Class Actions come to Germany - German Federal Council passes Redress Action

The introduction of the VRUG will simultaneously result in the introduction of the Consumer Rights Enforcement Act (VDuG) as well as modifications to various existing laws such as the Code of Civil Procedure (ZPO), the Courts Constitution Act (GVG) and the Civil Code (BGB). The goal is to improve the collective legal protection of consumers in Germany.

Redress Actions (Abhilfeklagen) as more efficient legal protection for consumers

When the EU Directive on collective redress was implemented, an independent instrument was created, the so-called redress action. This is a collective action for performance, which will provide consumers with a one-step procedure to demand performance directly from the defendant company in the form of payment, subsequent service such as repair, replacement, price reduction, termination of the contract or reimbursement of the price paid. The model declaratory action (Musterfeststellungsklage) introduced in 2018, which already represented a first step toward collective consumer protection, will be detached from the ZPO as an independent instrument and combined with the redress action in the VDuG as so-called representative actions.  

The declaratory action and the action for redress are united by the fact that both can only be brought by qualified entities authorized to bring an action. These are either qualified consumer associations from the fields of environmental protection, consumer protection, data protection and health protection, among others, or qualified entities from other member states of the European Union (Section 2 (1) VDuG). It remains to be seen to what extent consumers will make use of the representative action in the form of an action for redress via the institutions entitled to bring an action. In any case, the areas of application are likely to be diverse: highly standardized contracts (where the question of the validity of specific contractual clauses arises), for example in the banking sector, could be put to the test by means of a redress action. The redress action can also be used to sanction violations of data protection regulations, misleading advertising or poor product quality.

The new redress action goes beyond the previous collective actions in Germany, which were only focused at declaratory and injunctive relief. The lengthy process via the initial collective determination that a company has violated consumer rights and the individual action that must then be brought by the individual consumer is now no longer necessary.

Many aspects have changed since the first draft law was published. As a result, it has become much easier for consumers and small businesses to file their claims:

Period for filing own claims significantly extended

Consumers will be able to register their claims in the collective action register (Verbandsklageregister) for a significantly longer period than initially intended, specifically until three weeks after the conclusion of the…