Romania
Implementation of the European Directive on representative actions
Which national regulations transpose the Directive into national law?
The Directive (EU) 2020/1828 on representative actions for the protection of the collective interests of consumers and repealing Directive 2009/22/EC (the “Directive”) has been implemented in Romania with the Law no. 414/2023 regarding the conduct of representative actions for the protection of the collective interests of consumers, applicable from 23 December 2023 (the “Law no. 414”).
Even prior to the adoption of Law no. 414, there were cases in Romania where lawsuits were initiated jointly by multiple consumers or even by NGOs acting to protect their rights. However, these actions encountered numerous logistical limitations or regulatory gaps. Consequently, in our country there were no practical situations where it was possible to ensure the representation of a very large number of consumers within the same legal proceeding.
The new law largely adopts the mechanisms proposed by the Directive and introduces innovations, both in terms of the conduct of the proceedings and the specific measures that companies may be compelled to undertake.
Who is entitled to bring a representative action?
In accordance with the Law no. 414, representative actions may be initiated by qualified entities, which can include both state bodies (if authorized by law or public authorities for this purpose) and non-governmental organizations that meet a series of restrictive criteria established by law.
The requirements for qualified entities, established under the national law, are inspired by the Directive.
Among other things, the qualified entity must prove that:
- it is a legal entity established in accordance with the Romanian Civil Code;
- it has at least 12 months of effective public activity in the field of consumer interest protection;
- it is a non-profit organization;
- it operates independently;
- it is not subject to insolvency proceedings and is not declared insolvent or in a state of insolvency;
- presents publicly, through all communication channels (including its own website) information to demonstrate that it meets the criteria listed above, as well as information regarding its sources of funding, organizational and managerial structure, membership structure, activities and objectives.
The verification of compliance with these conditions falls under the court jurisdiction, serving as a safeguard for companies against illegitimate claims.
It is also important to note that qualified entities previously designated in another European Union Member State for the purpose of initiating cross-border representative actions, may bring such representative actions before the courts in Romania.
What can be the subject matter of a representative action?
According with Annex 1 of Law no. 414, representative actions are currently allowed for claims relating the violation of 66 normative acts. These acts address both general consumer protection and more specific fields, such as liability for defects, financial industries, transportation, communications, tourism, electricity and natural gas industries, retail, and personal data protection, among others.
Analyzing the domains from Annex 1, it is clear that the legislator aims to cover as many areas related to consumer protection, as possible.
Which individual consumers are represented in a representative action?
All individual consumers are entitled to participate in a representative action through an opt-in model or an opt-out one, depending on the purpose of the representative action.
The opt-in model applies to collective actions aimed at obtaining remedial measures. In such cases, consumers must provide their explicit consent within 30 days from the registration date of the representative action.
On the contrary, for representative actions intended to seek measures to terminate certain practices, consumers are not required to provide their consent to be represented by the qualified entities. They are only afforded the opportunity to indicate their objection to be represented by the qualified entity (opt-out model).
What will be the outcome of a representative action?
Qualified entities may request two categories of measures in court:
a) the provisional or permanent cessation of unlawful practices;
b) remedial measures of the unlawful practices.
With regard to a) cessation measures, these are, by their legal nature and substance, measures governed by special legislation, depending on the specific violations they address. The primary distinction lies in the fact that we are not dealing with an individual action, but rather with a representative action aimed at protecting the collective or group interests of individual consumers.
On the other hand, the notion of b) a remedial measure, is defined by Article 3(i) of the Law no. 414 [corresponding to Article 3(10) of the Directive], as a measure that obliges the professional to provide the affected consumers with remedies, such as compensation, repair, replacement, price reduction, contract termination, or reimbursement of the paid price, in accordance with legal provisions.
Are there particular rules for the disclosure of evidence?
In general, the existing provisions on disclosure of evidence will apply in the same way to representative actions. Therefore, the Law 414 does not establish distinct rules regarding the disclosure of evidence.
Is third party funding possible?
Law no. 414 introduces for the first time in Romania the concept of third-party litigation funding.
As an additional measure to protect companies against abusive litigation, the new regulation imposes a series of conditions and restrictions on third-party funding for representative actions. For example, actions cannot be brought against a company that is a competitor of the funder or against a defendant on whom the funder is dependent. Furthermore, the funder is prohibited from influencing strategic decisions related to the funded litigation.
The court is responsible for reviewing and ensuring compliance with these conditions and can deny third party funding if the above-mentioned criteria are not met.
Conclusion
In conclusion, the Directive outlines only general guidelines for member states, which, by virtue of their procedural autonomy, must explicitly establish internal rules of jurisdiction as well as procedural norms regarding the adjudication of representative actions brought by qualified entities to protect collective consumer interests.
Law 414 fundamentally changes the manner in which disputes between consumers and companies are conducted, because it introduces for the first time in Romania the representative action concept. In this regard, practices in all member states become relevant for understanding and anticipating the effects of this new reality for our legal system.
Contact
Sorin Susnea
T: +40 21 311 2561 E: sorinsusnea@eversheds.ro
Alexandra Sulea
T: +40 21 311 2561 E: alexandrasulea@eversheds.ro
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