Regime change – France to usher in new era for class actions

Legislation aims to simplify and harmonise the country's fragmented class actions framework

On 8 March 2023, the French National Assembly unanimously adopted a bill aimed at harmonising and simplifying the legal framework for class actions in France. The text must now be approved by the Senate.

The bill was filed by MPs Laurence Vichnievsky and Philippe Gosselin, the authors of a parliamentary report in 2020 which evaluated the legal framework of class actions in France, having drawn a disappointing conclusion from the current regime. As stated in their report, only 32 class actions have been introduced since their creation in 2014, and of these, only six have had a positive outcome for claimants (three judgements of liability for the defendants and three amicable settlements)

In light of these conclusions, the draft bill attempts to relaunch the use of class actions by simplifying the access to relevant procedures, ensuring better compensation for victims, and reducing time limits. It also looks to consider the guidance of the EU Directive 2020/1828 of 25 November 2020 on representative actions for the protection of the collective interests of consumers. To this end, the bill includes several of the recommendations issued by the 2020 parliamentary report.

The legal provisions of this new regime will be part of a separate legal framework, and not in the French Civil Code, as initially planned, following the French Supreme Administrative Court's recommendation ("Conseil d'Etat").^[1] 

Key modifications of the existing regime

The main change is the creation of a single and common procedural framework for class actions. Originally introduced in 2014 for consumer disputes, class actions were then extended in 2016 to the health sector, environmental matters, discrimination, personal data protection, and finally, in 2018 to disputes relating to housing rental matters. As sources of complexity and confusion, the bill intends to remove those specific regimes provided for in fragmented legal provisions, and consequently to create a unique legal framework for all civil matters. For that purpose, class actions now have a uniform definition and the objectives have been generalised. Therefore, a class action can be initiated to put an end to an infringement or to compensate a loss, regardless of the sector concerned by the action.

The text also broadens the conditions for admissibility of class actions by extending the qualified entities allowed to initiate proceedings to:

• non-profit associations registered for at least two years (as opposed to five years currently);
• ad hoc non-profit associations made up of at least 50 natural persons, placed in a similar situation of damage, or at least five legal entities or five local authorities; and
• the Public Prosecutor, as well as other entities authorised in other EU Member States to bring cross-border actions in accordance with Directive 2020/1828.

To avoid any abuse of process by claimants of bad faith, the new law will impose an obligation for them to produce a sworn statement that they are not pursuing a profit-making scheme.

It also extends the scope of damages allowing full compensation, regardless of their nature (material, physical or moral) in all fields.

The text further provides for the exclusive jurisdiction of specialised French judicial courts for ruling on class actions, despite opposition from the National Council of the French Bar.^[2]

Those specialised courts will have new tools to encourage the use of class actions and ensure their effectiveness. Under the new provisions, they may order the State to cover, in whole or in part, the costs related to investigative measures where the action is considered admissible or even to bear some or all of the costs incurred by the claimants, even when the action is rejected.

Regarding the question of third-party funding, the draft bill seems to exclude this possibility as the qualified entities must produce a sworn statement according to which the funder has no economic interest in introducing the action. In practice, it is difficult to see how a third-party funder will support a class action without having an economic interest in the proceedings.

The courts will also have the possibility to impose a civil penalty, at the request of the Public Prosecutor or government, when the professional deliberately committed misconduct which then caused serial damage in order to gain undue profit. The penalty amount will depend on the seriousness of the offence and the profit gained but may not exceed twice the actual profit for a natural person, as well as 3% of the annual turnover (excluding tax) in France for a legal person.

Moreover, the draft bill states that any clauses in a contract or in business terms which prevent a customer being part of a class action will be declared null and void.

Finally, the proposal also provides the establishment of a national and public register of class actions pending before all jurisdictions, the keeping of which will be entrusted to the Minister of Justice.

Enforcement

The new bill, once adopted, would solely be enforceable for class actions introduced after its publication, except for the provisions relating to civil penalties, which could be applied to actions brought before the publication of the law. However, it would only be for events giving rise to the defendant's liability, which would have had occurred after it went into effect.

Once the bill passes, a comprehensive review of this law will be conducted every four years to determine whether the reform's ambitious goals have been reached.

Click here for more of our analysis on the challenges of bringing class actions to the French legal system