Representative Actions for the Protection of the Collective Interests of Consumers Bill 2023: Second Stage

Minister of State at the Department of Enterprise, Trade and Employment (Deputy Dara Calleary)

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.

Deputy Louise O'Reilly

I thank the Minister of State for his remarks. Sinn Féin supports this Bill but will be putting forward amendments on Committee Stage, so it is not all good news.

This Bill transposes Directive (EU) 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 reason for the need for a representative action system is to protect the collective interests of consumers. Take, for example, the 2015 so-called dieselgate scandal, which affected thousands of consumers across the EU. This scandal, among others, highlighted gaps in consumer rights law across the EU's Internal Market. At the time, there was no tool across the EU that would have allowed consumers in mass harm situations to litigate and be represented in large groups by another entity. Closer to home, the tracker mortgage scandal is an example of a group of people who were treated egregiously by Irish banks and have been denied access to justice due to the high costs involved. Many of these families considered taking the banks to court but were concerned about dealing with the issue of costs, about what would happen if the case were to go against them, and about how they could take on a multibillion-euro company if it appealed the case all the way to the Supreme Court. That made for David and Goliath situations. People took the only option they felt they had by not taking an action they might well have won. People in such situations have to ask how much of their lives it will take up and what will happen if it does not work out. It is into this space that multiparty action procedures should fit.

The transposition of the directive on representative actions means that, for the first time in Irish law, a group of consumers can take an action through a qualified entity. The directive on representative actions creates this process - representative action by qualified entities - for groups of consumers to enforce their rights. This new EU system is non-profit and consumers do not cover the costs. It does not create any new consumer rights.

The directive on representative actions applies to a specific list of EU laws set out in the directive. Actions can be brought on a domestic or cross-border basis. An example of litigation before this directive is the French leaseback situation, where consumers from all over Europe, including Irish consumers, bought properties in France with the guarantee of a leaseback and then found it did not work out as envisaged. The relevant French consumer agency is investigating complaints on people's behalf. If this legislation had been in place at the time, there may have been a case for a representative action to have been taken in France, with consumers from all over the EU joining it. This Bill, in essence, compels the establishment of a multiparty action system for consumers.

Sinn Féin has been to the fore in campaigning for the introduction of a comprehensive multiparty action system. Movement in the area of multiparty actions was driven by the then Sinn Féin justice spokesperson, Deputy Ó Laoghaire, who introduced the Multi-Party Actions Bill 2017 in the previous Dáil term. Sinn Féin's work in the area compelled the then Minister for Justice and Equality to establish a review group to investigate the matter. Currently there is no recourse to multiparty action in this State. In 2005, the Law Reform Commission, LRC, conducted a review of the law regarding multiparty litigation and reached a preliminary conclusion that the Irish legal system lacks a comprehensive procedure that would tackle class claims in a uniform and consistent fashion. An LRC report on foot of that assessment, which was issued later in 2005, recommended that a formal procedural structure for collective redress be established.

Following the introduction of the aforementioned Private Members' Bill on multiparty actions by Sinn Féin, the then Minister for Justice and Equality referred to the question of the introduction of a multiparty action, MPA, procedure in the Irish legal system to the administration of civil justice review group established in 2017 and chaired by then President of the High Court, Mr. Justice Peter Kelly.

In January 2018 the European Commission published a report and study on collective redress mechanisms in member states. The report and study found that Ireland was an outlier among EU member states because there was "no dedicated mechanism for bringing collective claims in Ireland". It continued:

Rather, mass claims are dealt with under the general rules of civil procedure which only allow for collective claims in very limited circumstances.

A 2020 report on foot of the work of the administration of civil justice review group concluded that in addition to Directive (EU) 2020/1828 on representative actions, there was a further rationale for the introduction of a new and more comprehensive multiparty action procedure to accommodate mass claims. More specifically, while acknowledging the importance of public law redress mechanisms like those provided for in Directive (EU) 2020/1828, the Kelly report concluded that in addition it seemed clear that there was an objective need to legislate for a comprehensive multiparty action procedure in Ireland. The legislation does not do this. It transposes the EU directive but it goes no further than this to deliver a comprehensive multiparty action procedure. Sinn Féin believes this Bill should have been an opportunity to revolutionise the way our courts handle cases and could give countless numbers of people greater access to justice than heretofore. I understand that this is the purpose of it, but we think there is scope for amendments to broaden it out and not simply do the minimum that is required.

Steps could and should have been taken to deliver a fairer, more equitable justice system. Very often large institutions are in a position of strength in legal proceedings because of the issue of costs. This situation has needed to be addressed for some time and it is unfortunate that this Bill does not go further to deliver a comprehensive multiparty action procedure while also transposing the EU directive. We are far behind comparable jurisdictions in not having an avenue for justice through a multiparty action procedure, and without significantly strengthening this Bill that deficit will unfortunately remain. However, it should be noted that in advocating for a comprehensive multiparty action procedure, Sinn Féin seeks reforms which are carefully balanced. We know it is important to prevent spurious and excessive litigation. We should not let the fear of that prevent us from going that little bit further to encompass more people in it.

