After years of debate, the German legislator has now adopted a new law introducing a Model Declaratory Action to protect consumers. The new law comes just in time to give VW car owner's a new mechanism for collective redress before claims might become time-barred. The German legislator expects that there will be approximately 450 model actions annually.
However, the new option will face competition. It has been modelled in close resemblance to the German KapMuG proceedings, especially allowing joint proceedings by shareholders. Yet, both the KapMuG proceedings as well as the new Model Declaratory Action evoke much criticism especially in terms of efficiency.
In both instances, based on a judgement on common questions of fact or law, the claimants will yet need to pursue their claims for compensation individually. Hence, the new option is far away from how class actions operate in other jurisdictions. In fact, it seems quite possible that consumers might turn to other options which promise a more comfortable access to justice. In the VW case, it is especially the platform MyRight which shows how thousands of claims can be efficiently administered and consolidated.
I am convinced that this and similar options will remain a key factor in the German litigation market. And: the EU's proposal for a New Deal for Consumers including an proposal for a EU group action goes quite significantly beyond the German new law – which might hence become outdated sooner than later.
In any event, the new German law – as well as respective developments in other countries and on EU level together with privately organised solutions – continue to reshape and possibly reinvent the European litigation market.
Germany will allow interest groups to sue on behalf of consumers, taking a tentative step toward U.S.-style class-action lawsuits in a bid to make it easier to collect damages from big companies in the aftermath of Volkswagen AG’s diesel-cheating scandal.