Definition and Objectives of the Act Implementing the Directive on Representative Actions
Das Act Implementing the Directive on Representative Actions (VDuG) is a German law that implements Directive (EU) 2020/1828 of the European Parliament and of the Council of 25 November 2020 on representative actions for the protection of the collective interests of consumers into national law. The aim of the law is to strengthen collective legal protection in consumer law and to simplify proceedings in which numerous consumers are affected by unlawful acts or omissions by companies.
Background and Development
European Legal Basis
Directive (EU) 2020/1828 provides that qualified entities may bring so-called representative actions in the interest of the collective consumer rights before national courts and authorities. These measures are intended to ensure effective and consistent enforcement of the law within the internal market of the European Union.
Implementation in Germany
With the entry into force of the Act Implementing the Directive on Representative Actions on 13 October 2023, Germany transposed the EU Directive into national law. The law governs the conduct of group actions by qualified entities and thus supplements existing collective legal protection instruments, in particular the model declaratory action.
Content and Structure of the Act Implementing the Directive on Representative Actions
Scope of Application
The VDuG regulates the framework for conducting so-called representative action proceedings in cases where collective consumer interests are affected. The scope especially covers disputes related to consumer contracts, data protection, financial services, e-commerce, energy supply, transport, and other areas of economic life.
Qualified Entities
Requirements for Legal Standing
Legal standing under the VDuG is granted to so-called qualified entities (§ 3 VDuG). These particularly include consumer associations, which must meet specific requirements, such as sufficient staffing, material and financial resources, as well as transparency regarding their funding and operational focus. The authorization of such entities is granted by the Federal Office of Justice and—in the case of cross-border actions—by the European Commission.
Types of Proceedings under the VDuG
Remedial Representative Action
The remedial representative action is central. It allows for collective legal protection by enabling affected consumers to assert specific claims—such as for damages, contract fulfillment, rescission, or injunctive relief—through a representative action procedure. The remedial action goes beyond the model declaratory action as it aims at the direct award of individual claims.
Declaratory Representative Action
Additionally, the VDuG provides for the possibility of filing a declaratory representative action, in which only the unlawfulness of a measure is established. This is particularly relevant when a large number of similar individual claims are affected.
Procedural Particularities
Register of Claims
A core element of the representative action procedure is the claims register (§§ 8 ff. VDuG). Here, affected consumers can register to benefit directly from a remedial judgment. Registration is a prerequisite for subsequent enforcement of claims within the collective procedure.
Binding Effect and Enforceability
Decisions rendered through representative actions are binding on all consumers registered in the claims register. This brings about consistent case law and eases the burden on the courts by reducing numerous parallel individual proceedings.
Settlement Options
The procedure allows for the possibility of concluding settlements between the parties under court supervision (§ 15 VDuG). Any settlement reached also directly applies to all registered consumers, provided no timely objection is declared.
Distinction from Other Collective Legal Protection Instruments
The VDuG supplements, expands, and differs from previously existing mechanisms of collective legal protection in Germany:
- Injunctive Relief Act (UKlaG): Primarily serves to prohibit unlawful business practices, but does not enable the enforcement of individual claims.
- Model Declaratory Action: Focuses on determining certain prerequisites for claims, without directly granting performance in favor of consumers.
- Representative Actions under VDuG: Allow both the establishment and direct enforcement of claims.
Impacts and Significance for Consumer Protection
With the Act Implementing the Directive on Representative Actions, Germany now has an effective and modern instrument for collective law enforcement. By facilitating collective enforcement of claims, consumers, especially those who have so far been unable to pursue their rights individually due to financial, organizational, or psychological barriers, are strengthened. At the same time, it incentivizes responsible corporate conduct and enhances legal clarity and certainty in the market.
Literature and Further Regulations
- Full text of the act: BGBl. I 2023, No. 260, p. 2838
- Directive (EU) 2020/1828 on representative actions for the protection of the collective interests of consumers
- German Civil Code (BGB), German Code of Civil Procedure (ZPO)
- Model Declaratory Action Act (MKlaG)
- Injunctive Relief Act (UKlaG)
Web links
- To the full text of the law in the Federal Law Gazette
- Federal Office of Justice – Information on qualified entities
Frequently Asked Questions
What legal requirements must be met for the admissibility of a representative action under the Act Implementing the Directive on Representative Actions?
