> Prevention and Resolution of Disputes

Implementation of Class Action Act

Class Action Act was adopted on 26 September 2017; it entered into force on 21 October 2017 and will begin to apply on 21 April 2018. The aim of the new law is to provide effective means of collective redress, both in terms of cessation of illegal behavior (i.e. injunctive relief) and in terms of compensation for the damage caused (i.e. compensatory relief). The decision of the court in collective redress procedure granting injunctive relief to consumers will be binding for other courts deciding on individual (for example, compensatory) claims against the same defendant. It is also expected that the new law will have a strong preventive function as it will remove barriers (in terms of access, effectiveness and affordability) that deter customers/consumers affected by malpractice from pursing their case in the court.

General Solutions Adopted by the New Law

In general, the law implements solutions from the European Commission Recommendations on common principles for injunctive and compensatory collective redress mechanisms*. The areas where collective actions will be admissible include, amongst others:

  • consumer protection,
  • competition,
  • investor protection, and
  • liability in connection with environmental incident.

The law introduces the “representative” type of collective redress which means that the customers/consumers affected by malpractice will not be a party to the proceedings directly. The legal standing to bring representative action is limited to representative entities (which may also be established ad hoc) and public lawyers. The collective redress action seeking injunctive relief in the field of consumer protection may also be filed by the chamber or association of companies to which the breaching company belongs.

The collective redress mechanism is not limited to consumers and consumer protection issues only, meaning that a collective redress action may also be brought in the interest of legal persons affected by malpractice. The law will also apply for mass harm situations that had occurred before the new law entered into force.

The information on collective redress actions (including the information on alleged malpractice) will be entered into the national registry of collective redress actions available to any interested person through electronic means free of charge.

In order to avoid the development of abusive litigation culture in mass harm situations and harm to defendant’s reputation, collective action will be permitted to proceed only where the court establishes that all admissibility conditions set forth by the law have been met. The law also provides for other safeguards to prevent abusive litigation, such as absence of any punitive damages, application of “loser pays principle” in respect to the legal costs (the court may demand the payment of security for costs from the plaintiff) and prohibition of collective action financing by the fund provider that is defendant’s market competitor.

Legal Standing to Bring Actions by Entities from other Member States

Pursuant to the law, collective redress actions seeking injunctive relief (cessation of illegal behavior) can be brought by entities from other Member States as well. The legal standing to bring such actions will be limited to qualified entities from other Member States under Directive 2009/22/EC of the European Parliament and of the Council on injunctions for the protection of consumers’ interests and only to events where the alleged malpractice originating in Slovenia affects consumers in other Member State.

* Commission Recommendations of 11 June 2013 on common principles for injunctive and compensatory collective redress mechanisms in the Member States concerning violations of rights granted under Union Law (2013/396/EU).