June 23, 2020 / 11:26 AM / 21 days ago

EU countries, lawmakers agree deal on class action lawsuits

BRUSSELS (Reuters) - European Union countries and lawmakers struck a deal late on Monday to pave the way for Europeans to team up and sue companies for defective products but with built-in safeguards to guard against the excesses of U.S. class action lawsuits.

FILE PHOTO: European Union flags fly outside the European Commission headquarters in Brussels, Belgium, February 19, 2020. REUTERS/Yves Herman/File Photo

The move to boost consumers’ rights gained pace following Volkswagen’s (VOWG_p.DE) diesel cheating scandal which has led to thousands of regulatory investigations and lawsuits.

The European Parliament said such lawsuits could cover data protection, financial services, travel and tourism, energy, telecommunications, environment and health, and air and train passenger rights.

The agreement between representatives of EU governments and the European Parliament will need to be rubber stamped by the 27 EU countries and the legislative body in the coming weeks. The bloc will have two years to convert the EU legislation into national laws.

The European Commission announced the proposal in 2018, but it was delayed by disagreements among EU countries and EU lawmakers.

“We have sought to strike a balance between the legitimate protection of consumer interests and the need for legal certainty for businesses,” lawmaker Geoffroy Didier said in a statement.

European consumer lobbying group BEUC welcomed the agreement.

“This deal is a huge landmark to make justice available to all EU consumers. Consumers can finally go to court as a group when their rights have been harmed by the same trader,” BEUC director general Monique Goyens said.

Under the agreement, each EU country will have to name at least one consumer organisation or public body to launch class actions on behalf of consumers.

Safeguards to prevent frivolous or abusive litigation include the “loser pays” principle which ensures that the defeated party in a lawsuit pays the costs of the proceedings for the successful party.

Reporting by Foo Yun Chee. Editing by Jane Merriman

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