LEGAL STANDING: A KEY ISSUE FOR COLLECTIVE REDRESS

WHY IS A BROAD CONCEPT OF LEGAL STANDING SO IMPORTANT?

Collective redress is about mass harm events and how judicial systems can best cope with these cases. The nature of the cases differs considerably, but there are two main objectives of collective redress instruments: compensation for the victims, and deterrence. National legal systems take different approaches when it comes to the function of tort rules, and although in some systems compensation is the primary (if not the exclusive) objective of the rules on liability in tort, it cannot be denied that liability regulations can have a strong influence on the behaviour of the business sector, regardless of whether this is in consumer law, competition law, product safety law or environmental law, to give just a few of the important fields in which mass harm events occur. Preventive effects require an effective enforcement of private claims, and the effectiveness of collective redress instruments depends on many factors: legal standing, funding possibilities, access to evidence and so on.

A general hypothesis would be the following: the greater the number of active players in terms of potential claimants involved, the higher the chance of capturing as many mass harm events as possible and of bringing these before the courts. Thus, the concept of legal standing and the admissibility of collective redress actions are important parameters with which legislatures can either strengthen or weaken their regulatory instruments. The long and controversial legislative history of Directive 2020/1828 indicates that the implementation of the Directive will probably vary depending on the influence of trade and industry in the Member State. Of course, all Member States must respect the effet utile principle when implementing EU law, but an intervention from the European Court of Justice can take many years.

In the US, the traditional approach of class actions gives legal standing to individual victims to bring proceedings in the interests of the class of victims of a mass harm event, and builds on entrepreneurial lawyers and their prospective contingency fees to persuade victims to bring a class action. It is well known that the effect is ambiguous, and not only from a non-US perspective: the large number of class actions that can easily be filed without much preparation after a mass harm occurrence is impressive.