Estonia
Implementation of the European Directive on representative actions
Which national regulations transpose the Directive into national law?
The Directive on Representative Actions is transposed into Estonian law by the so called “Tsiviilkohtumenetluse seadustiku ja teiste seaduste muutmise seadus (kollektiivse esindushagi menetluse loomine)” (Act amending the Code of Civil Procedure and other Acts (creation of a collective representative action procedure)). The Act is still in draft law status and is in its second reading in the Parliament.
The Directive is based on a concept that is new for Estonian legislation, according to which a collective representative action procedure is available in court proceedings, which can be invoked in cases where a breach of law by a trader has harmed or is likely to harm the collective interests of consumers or data subjects.
Who is entitled to bring a representative action?
The qualified entities for collective actions under the draft law would be the legal entities included in the list of qualified entities established by a Regulation of the Minister responsible for the field. The Consumer Protection and Technical Regulatory Authority; the Financial Supervision Authority; and the Data Protection Inspectorate would also be able to bring a collective representative action.
The court may allow collective actions to be brought in certain cases by a legal entity and by a cross-border qualified entity if it is included in a list of cross-border qualified entities established by the European Commission and available on the website of the Ministry of Economic Affairs and Communications. Individual consumers themselves do not have the right to bring representative actions.
What can be the subject matter of a representative action?
The representative action would be available for all consumer claims in private law disputes. Collective representative actions would be available in cases where a trader’s infringement has harmed or is likely to harm the collective interests of consumers or data subjects.
Collective actions could be brought to protect the collective interests of consumers or data subjects:
- a declaratory and injunction to refrain from further trader’s infringements or prohibiting further infringements;
- the determination of legal remedies available to consumers or data subjects individually.
Which individual consumers are represented in a representative action?
In the case of the Estonian collective actions regulation, it is envisaged to implement a late opt-in model, whereby consumers can decide to join a collective action only at the stage of the determination of remedies in a representative action, i.e. when the court has already found an infringement and has an overview of the possible means and scope of compensation.
What will be the outcome of a representative action?
As a result of the procedure, the court will make a decision in an action-by-petition procedure. If the court does not find an infringement, the court terminates the proceedings, and the decision is final when the possibilities for appeal have been exhausted. If the court confirms the claim for an injunction to refrain from further infringements, the decision is also final.
If the court upholds the claim for compensatory measures (application of remedies), the court will continue with the proceedings. If the court orders compensatory measures in an interim decision, consumers who meet the criteria set out in the decision will be granted a short period of time (e.g. three months) starting after the entry into force of the decision in which to submit their claims for compensatory measures. Monetary compensation will be awarded to consumers or data subjects, and fines may be imposed if the company fails to comply.
Are there particular rules for the disclosure of evidence?
The simplifying exception regarding evidence is that in a collective representative action procedure for a declaration of infringement and for an injunction to refrain from further infringements, the petitioner does not have to prove that consumers or data subjects have suffered damage as a result of the infringement of the trader or that the trader is at fault.
Is third party funding possible?
The qualified entity may be financed by a third party. Conflicts of interest must be avoided. Where the third-party funder has a financial interest in the filing or outcome of the collective representative action, it shall be prohibited from doing so in order to avoid a conflict of interest:
- improperly influence the entity competent in the representative action;
- finance a representative action against a competitor or a person on whom the funder depends;
- otherwise divert the representative action from the protection of consumers’ collective interests.
A collective representative action for the determination of legal remedies brought by a qualified entity may be funded by equal contributions or donations from members of the organisation.
Where the funding of a collective representative action is agreed in such a way that the funder is entitled to a share of the compensation payable to consumers or data subjects in the event of a successful representative claim, the funder may not agree to a right to a greater share than 30 per cent of the compensation payable.
Conclusion
The draft establishes a collective representative action procedure as a type of action-by-petition procedure that can be used in cases where a breach of law by a trader has harmed or is likely to harm the collective interests of consumers or data subjects. For example, collective actions may be useful in situations where the harm suffered by many consumers individually, as a result of the same infringement by the trader, is sufficiently limited that individual consumers would have no interest in pursuing their claims in court on their own. The consumer does not have to initiate enforcement proceedings themselves in order to enforce a court decision on a remedy identified in a representative action, as it will be enforced by the qualified entity that brought the collective action before the court.
An innovative feature is the possibility for individual consumers to bring a collective representative action to determine their legal remedies, e.g. redress. The funding of the qualified entities will have to be controlled and it will have to be ensured that the filing of a representative action by a qualified entity is not hindered.
In order to be adopted, the draft law must undergo three readings, during which amendments may be proposed which could lead to changes to the draft.
Contact
Kaspar Kaljurand
T: +372 622 9990 E: kaspar.kaljurand@eversheds-sutherland.ee
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