Spain
Implementation of the European Directive on representative actions
Which national regulations transpose the Directive into national law?
On 20 December 2022 the Spanish Government Cabinet approved the draft bill on the transposition of the Directive into Spanish law (Anteproyecto de Ley de acciones de representación para la protección de los intereses colectivos de los consumidores). The draft bill has not yet been debated nor passed before Congress and the Senate as is required for it to enter into force.
Who is entitled to bring a representative action?
(i) Entities authorized in Spain under the Consumer Protection Act; (ii) entities designated in other EU Member States for the purpose of bringing cross-border representative actions, provided their designation was prior to the infringing conduct and that they appear on the relevant list published by the European Commission; (iii) the Public Prosecutor's Office; (iv) the Directorate General for Consumer Affairs; and (v) other regional and local bodies authorized to bring representative actions. The requirements established under the Spanish Consumer Protection Act to grant entities authorization to bring representative actions are inspired by those established in the Directive. Among others, to be authorized the must have proven an effective and public performance of its consumer protection activity for a minimum period of 12 months prior to the date of application for its designation as a qualified entity, that it is a non-profit entity, that it is not in a situation of insolvency and that it is not involved in a situation of conflict of interest.
What can be the subject matter of a representative action?
The draft bill states establishes that it applies to proceedings in which representative actions are brought against conducts of businessmen or professionals that infringe the collective rights and interests of consumers and users.
The scope of application is quite broad. In fact, the draft bill’s explanatory memorandum states that it intends to cover actions against any type of infringement in which the collective rights and interests of consumers and users have been harmed including and not limited to those foreseen in annex I of the Directive.
Which individual consumers are represented in a representative action?
The current draft law provides for an opt-out model. Following the admission of the claim and a hearing to establish the objective and subjective scope of the action, the court processing the claim will establish the deadline for the consumers affected by the action to manifest their will to be excluded from the proceedings and not be affected by their outcome.
Exceptionally, the court may decide for an opt in model to apply through which only those consumers and users who have expressly manifested their willingness to be bound by the action and by the outcome of the proceedings, shall be affected by the action. This decision may only be adopted by the court if it becomes necessary for justice to be administered correctly provided that the amount claimed or the value of the compensation requested per beneficiary exceeds 5,000 euros.
The draft bill provides for the creation of a Public Registry of Class Actions operated by the Ministry of Justice. The purpose of this Registry is to promote transparency and consumer and user’s awareness of ongoing class actions by consumers and users can be aware of them. All consumers and users can keep abreast of the progress of collective injunction and redress proceedings. And redress procedures and thus be able to exercise their rights.
What will be the outcome of a representative action?
If all parties are in agreement, the court may first decide on the merits rather than both the merits and quantum simultaneously. If the proceedings are split in such way and the court finds that the defendant is liable, the court will grant the claimant 15 days to submit pleadings establishing the quantum they consider must be due. The defendant will subsequently be granted another 15 days to make their own allegations on the quantum following which a hearing will be held. The court will then issue a judgment determining the amounts to be paid to each consumer or to each of the various categories into which they are grouped.
The judgment may be appealed before a Higher Court. The Higher Court’s decision on the appeal may also be subject to appeal before the Supreme Court.
If the number of consumers and users who may benefit from the judgment cannot be determined, the judgment shall establish the maximum amount which, according to its estimates, must be paid to the concerned consumers.
The claimant may request for said amount to be increased if it becomes insufficient. This request must be justified and must propose the new amount to which the judgment should be increased. This request shall be transferred to the defendant and the court will subsequently hold a hearing and issue a written decision on the matter.
Are there particular rules for the disclosure of evidence?
The draft law provides for additional rules for the disclosure of evidence not available in ordinary proceedings. A court may order the defendant or a third party to disclose evidence in their possession, including that which is necessary to determine the identity of the affected consumers, subject to certain conditions. The court may also order the plaintiff or a third party to produce evidence at the defendant’s request. The court shall limit the disclosure of evidence in accordance with the principle of proportionality and considering consideration the legitimate interests of all parties and interested third parties.
As a general rule, the costs incurred by the defendant as a result of the production of the requested documents will not be reimbursed.
Is third party funding possible?
Third party funding is allowed at the court’s discretion. The court will deny third party funding if the third-party funder is a competitor of the defendant or dependent on him or has an economic interest in the claim or its result. Since the acting consumer organisation may not sue for profit, it remains to be seen how third-party funders will deal with this or whether they will be interested in financing at all.
Conclusion
Although Spanish law already has mechanisms in place aimed at consumer protection which allow to bring class actions, the draft bill introduces a special unified process to bring such claims. The new process introduced by the draft bill grants the possibility of exercising merely declaratory actions and excludes the intervention of individual consumers in representative proceedings, for the sake of a more efficient management of the process. Consumers not participating in the representative action remain free to bring individual actions although the draft bill grants representative actions interruptive effects in respect to the potential filing of individual actions. Another innovative aspect of the draft bill not previously foreseen under Spanish law is the regulation of redress agreements.
Contact
Antonio Bravo
T: +34 914 294 333 E: abravo@eversheds-sutherland.es
Pilar Colomes
T: +34 914 294 333 E: pcolomes@eversheds-sutherland.es
Sara Ganzarain
T: +34 914 294 333 E: sganzarain@eversheds-sutherland.es
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