For a representative action to be admissible under the Act Implementing the Directive on Representative Actions (VRUG), several legal requirements must be met. First, the plaintiff must be a so-called qualified entity, which must be authorized and listed among eligible organizations. It must operate in the public interest and may not pursue commercial purposes. The action must be brought against a business or institution that, in the course of commercial activity, has created legal relationships through actions that could infringe consumers’ rights. Furthermore, the challenged business practices must relate to circumstances affecting a large number of consumer interests. Affected consumers must be able to register their claims within the prescribed procedure (so-called opt-in procedure) before enforcement of claims proceeds. The court also examines whether the representative action is not being misused and whether it has sufficient prospects of success. The requirements for substantiation and burden of proof are higher for the plaintiff entity. Special procedural rules apply, such as the possibility to suspend proceedings in the event of individual actions and the rules on model decisions.
How does the course of representative action proceedings unfold according to the Act Implementing the Directive on Representative Actions?
The proceedings commence with the filing of a claim by a qualified entity. After reviewing the admissibility of the claim, particularly the formal requirements and legal standing, the representative action procedure is initiated. Affected consumers must register their claims for the action within a statutory deadline, since the VRUG provides for an opt-in model. The court then examines the facts, possible defenses, and conducts a collective balancing of interests. Evidence proceedings may be conducted, with expert reports obtained if necessary. At the end of the proceedings, the court delivers a judgment that is binding on the participating consumers. There is the possibility of appeal or revision under the general civil procedure rules. The enforcement of the judgment takes place collectively, if necessary through the initiation of enforcement measures.
What are the legal consequences of a successful representative action according to the legislative draft?
In the event of a successful representative action, the judgment will not only declare that certain business practices or contract clauses were unlawful but will also pronounce a collective determination of entitlement. The affected consumers thereby obtain a secure legal basis for their claims against the defendant entrepreneur, which they can further pursue. In many cases, the law also provides for a collective settlement that amicably regulates the claims of affected consumers. This result is immediately effective for all registered consumers and is enforceable against the entrepreneur. Implementation may mean, for example, repayments, contract amendments, damages, or injunctive relief, whereby the court may order detailed enforcement and settlement arrangements. In certain cases, the claim may also be aimed at prohibiting future misconduct.
To what extent does the new representative action differ from the existing German consumer law protection system?
The Act Implementing the Directive on Representative Actions introduces additional instruments for collective law enforcement that go beyond the previously applicable model declaratory actions. Whereas up to now, only the determination of entitlement for consumers was possible in the model declaratory procedure, the VRUG now creates, for the first time, the possibility for consumers to not only establish their claims with a single collective ruling but also to enforce them. Furthermore, the range of permissible claims is expanded, so that immaterial damage claims and smaller claims can also be effectively asserted. The law also calls for an effective opt-in procedure, which improves consumer participation and information. In addition, the requirements for qualified entities have been adapted and raised, to counteract abusive warnings and increase the efficiency of legal protection.
What role do qualified entities play as plaintiffs under the VRUG, and what requirements are imposed on them?
Qualified entities play a central role in initiating and conducting representative action proceedings under the VRUG. They must demonstrate that they have represented consumer interests for at least twelve months, pursue non-profit objectives, are organized democratically, and avoid conflicts of interest. Having their names listed on national and European registers forms the basis for their legal standing. Qualified entities must demonstrate financial and human capacity to conduct complex proceedings and may not have any economic self-interest in the outcome. They are required to inform affected consumers transparently about the procedure, its status, and prospects of success, and to ensure their participation in the opt-in process. Violations of these obligations may lead to the exclusion of the entity or the inadmissibility of the action.
What effect does the law have on the limitation periods of affected consumers’ claims?
With the initiation of a representative action under the VRUG, the limitation period for affected claims of all registered consumers is suspended in accordance with § 204 BGB. This means that claims that have not yet expired at the time of the action cannot lapse during the entire representative action procedure. Only upon conclusion or termination of the collective procedure does the limitation period begin to run again. This is of great importance for affected consumers, as by registering their claims in the representative action procedure, they are securely protected from limitation and may, if necessary, take further action later without the risk of their rights lapsing in the meantime. This regulation marks a significant difference from the previous law on limitation, as previously it was necessary to pursue a claim individually or register under the model declaratory action.
What particularities exist regarding the financing and allocation of costs in the representative action procedure?
The financing of the representative action falls primarily to the plaintiff qualified entity, which must therefore have sufficient own funds or involve external supporters, such as consumer centers or foundations. The general rules of civil procedure on cost allocation apply: If the entity loses the case, it must bear the costs itself; if it prevails, the defendant is required to pay the costs. Registered consumers do not incur court or litigation fees unless they join the proceedings as an intervening party or third-party participant. Additionally, the VRUG contains provisions for the proportional reimbursement of costs and the prevention of cost abuse. In some cases, the law provides for public or third-party funding, with transparency obligations in place to ensure the entity’s independence.
