Belgium implements EU Collective redress directive

The deadline for transposition of the EU-Directive into national law was set for 25 December 2022, but Belgium failed to meet this, prompting the European Commission to initiate an infringement procedure (see our earlier e-zine: European Commission starts an infringement procedure against Belgium for late transposition of new directive on representative actions | Lydian). Despite this setback, Belgium’s new law significantly overhauls its collective redress mechanisms to align with the directive’s robust consumer protection objectives.

Notably, Belgium was already a pioneer in this area, having introduced a collective redress framework through Title 2 of Book XVII of the Belgian Code of Economic Law. This framework enabled collective actions for consumers as early as 2014 and was further extended to small and medium-sized enterprises (SMEs) in 2018. Consequently, Belgian law was already largely in line with the directive's principles. However, the recent implementation has brought about a few but significant changes, further enhancing the scope and functionality of the existing regime.

The Belgian implementation introduces several significant changes to the collective redress landscape, including:

• Expanded scope of collective actions

The new Collective redress directive further broadens the scope of application of the Belgian class action-regime by incorporating the current exhaustive list with the 66 EU directives and regulations referred to in annex I of the EU Collective Redress Directive. This list of applicable laws is no longer static, as the EU introduces new regulations relevant to consumer protection, these will automatically extend to the Belgian framework. For example, collective actions can now target breaches of the MiFID II-Directive, the AIFMD, and many other regulations. Companies operating in areas such as digital markets, financial services, or consumer goods must be vigilant about compliance, as they are now more exposed to collective actions.

The legislation also revises who can initiate collective actions. The framework is no longer limited to consumer organizations and extends to so called ‘qualified entities’, representing consumers or SMEs, designated by EU member states. These entities can bring cross-border actions on behalf of affected consumers. These entities must meet stringent criteria, such as operating on a non-profit basis, demonstrating at least 12 months of consumer protection activity, and maintaining financial transparency. Additionally, safeguards have been introduced to prevent conflicts of interest, particularly where third-party litigation funding is involved. 

• Refined opt-in and opt-out mechanisms

The new Belgian collective redress legislation introduces a more flexible framework for opt-in and opt-out mechanisms, offering greater negotiating power to the parties involved. During a mandatory cooling-off period, the parties now have the option to mutually agree on the appropriate system, rather than leaving the decision solely to the courts. If the parties cannot reach an agreement on the applicable system, the case will proceed to litigation on the merits. Should the court find the defendant liable, the opt-in mechanism will automatically apply by default. Following the court’s judgment, victims will have a four-month period to decide whether to join the collective action and claim compensation.

However, certain types of cases still require the automatic use of the opt-in mechanism, such as actions involving consumers residing outside of Belgium, SMEs without a main establishment in Belgium, and claims for physical or moral damages.

• Cross-border implications

In line with the EU directive’s goals, Belgian courts can now accommodate collective actions initiated by foreign qualified entities. By aligning the definition of qualified entities with EU standards, the framework allows for cross-border collaboration and facilitates collective actions that span multiple member states, creating a more unified and efficient legal environment for consumer protection across the EU.

For businesses operating in Belgium, the new collective redress framework presents both challenges and opportunities. On one hand, the enhanced consumer protection standards underscore the importance of heightened vigilance in ensuring compliance with EU regulations. On the other hand, the safeguards built into the system provide reassurance against frivolous claims. To mitigate the risk of abusive litigation, the Belgian law incorporates strict criteria for the admissibility of claims and ensures that funding mechanisms are transparent.

The implementation of the EU Collective Redress Directive marks a significant milestone in the EU’s commitment to consumer rights. By harmonizing and enhancing collective redress mechanisms, the new framework offers consumers greater access to justice while maintaining safeguards for businesses. 

For further guidance on navigating this evolving legal landscape, feel free to contact our Commercial & Litigation team.