EU Parliament sets obstacles to collective action for victims of corporate harm

Members of the European Parliament have voted today to weaken a proposal from the Commission on EU collective redress, undermining the possibility for European citizens to defend themselves against illegal actions by companies, lawyers say.

Following corporate scandals such as the Dieselgate revelations – which highlighted the lack of redress mechanism in the EU – the Commission proposed last spring to harmonise Europe’s collective redress rules, to allow groups of claimants to take legal action when faced with mass corporate harm.

But MEPs of the legal affairs committee today decided to limit redress for victims. While some of the worst amendments proposed by the European People’s Party (EPP) were finally rejected, the committee’s report recommended imposing further requirements that effectively limit the number of consumer organisations able to launch a case. They have also agreed to limit evidence disclosure of a company being sued, making it harder for consumers to win their case.

ClientEarth environmental democracy lawyer Sebastian Bechtel said: “The dieselgate scandal is proof that victims of corporate harm face huge obstacles in obtaining compensation in Europe. The Commission’s proposal was a chance to remedy this situation, but many MEPs preferred to protect companies violating EU law, rather than strengthening the mechanism for the benefit of European citizens.”

Lawyers from environmental law charity ClientEarth also highlighted that the draft law is restricted to breaches of consumer rights. This means a missed opportunity to allow collective actions for environmental harm, like air pollution caused by illegal activities or products containing illegal toxic chemicals.

Bechtel added: “We are disappointed that MEPs have come up with a compromise that effectively weakens the Commission’s proposal. Despite this important missed opportunity, the proposal remains an important initiative that will improve the situation of consumers overall and should be supported.”

The Commission’s initial proposal to harmonise collective redress faced intense industry pressure. For instance, the US Institute for Legal Reform lobbied against the proposal at the European Parliament, launching a report, petition and campaign website using misleading industry claims to discredit the set of proposed measures to improve collective redress.

The proposal is now awaiting a common position from the Council in order to gain approval before the European elections.

Bechtel said: “The ball is now in the Council’s court. We call on the Member states to ensure that all victims of corporate harm can rely on this mechanism.”

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