The Maltese law transposing European Union Directive on representative actions for the protection of the collective interests of consumers, Directive (EU) 2020/1828 of the 25th of November 2020, came into force by means of Act XVII of 2023 on the 25th of June 2023 (hereinafter referred to as the “Representative Actions Act” or the “Act”). This Directive is intended to serve as a model for representative actions on behalf of European consumers in situations wherein their interests are collectively harmed.
In Malta, although class actions are already provided for in terms of the Collective Proceedings Act (Chapter 520 of the Laws of Malta, as in force prior to the latest 2023 amendments made thereto), this legislative act has struggled in terms of implementation before the Maltese Court. For this reason, the Representative Actions Act is envisioned to provide a more comprehensive legal framework on the basis of which collective actions by qualified entities are anticipated to gain more traction before the Court.
Who may file an action in terms of the Act?
The Act speaks of a ‘qualified entity’ as the person entitled to bring domestic representative actions, cross-border representative actions or a combination of both. Such qualified entity is defined as “any organization or public body representing consumers’ interests which has been designated by a Member State as qualified to bring representative actions in accordance with th[e] Act”.
Furthermore, the Consumer Affairs Council as established under Part II of the Consumer Affairs Act (Chapter 378 of the Laws of Malta) shall, by the 26th of December 2023, inform the European Commission of the list of qualified entities for the purpose of bringing cross-border representative actions.
What are the duties of qualified entities?
The Act lists several duties to be observed by such qualified entities, including the duty to explain to consumers the nature of the representative action proceedings and to keep them informed of the progress of such proceedings. Additionally, the Act necessitates that the qualified entity keeps and maintains a register to record the identity and claims of those consumers who are part of the representative action proceedings, and shall, on request, make such register available to the defendant/s, as the case may be.
Furthermore, and prior to the institution of proceedings in terms of the Act, a representative action agreement shall be entered into between the consumer and the qualified entity wherein the consumer, inter alia, consents to his/her inclusion in such proceedings and to the appointment of the qualified entity as the plaintiff within the proceedings.
Should a consumer no longer wish to be represented by the qualified entity in the representative action, the consumer is required to notify the qualified entity in writing, and he/she shall no longer benefit from the remedies obtained through these proceedings. The qualified entity must inform the Court of any withdrawals made by consumers.
Procedure of domestic representative actions
Where domestic representative actions are being instituted, these are to be brought by sworn application before the Civil Court (Commercial Section) by the qualified entity/ies who shall act for and on behalf of consumers and in their best interest.
Upon the filing of this application, the Court shall hold a pre-trial hearing to assess the admissibility (or otherwise) of the representative actions presented in the application in accordance with the provisions of the Act. Indeed, the Court must issue a decree, either to order the continuation or dismissal of proceedings or, alternatively, it may stay proceedings if the parties agree to attempt to reach an out-of-court settlement.
Interestingly, this decree is required to be published in the Government Gazette and in local newspapers, and it may also be published in any other media if the Court deems it appropriate in the circumstances. Such decree shall state that any other consumers who wish to be represented by the qualified entity may register their interest within a specified date determined by the Court, which date shall not exceed five (5) months from the date of the decree.
It is important to note that judgments delivered on issues which are common for the represented consumers shall bind such consumers. Moreover, in the case of judgments in which the Court orders the defendant to pay compensation to the plaintiff, the Court may also order the defendant to credit the amount due to a specific account held by the plaintiff and may give such orders to the plaintiff for the effective distribution of that compensation among the consumers.