report in 2024, as I indicated previously. The issue of third-party funding is hugely complex, raising many detailed questions. The House will therefore agree it is right and proper the Law Reform Commission and, in due course, the relevant Minister are given the time to consider these issues.
This legislation is good news for consumers. It is equally good news for businesses because it recognises responsible traders but holds to account traders who flout consumer protection laws. I am confident that once this legislation is enacted, it will strengthen consumer efforts to correct malpractice by traders by providing them with a mechanism to take collective action against an errant trader. I commend the Bill to the House.