Claiming consumers' rights: patterns and limits of adversarial legalism in European consumer protection.

VerfasserStrunck, Christoph

1 Introduction

A specter is haunting Europe-the specter of class actions. Usually, European business groups jealously look to the United States with its flexible markets and benign government regulation. But when it comes to consumers' legal rights and their private enforcement most business groups would rather have more government intervention than any kind of adversarial legalism American style. However, there are signs that private enforcement of consumer protection is on its way to Europe, giving courts a bigger role.

In the United States, the role of courts and the judiciary in policy-making has long since been a subject for political science. Due to the fragmented system of government, common law and activist judges court rulings may serve as equivalent for comprehensive policies (Reagan 1987).

Consequences of different legal systems have often been neglected in European policy analysis. Yet there are signs of change (Rehder 2007). Many scholars point out that the European Union shares one feature that fuels adversarial legalism in the US: a fragmented political system (Kelemen 2006). Also, the European Commission has to rely on legal instruments to see European rules enforced.

In the European Union, conflicts about mobile phone rates, energy prices or food labeling are looming, too. In comparison to the US those conflicts pose different challenges. The more European markets become integrated the more consumer protection turns into an issue beyond the nation state. In complex and cross-cutting markets it is getting difficult to enforce the law from the perspective of governments and the European Commission.

The European Union with its fragmented political system and its integrating markets is a peculiar setting when it comes to consumer protection. Government agencies are not capable of enforcing the law on their own. This is why litigation and collective redress have made headway in European debates as the quote by Commissioner Kuneva indicates.

However, member states still have different legal systems. Not all of them allow for bundling claims and class actions. In the meantime a couple of countries have adopted laws that resemble the American way of law at first glance. There are even signs of convergence among European countries. If consumer litigation congealed into one model of collective redress it would enable the European commission to embark on a common framework in the future.

So the basic question is: has adversarial legalism already affected consumer policy in Europe? This paper holds that the American way of law still meets strong obstacles in European consumer policy. It is not class actions but collective redress by public interest groups that increasingly shapes European consumer policy, both at national and European level. The emerging European regulatory state and business groups' resistance to American class actions have paved the way to a light version of adversarial legalism in European consumer policy.

In the literature on policy convergence scholars allude to adversarial legalism in general. This paper takes a closer look at adversarial legalism in consumer policy. It draws on recent empirical studies on European countries to illustrate distinctive legal features of consumer protection. Whatever the European Commission aims at, those national legal cultures curb a fully fledged system of class actions in Europe. However, the Commission has managed to indirectly influence the way collective redress is handled in member states.

The paper will first highlight the increasing role of private actors when it comes to enforcing consumer protection. In a second section the legal framework in member states is presented. Those empirical examples show that class actions are unlikely in most European countries.

Yet the European Union provides an additional layer for litigation in the name of consumers. Looking at the European level, the US and the EU share some features that usually ease adversarial legalism. Thus in a third section the roots of adversarial legalism in the US and the European Union are discussed. That section draws on the concept of the "regulatory state" (Majone) in which law enforcement is mainly delegated to independent agencies and private actors. The European Union has clearly become that kind of regulatory state. In a fourth section the paper explores independent variables that help to explain the EU approach towards law enforcement in consumer policy. In the last section the paper will shed light on recent changes at EU level. Those changes might help to craft a common European framework when it comes to consumer litigation.

2 New roles for private actors in consumer protection

What is the rationale behind private law enforcement in consumer protection? Following economic theories of law breaches of consumer law or corporate misconduct are not very likely to be sanctioned (Sunstein 2000). Especially in the case of small claims individual consumers are not willing to sue or accept any other burden. Thus if no other actor steps in to enforce the law it will remain ineffective. Even if consumers were willing to sue they would be facing a time-and money-consuming procedure which would deter a lot of possible plaintiffs. As a result, markets do not work properly because they reward inefficiency and even fraud.

Governments cannot detect any possible flaw in consumer protection and sometimes there are not willing to do that, either. So in the sense of effective markets and comprehensive law enforcement it is new incentives to consumers or collective actors to sue or deal with companies that can bring about change. In theories of the regulatory state it is those judicial functions that are delegated to interest groups. This distinctive form of delegation marks a difference to theories of neo-corporatism where it is more about quasi-public or quasi-executive functions (Lehmbruch/Schmitter 1982).

Closer scrutiny reveals that paths to private law enforcement are multi-fold. This holds true for Europe, as well. If you take a look at what can be called consumer redress you can see legal as well as non-legal paths. The following procedures figure most prominently in European consumer redress:

* Direct negotiation,

* Mediation and arbitration,

* Small claims procedures,

* Collective action for damages,

* Actions for injunctive relief.

In a recent study for the European Commission Stuyck et al. (2007) figured out the scope and impact of those procedures in different European countries. Their aim was to analyze alternative dispute resolution beyond classic court rulings. Consequently, they also touched on the subject of group action or collective action. They distinguish between "group actions", "representative actions" and "test procedures". All three procedures can be found in European countries, whereas the classic group action in terms of American class action is barely found in Europe.

Group actions usually occur when individual claims are bundled before going to the courts. American class actions fit in this model. The most important feature is an opt-in or opt-out clause. If group actions are based on an opt-in system possible plaintiffs have to be notified in advance (Mulheron 2007). Those possible class members have to explicitly agree to be included in the claim. Consequently, any decision is binding only for those who have agreed. Also, opt-in systems are more demanding than opt-out. In an opt-out system a note is sent to possible class members once the case has reached the court. If people do not answer they are automatically included in the claim.

Of all class actions the opt-out system is the most effective one from the perspective of plaintiffs. It is also the one which is typically applied in the United States. Yet in Europe doubts have been raised whether opt-out might be at odds with due process rights in Continental law (Micklitz/Stadler 2006). Only the Netherlands and Portugal have introduced opt-out clauses, yet with more safeguards for individual members.

There are some additional features that shape group actions such as scope of application, rules of standing and a range of procedural dimensions. Of course, costs are an overwhelming aspect because their distribution and compensation sets crucial incentives for group actions. Costs are linked to notifying class members and all procedural costs, including lawyers' fees. Most...

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