Legal Updates

On 11 July 2023, the President signed into law The Representative Actions for the Protection of the Collective Interests of Consumers Act 2023 (‘Act’). However, the Act is not yet in operation and a commencement order from the Minister for Enterprise, Trade and Employment is awaited.

Background

The primary purpose of the Act is to transpose into Irish law the European Union Directive on representative actions for the protection of the collective interests of consumers (EU) 2020/1828 (‘Directive’). The Directive provides for a new legal framework to allow a ‘qualified entity’ to bring representative actions on behalf of consumers, at both national and cross-border level, in circumstances where a trader has infringed their consumer rights under specified consumer legislation.

A qualified entity is any consumer organisation or association designated as qualified to bring representative actions (‘Qualified Entity’). Ireland can designate at least one Qualified Entity and it must satisfy certain conditions, including that it is independent, has a legitimate interest in protecting consumer interests and has a non-profit making character. As yet, no such qualified entity has been designated.

Further details on the representative consumer actions legislation can be found in our January 2023 and May 2023 articles.

Third-party Funding

A key issue in the Oireachtas debate on the legislation was the matter of third-party funding. Ireland’s long-standing laws of maintenance and champerty prohibit third-party funding of litigation, save in very limited circumstances. The Act permits third-party funding only “insofar as permitted in accordance with law” and as such, does not change the position in respect of funding for the representative consumer actions permitted by the Act.

However, the Minister for Enterprise, Trade and Employment acknowledged the challenge in resolving issues relating to third-party funding in this regard and it was confirmed by the Minister that access to third-party funding for litigation in Ireland is currently under consideration by the Law Reform Commission (‘LRC’). On 17 July 2023, the LRC published a consultation paper seeking submissions in respect of third-party funding in Ireland, for the purpose of assisting the LRC in publishing a final report setting out its recommendations. The closing date for submissions is 03 November 2023.

In addition, given that the Courts and Civil Law (Miscellaneous Provisions) Act 2023 provides for the removal of the restriction on third-party funding in the context of international commercial arbitrations, it would indicate that this is an area of potential reform, which may affect the practical operation of the Act in the future.

Conclusion

It remains to be seen what body or bodies will be designated as Qualified Entities and how the court actions permitted by the Act will be funded. The lack of third-party funding is very likely to limit non-profit organisations seeking designation as a Qualified Entity due to the inherent risks of adverse cost awards in unsuccessful claims. However, as noted, third party funding is an area of the law which is currently under renewed consideration.

While the Act represents a significant development in Irish consumer protection law, it is unclear when consumers will be in a position to fully avail of all of the benefits offered by the Act.

The authors would like to thank Lauren Dolan and Fiona O’Connell for their contribution to this article.