We believe the Bill does not go far enough in that it only transposes the minimum standards set out in the EU directive. We want to see the Bill go further and the Government should use this opportunity to introduce a comprehensive multiparty action procedure. This will require the input of the Department of Justice, but we see no reason the Minister for Enterprise, Trade and Employment cannot work with the Minister for Justice to achieve this.

Furthermore, the sole use of qualified entities to commence representative actions on behalf of consumers may limit access to multiparty actions as groups of individual consumers cannot bring representative actions. Consideration should be given to the use of qualified entities and groups of individual consumers to pursue representative actions. The Bill also ignores the administrative costs that will be demanded of a qualified entity to commence a representative action.

The legislation places considerable administrative burdens on the qualified entity, such as the provision of information about representative actions online, transparency as to the funding of the qualified entity to avoid conflicts of interest and interactions with consumers prior to commencement of a representative action. In that case, the qualified entity would need to have a well-resourced office with staff to complete the task of instigating representative actions. Without some form of funding from the Government or co-operative assistance from the Competition and Consumer Protection Commission it is doubtful if this directive will be fully enacted for the benefit of Irish consumers.

The directive requires that Ireland ensure that non-profit bodies are able to bring sufficient funding to take legal proceedings to protect consumers. If the Bill is not amended to provide for litigation funding, I believe Ireland will be in breach of EU law as the right to litigate under the directive will essentially not exist. This is also the view of the Irish Council for Civil Liberties, and the matter must be addressed on Committee Stage.

Article 20(1) of the directive provides:

member states shall take account of the non-profit making character of qualified entities and ensure that a lack of funding is not a bar to bringing representative actions.

Perhaps consideration should be given to allowing non-profit organisations to source some funding for collective actions given that it is not going to be free or, indeed, cheap to take such actions. There is significant concern that the Bill and any additional regulations will not be in place by the time this directive is to be operational on 25 June 2023.

I thank the Chair for the time to speak and I thank the Minister of State for his attention to my remarks. I look forward to working with the Minister of State and my colleagues on Committee Stage to amend and improve the legislation.

Deputy Ged Nash

The Labour Party supports the Bill and the transposition of the directive into Irish law. When an individual consumer takes on a corporation, it is never a fair fight and anything that strengthens the hand of the consumer and levels the playing field is to be welcomed. The broad thrust of the legislation is an attempt to do that. It will allow consumers to band together or enlist the help of designated representative organisations when they go into battle, so to speak, against a big corporation, in a bid to protect their consumer rights.

However, the Irish Council for Civil Liberties has identified a problem that puts the Bill at risk of being at odds with European law. I am advised that there is currently no provision in the Bill to allow for third party funding of collective actions by consumers to protect their rights. To be fair, the Minister of State, Deputy Calleary, put on record his communication with the Minister of State, Deputy James Browne, who has engaged the Law Reform Commission to review the matter. However, I am somewhat concerned over the timeline for that review. The Minister of State, Deputy Calleary, indicated that review might not conclude until 2024. We have been waiting for some time to transpose this directive into Irish law and any further delay will be to the detriment of consumers in this country. In his response at the end of Second Stage this evening or tomorrow if it continues to that stage, which is unlikely, the Minister of State might outline his anticipated timeline for the resolution of that problem, which is especially problematic for the successful operation of this welcome legislation.

As I said, the Government is already late in bringing this legislation to the Oireachtas and the deadline for its application is 25 June of this year so the clock is ticking. If the legislation is enacted as it currently stands, Ireland will run the risk of being in breach of European Union law. As the Minister of State said in his earlier remarks, infringement proceedings are already under way because we missed the deadline of December of last year for transposition.

We, in the Labour Party, will be proposing a minor but not insignificant amendment that addresses the problem. By making the Bill more reflective of the EU directive it seeks to transpose, it should also serve to speed up its application and make it more effective for consumers. Staying on the right side of European law is important enough but the amendment proposed is also about fairness. The Minister of State will agree that cost cannot be a barrier to consumers seeking to defend their basic rights, particularly when they are facing a battle against entities with bottomless pockets. I urge the Government to accept the amendment we propose to make. It is a minor amendment, but not an insignificant or insubstantial one in terms of the efficacy of the legislation. We should not allow this issue to thwart what is otherwise very welcome legislation.

There are many aspects of the Bill that are welcome. The ability for consumers to act across borders to protect their rights is a crucial element of this legislation. Corporate misdeeds, like the motor industry emissions scandal of 2015 and the mass flight cancellations of 2017, are no respecter of borders and it is important that citizens across the European Union can act to protect their consumer rights where those rights are infringed in multiple member states. This is surely part of the wider vision of what a political, social and economic union should be, and fulfils some of the objectives of what all of us in this House believe the European Union should do. Standing up for the rights of consumers should be central to that, applying consumer protection law evenly, fairly and equitably across the bloc.

