Italy Implements the First Consumers' Collective Interests Representative Action
The Italian transposition of the EU Directive 2020/1828 on representative actions by means of Legislative Decree no. 28/2023 ("Representative Action") will create a "new deal for consumers" package and provide them with broader redress rights across a wide range of sectors. Ultimately, the Decree, which takes effect on June 25, 2023, will heighten the litigation risk for companies.
For the first time consumers' "collective interests," as opposed to "subjective rights," are explicitly recognized and protected by an ad hoc tool, the Representative Action, which has made significant changes in the domestic consumer's legislative framework. Consumers will now enjoy special, broader redress rights, which run in parallel with the class action governed by the Italian Code of Civil Procedure.
Consumers' collective interests may be brought exclusively before the Specialized Business Division of any competent civil court and solely by the "qualified entities" registered with the competent local or European authorities without any specific mandate from the consumers. Such qualified entities enjoy standing to sue private or public entities and/or professionals ("Professionals") should the Professionals' conduct have actually or potentially caused harm to consumers in the following areas among others: unfair trade practices, consumer goods warranties, misleading advertising, transportation, electricity, gas, tourism, e-commerce, digital services, data protection, product and food safety, insurance and investment funds.
In order for the Representative Action to be admissible, the qualified entities should precisely identify the group of consumers intended to be represented. Jurisdiction, applicable law, and any third-party funding should be clearly set out in the statement of claim.
Injunctive and/or compensatory relief may be sought. When the former is invoked, the qualified entities may seek cease-and-desist orders against Professionals, the publication of any sentence against them, and petition for urgent provisional orders, only after 15 days of a formal out-of-court cease-and-desist notice. When the latter is invoked, the lawsuit is admissible and damages may be awarded only if the qualified entities prove that there exist homogeneous compensatory rights across the represented class.
Up to the final hearing, the qualified entities and the Professionals may submit to the court a joint settlement proposal, which the court is expected to accept anytime as long as it does not conflict with mandatory legal provisions or does not provide for obligations reasonably impossible to perform under the circumstances.
The Representative Action is without prejudice to any consumer's individual redress actions. Effective June 25, 2023, Representative Actions may be instituted in Italy for violations that occur from that date onward.
As the June 25, 2023, effective date applies to all EU Member States, though many have yet to pass any domestic implementation laws, increased attention and activity is expected on this new, powerful redress tool in the coming weeks.
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