Claiming compensation through collective actions
The purpose of the Class Action Act (Zakon o kolektivnih tožbah; ZKolT) is to facilitate injured parties in claiming damages arising from a mass harm situation. Due to the disproportion between the value of each claim and the costs of the procedure, ignorance or passivity, the injured parties, for the most part, did not opt to bring an action in individual litigation. A good example is the recent “dieselgate” affair, massive violations of workers’ rights or the problem of overpayment of electricity bills a few years ago. The institute of collective action may be used in disputes arising from consumer protection, competition, environmental protection, personal data protection, financial services legislation and investor protection.
ZKolT applies a collective damages action, pursuant to which an eligible person claims compensation for the loss of benefit to all those who have suffered damage. Compensation may relate to damages, repayment or fulfilment of the contract. A collective lawsuit can only be filed by an organisation (e.g. a consumer organization, a trade union, etc.), or by a public authority, a senior state attorney (this is a new function that will be introduced by the State Attorney’s Office Act), but not an individual.
As an additional form of protection of collective interests ZKolT regulates a collective injunctive lawsuit, on the basis of which a legitimate person demands that the mass harm situation be brought to an end (for example, in the field of protection against discrimination). Based on the principle of amicable settlement of disputes, ZKolT introduces a collective settlement institute.
The court decides whether to use an opt-in system, in which the judgment binds only those members who declare that they want to be involved or an opt-out system, where the judgment binds all members who declare that they do not want to be involved. If the court grants the claim in the judgment, it can determine the total amount of compensation or determine the amount that an enterprise must pay to each member who meets the eligibility criteria set out in the judgment.
A collective action brought or an application to approve a collective settlement has a bearing on other proceedings. Multiple collective actions can not be taken in respect of the same mass harm situation. Where multiple collective actions are filed, the court shall decide, using legal criteria, which action will proceed, while all and any actions brought by private individuals shall be suspended. They continue if the collective proceedings have been legally concluded without a substantive decision, or if the substantive decision does not affect the parties to the proceedings following an independent action.
For companies, collective actions may primarily mean a negative publicity, since the law also provides for the administration of a public register of collective actions. In order to protect the defendant’s substantiated interests, the court may, at the approval stage, decide not to allow the action if it is clearly unfounded in content. The defendant company will therefore have to prepare its defence well in the phase prior to granting a collective action.
