French bill introducing a unified legal regime for class actions

On 8 March 2023, the French National Assembly passed a bill that aims at increasing the recourse to class actions.

Background

Class actions were introduced in France by Law No. 2014-344 (“Hamon Law”). Initially limited to consumer and competition matters, class actions were extended in 2016 to healthcare, discrimination, data protection as well as environment disputes, and then further extended in 2018 to housing rental matters.

However, class actions have had limited success in France so far, as only 32 actions have been launched since 2014 and only very few decisions on liability have been rendered. A parliamentary report published in June 2020 therefore recommended

• to adopt a general regime of class actions, not limited to a specific sector, and 
• that legal standing is also granted to (i) associations whose purpose includes the subject matter of the dispute and which have existed for at least two years, and (ii) ad hoc associations of at least 50 natural persons, or at least 10 legal persons, and which have existed for at least two years.

A draft bill dated 15 September 2020 followed these recommendations, but was not examined as it was submitted a few months before the adoption of the EU Collective Redress Directive. To transpose this Directive into French law, a new bill was submitted to the French National Assembly on 15 December 2022. Further to various amendments filed by members of the Parliament, the National Assembly adopted the text on 8 March 2023. The text will now be examined by the French Senate.

Main elements of the bill

The bill includes the following aspects:

• General regime: A general regime will replace the existing sector-specific rules.
• Opt-in: The bill adopts an opt-in approach.
• Legal standing: Legal standing will also be granted to

1. any non-profit association existing for more than 2 years whose purpose covers the subject-matter of the dispute;
2. any non-profit association representing at least 50 natural persons placed in a similar situation, or at least 5 legal persons which have existed for at least 2 years;
3. any non-profit association representing at least 5 local and regional authorities (collectivités territoriales);
4. qualified entities that can bring cross-border representative actions, as defined by Article 5 of the Directive;
5. the Public Prosecutor (as the main party in the action for the cessation of the infringement, or as a joint party in all kind of class actions).

• Scope: Class actions may be introduced in order to obtain either the cessation of an infringement, and/or the reparation of any kind of damages. By contrast, under the current regimes, the recoverable damages depend on the type of collective redress:
  • In class actions relating to consumer, competition and housing rental matters, damages can only be awarded for pecuniary losses resulting from material damages (dommage matériel).
  • In class actions relating to public health, damages can only be awarded for damages resulting from physical harm suffered by the users of the health care system.
  • In class actions relating to environmental law, damages can be awarded both for physical injuries and material losses arising from damages caused to the environment.
  • In class actions relating to discrimination, compensation can be awarded for any kind of damage.
  • In class actions relating to data protection, damages can be awarded for moral damage or material losses.
• Civil penalty: If the misconduct is considered to be deliberate, and if it has caused a damage to more than one natural or legal person, the defendant can be condemned to a civil penalty of a proportionate amount to the gravity of the misconduct and the corresponding profit for the defendant. If the defendant is a legal person, the civil penalty can amount to up to 3% of the incriminated company’s turnover excluding tax.
• Financing: Plaintiffs must file a statement indicating that (i) they pursue a non-profit purpose, and that (ii) third-party funders do not have any economic interest in the filing or the outcome of the class action, and are not a competitor of the defendant. In the absence of this statement, the claim will be declared inadmissible.
• Costs of litigation: If the action is considered to be admissible, a court can decide that the advance on costs of the investigative measures must be covered in whole or in part by the State. If the action is dismissed, the court may order the State to bear the costs of the proceedings.
• Jurisdiction: Specific tribunals will be designated to have exclusive jurisdiction to hear class actions.
• Public register: The Minister of Justice will keep a public register of pending class actions before all courts.

Finally, the French bill provides that the Minister in charge of Consumer Matters can issue an accreditation (agrément) allowing a legal entity to introduce cross-border class actions. In line with Article 3 of the Directive, said legal entities must demonstrate (i) 12 of actual public activity in the protection of consumer interests, (ii) a statutory purpose demonstrating that they have a legitimate interest in protecting consumer interests, (iii) a non-profit-making character, and (iv) that they are independent and are not influenced by persons other than consumers, in particular by traders, who have an economic interest in the bringing of any representative action, including in the event of funding by third parties, and, to that end, has established procedures to prevent such influence as well as to prevent conflicts of interest between itself, its funding providers and the interests of consumers.

Next steps

The bill was transmitted to the French Senate on 9 March 2023. While all member states should have implemented the Directive by 25 December 2022, with a further six months permitted for the new provisions to come into effect, it will likely take another few months before France agrees on a final text.