German Government Releases Draft Act On Class Actions In Germany

Author:Mr Jakob Hübert, Christian Fulda, Dieter Strubenhoff and Anna Masser
Profession:Jones Day

The Situation: As agreed in the Coalition Contract of the current German government, the Federal Ministry of Justice officially presented the Act on Model Declaratory Proceedings ("Draft Act") on May 9, 2018, after protracted last-minute negotiations within the government.

The Plan: The Draft Act, if ratified, would give qualified institutions the right to raise claims on behalf of groups of consumers in order to obtain a declaratory judgment. The plan is to enact the Draft Act by November 1, 2018.

Looking Ahead: The European Commission has issued a proposal along the same lines, and its suggestions go far beyond the draft provided by the German government. Germany is therefore already under pressure to anticipate the next legislation in this regard, even though the Draft Act has not even been enacted yet. It is therefore expected that extensive—potentially divergent—actions will be taken on Member State and EU level in this area of law.

Presented by Germany's Federal Ministry of Justice, the Draft Act, if ratified, would grant qualified institutions the right to bring class actions for groups of consumers in order to attain a declaratory judgment. Enactment of the Draft Act is planned for November 1, 2018.

The Draft Act's Core Elements

An action in relation to a claim or legal relationship between a consumer and a company may be raised by any qualified institution that has been registered for four years under the German Injunctive Relief Act or (if foreign) with the European Commission under Directive 2009/22/EC. Further, the institution must consist of 10 associations or 350 natural persons. It may not receive more than 5 percent of its financial means from corporate entities and may not raise model proceedings in order to make profits.

In order to initiate the claim proceedings, the consumer association needs to demonstrate that it represents 10 identified consumers that are affected. The initiation of the proceedings does not prevent consumers from filing individual claims. Once a model proceeding has been initiated, no further model proceedings may be commenced based on the same set of facts against the same defendant.

To have the proceedings executed in court, 50 applicants must access the claim by registering their claims with the claims register within a time frame of two months.

Any consumer affected by the alleged wrongdoing has the right to join the ongoing model proceedings by registering his or her claim at least one day...

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