FAQs: The new German representative class action

After intense discussion in politics and the public, the Implementation Act relating to the EU Collective Redress Directive (Verbandsklagenrichtlinienumsetzungsgesetz, VRUG) passed Germany’s second legislative chamber today and will enter into force this autumn. With its centrepiece, the new consumer-friendly Consumer Rights Enforcement Act (Verbraucherrechtedurchsetzungsgesetz, VDuG), companies are exposed to representative class actions and corresponding liability risks in various areas of law.

In a nutshell:

• The VDuG introduces representative class actions directed at redress and, in particular, compensation for damages which have so far been alien to German law.
• Unlike the EU Directive, the VDuG is not limited to actions for infringement of certain EU consumer protection acts.
• Under the VDuG, small businesses (< 10 employees / < 2 million euros of annual turnover) can also benefit from the representative action, in addition to consumers.
• Qualified entities that must meet certain requirements are entitled to sue as a representative in their own name (e.g., consumer protection organisations).
• In order to benefit from the outcome of the action, consumers / small businesses must register their “essentially similar” claims in the register of representative class actions no later than three weeks after the conclusion of the oral proceedings (opt-in model).
• The procedure is roughly divided into a court phase, a settlement phase and an implementation phase. The latter includes the examination of individual claims and is conducted by a court-appointed administrator.

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