For too long, Irish citizens have lacked the ability to act collectively with others who have suffered the same negative impact of corporate misdeeds. This legislation will allow them to do that for the first time, albeit in a limited, tightly controlled and proportionate way. This will not give rise to the free-for-all class action suits we are familiar with from across the Atlantic. There is protection against frivolous or vexatious actions by virtue of the fact that only designated bodies will be allowed to act on behalf of a group of consumers. It is important to ensure that these designated bodies will at all times act with the protection of consumer rights in mind. It is also important that they act in a very transparent and accountable way and that their activity is monitored.

This Bill will not affect the rights of decent traders one bit. At the same time, it will strengthen the rights of individual consumers. In other words, somebody who is operating fairly, within the law and with a consumer-centred focus, will have nothing whatsoever to worry about.

I reiterate that in order for the legislation to work and comply with EU law, the small and reasonable amendment we will table on Committee Stage is necessary to ensure that everybody will be able to utilise the provisions of the legislation in full. The Minister of State might indicate when he expects Committee Stage to be taken. It would be useful to establish that.

Deputy Cormac Devlin

I welcome the opportunity to examine the Representative Actions for the Protection of the Collective Interests of Consumers Bill 2023. Fianna Fáil supports this Bill, which is required in order to transpose Directive (EU) 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 latter is part of the European Commission's proposals for a new deal for consumers to ensure that all European consumers fully benefit from their rights under European law.

While the EU already has some of the strongest rules on consumer protection in the world, recent cases like the dieselgate scandal have shown that it is difficult to enforce them fully in practice. This new law is an EU-wide response to recent mass consumer rights breaches by private companies, such as the car emissions scandal of 2015 and the mass flight cancellations of 2017, which were referred to by previous speakers.

The Bill will allow for several cross-border qualified entities to come together to represent the European consumer where they have been harmed by the same alleged infringement that has been caused by the same trader in several member states. Importantly, this will not impose an extra administrative burden on businesses and will not affect the vast majority of traders that treat customers well.

The new deal for consumers package was launched by the European Commission on 11 April 2018. It aims to facilitate co-ordination and effective action from national consumer authorities at EU level and reinforce public enforcement action and better protection of consumer rights. The Bill before us will implement this directive, which is welcome. I thank the Minister of State and his officials for bringing the Bill forward. As the Minister of State indicated, this legislation is complex and also relates to the Department of Justice.

More needs to be done, but the Bill is long overdue. Representative and multiparty actions have been required for some time. This Bill is very welcome on that front. Earlier, I contributed to the debate on the Courts Bill, which will facilitate an increase in the number of judges across our courts system. The Minister of State referred to the fact that the High Court will be hearing such cases, so additional resources for the courts will be required. It is welcome that this is going to happen. Extra funding is being provided to facilitate that.

I look forward to the Bill being progressed by the Select Committee on Enterprise, Trade and Employment.

Minister of State at the Department of Enterprise, Trade and Employment (Deputy Dara Calleary)

Gabhaim buíochas leis an gCathaoirleach Gníomhach agus leis na Teachtaí O'Reilly, Nash agus Devlin freisin for their contributions this evening. I appreciate the broad support for the Bill and I look forward to engaging with the Deputies in respect of the issues they have raised.

Deputies O'Reilly and Nash raised the issue around third-party funding. As indicated, I have written to the Minister of State, Deputy Browne, who is engaging with the Law Reform Commission in order that we will have a comprehensive response in that area. If legislation is passed on foot of the work of the Law Reform Commission, which I cannot anticipate, the new laws will automatically apply to cases brought under this Bill.

I want to transpose this legislation, and Deputy Nash correctly raised the delay in its transposition. I do not want to risk further delays. I am of the view that we can transpose the legislation while the law reform process is ongoing. I will certainly communicate again with the Minister of State, Deputy Browne, ahead of Committee Stage in order to try to get an indication of the timeline of the law reform process. By the time we get to Committee Stage, I will be in a better position to give that indication.

I thank the Deputies for their comments on the Bill. I appreciate the broad support offered. As the Deputies stated, the legislation seeks to transpose the EU directive, which is an EU-wide response to recent mass consumer breaches, such as those relating to private companies and involving car emissions, mass flight cancellations and property issues, as referred to by Deputy O'Reilly. It will allow for several cross-border qualified entities to come together to represent European consumers where they have been harmed by the same alleged infringement that has been caused by the same trader in several member states.

The legislation will not impose an extra administrative burden on businesses. As already stated, it will also not affect the vast majority of traders and companies that treat their customers very well. This legislation has the improvement of consumer protection at its heart. Its enactment will be good for consumers and responsible traders alike. It will make it easier for consumers to group together and to seek redress where a large number of them have been affected by the breach of their rights, either at home or in another European country. It will allow that to be done through a designated qualified entity at the High Court on behalf of consumers.

I look forward to constructive debate on Committee Stage. I thank the three Deputies for their contributions.

Question put and agreed to.

Dáil Éireann díospóireacht - Wednesday, 19 Apr 2023