Austria
Implementation of the European Directive on representative actions
Which national regulations transpose the Directive into national law?
The EU-Class Action Directive was transposed into Austrian law by the ‘Verbandsklagen-Richtlinie-Umsetzungs-Novelle’ (VRUN) which entered into force on 18 July 2024.
Besides amending already existing legislation (civil procedure code, consumer law etc.) the centerpiece of the transposition is the enactment of the new ‘Qualified Entities Act’ (‘Qualifizierte Einrichtungs-Gesetz’, ‘QEG’), regulating the requirements and status of the consumer protection institutions (qualified entities) entitled to represent consumers and bring collective actions before the (exclusively) competent Commercial Court of Vienna.
The novel class action regime will coexist with the pre-existing options for collective actions under the Austrian Consumer Protection Act and the Austrian Unfair Competition Act.
Who is entitled to bring a representative action?
According to the QEG, these qualified entities are legal entities established under Austrian law, in any case comprising the already existing representative bodies that have so far acted for collective redress under the pre-existing methods.
Further, other private legal entities may henceforth request to being aggregated as such qualified entity by the federal cartel authority as supervisory authority. The primary requirements for obtaining such a ‘license’ are that the applying legal entity must operate independently to protect the public interest of consumers and must be free from any conflicts of interest with companies. For example, a qualified entity may not receive more than 20% of its financial resources from corporate sources or donations.
What can be the subject matter of a representative action?
Material subject:
The Austrian implementation exceeds the material scope of the EU Directive by not being restricted to infringements related to EU law or specific economic sectors. Instead, the new Austrian class action framework applies to any infringement that harms or threatens to harm the collective interests of consumers. This gives the planned Austrian regulation a potentially wide-reaching application, comprising inter alia violations of telecommunications, product safety, data protection law, or general civil law by an entrepreneur against a consumer.
However contrary to the possibility in the EU Directive and other Member States implementations, class actions in Austria are not provided for in the B2B area (SME) and remain reserved explicitly for consumers.
Procedural subject:
Compared to the pre-existing collective actions, the new Austrian class action implementation introduces both actions for an injunctive relief as well as request for damages/compensation. If ‘unlawful conduct by an entrepreneur impairs or threatens to impair the collective interests of consumers’, a qualified entity may seek to cease such conduct by way of an injunction claim. If such conduct causes (primarily monetary) disadvantages for a wide range of consumers (50 +), collective damages lawsuit before the Commercial Court of Vienna are admissible, if the damages accrued to the consumers under ‘essentially similar circumstances against the same entrepreneur’.
Which individual consumers are represented in a representative action?
Consumers who suffer damages under unlawful conduct of (the same) entrepreneur in essentially similar circumstances may join (opt-in model) a class action within 3 months after the filed class action has been announced in the legal gazette. For a class action to be ultimately admissible, a minimum threshold of 50 participating consumers must be reached.
The qualified entity may reject a consumer’s accession without providing reasons; conversely, the consumer cannot withdraw or invoke the accession.
A qualified entity may charge an admission fee for joining a representative action; however, this fee may not exceed 20 percent of the claimed amount or €250, whichever is lower.
Contrary to the EU-Directive and transposition in other Member States, the Austrian methods merely entitles (collective representatives of) consumers; Entrepreneurs who have been infringed by other entrepreneurs cannot assert such B2B claims by way of the new class action system.
What will be the outcome of a representative action?
There are multiple possible outcomes for a class action in Austria:
- Initially, the endeavored class action may be rendered inadmissible if e.g., fewer than 50 consumers ultimately join the class action.
- The dispute may be settled; however, in deviation from standard procedural rules, such settlement requires the court’s final approval.
- An interim declaratory relief may be requested if general effects for all participating consumers are unfolded.
- The typical outcome of damages actions is compensation for the (primarily financial) loss suffered by an individual consumer. In the first step, the court will determine whether a wrong occurred based on the general merits of the case (applicable for all consumers participating in the class action). In the second step, the court may award compensation individually on the basis on the specific damage suffered by each consumer.
- An injunction order mandating the sued entrepreneur to cease a certain unlawful conduct.
Are there particular rules for the disclosure of evidence?
The standard Austrian procedural rules on evidence apply. Unlike many common law jurisdictions, Austria follows the civil law approach, where discovery and document production are vastly unfamiliar concepts.
However, the burden of proof for qualified entities is alleviated as they are not required to provide evidence of actual damages incurred by consumers, nor to demonstrate (malicious) intent or gross negligence by the business when pursuing 'mere' injunction actions.
Is third party funding possible?
Third-party funding of class actions is explicitly permitted, with no percentage limit on contributions by litigation funders (but see the limitation on admission fees mentioned above). However, the Austrian transposition makes the independence of the third-party funder mandatory: funding from competitors of the defendant or from parties economically or legally dependent on the defendant is inadmissible.
Moreover, the qualified entity may condition an individual consumer's participation in the class action on entering into a contract with a third-party litigation funder.
Conclusion
The wide material scope of the Austrian class action implementation opens an unprecedented litigation risk if entrepreneurs infringe B2C compliance obligations that clearly exceeds the scope of the pre-existing class action possibilities in Austria.
Businesses must, therefore, intensify their focus on compliance with consumer protection and data privacy regulations. While it remains uncertain how significantly the new 'class action' framework will resonate with future consumer organizations, past cases demonstrate that there is a viable 'market' for bundling such proceedings. This development poses a significant threat to companies primarily targeting consumers.
Contact
Georg Röhsner
T: +43 151 620 160 E: georg.roehsner@eversheds-sutherland.at
Fridolin Fahringer
T: +43 151 620 160 E: fridolin.fahringer@eversheds-sutherland.at
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