France has passed ‘Loi Hamon’ No 2014-244 of 17 March 2014, a wide ranging consumer class-action mechanism. After several decades of stalled debate, France has angled itself as a legislature to watch as Loi Hamon could be extended to further types of redress, including securities class actions.
France has passed ‘Loi Hamon’ No 2014-244 of 17 March 2014, a wide ranging consumer class-action mechanism. After several decades of stalled debate, France has angled itself as a legislature to watch as Loi Hamon could be extended to further types of redress, including securities class actions.
In its current form, Loi Hanon is somewhat limited. Individuals and law firms are excluded from acting on behalf of a group of consumers and only explicitly listed consumer associations, of which there are no more than 20, may act as a representative. Cases concerning, for example, health and environmental violations may not be brought, only actions concerning the sale of goods or provision of services and competition law violations. Discovery, contingency fees and punitive damages are also barred.
Such restrictions are likely to have been put in place due to reservations expressed by both businesses and the French government about a US style of litigation that often results in huge settlements. However, now there is a class action mechanism in place, time and experience may well see it extended to include further types of redress—Loi Hamon is a significant first step. As quickly as two-and-a-half years following its enactment, proposed changes may well be enacted following a government report reviewing the mechanism that is required to be submitted to parliament.
“The new law includes a mixed simplified fast-track procedure for paying damages to consumers who can be easily identified, such as subscribers to services. At the start of the proceedings, it will be up to the professional that has carried out the illegal practices to identify a group of clients (opt-out). At the end of the proceedings, the consumers must give their agreement to be compensated for the damages suffered (opt-in),” according to Bloomberg.
“The new law will apply immediately to cases that date back five years and are not covered by the statute of limitations. It will not, however, apply to decisions on competition law infringements that can no longer be appealed by the time the law is published.”
France was slow to incorporate class action legislation when compared to other European legislatures such as the Netherlands and Germany, but it may now be able to benefit from better corporate governance and shareholder protection.
Cases are already being processed in France. For example, a joinder of claims of several institutional investors against Vivendi in France is now being brought after it failed to claim damages in the US due to the US Supreme Court’s 2010 ruling in Morrison v National Australia Bank.
Although Loi Hamon does not currently cover securities litigation, and cases seemingly can only be brought by approved associations and not individual people or entities, it is nevertheless an important advancement in the protection of French consumer rights. Time will tell how effective the new law will be, and there is significant potential for it to be extended in the future to accommodate further types of redress, such as securities.
As securities class actions, group and collective litigation mechanisms globalise, investors and trustees must remain vigilant and monitor global opportunities to participate in class actions to reclaim rightful returns—France must now be included as a legislature to watch. Although keeping track of international opportunities and the claims process can be somewhat daunting, there are now specialist service providers that can automate the complex process of class action, group, and collective litigation participation across international jurisdictions.
