Quick help for disappointed consumers and smaller businesses and relief for the civil courts: that is what the draft bill for the class action lawsuit from the Federal Ministry of Justice by Marco Buschmann (FDP) promises.

From June 2023 onwards, consumer associations should be able to bundle the interests of many of those affected before the higher regional courts and sue for benefits.

For example, requesting repairs, replacement deliveries or damages after mass damage.

The new “remedial action” is intended to make this possible.

Germany is thus fulfilling the task of transposing the EU directive on representative actions into national law.

Katja Gelinsky

Business correspondent in Berlin

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Marcus Young

Editor in Business.

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Existing options in collective legal protection such as injunctive relief or model declaratory judgment suits will be adjusted with the planned amendment and extended to the enforcement of claims.

Previously, consumers had to enforce their claims in court themselves following the legally binding model declaratory judgment.

Affected consumers must continue to take action themselves in the run-up to the remedial action if they want to share in the subsequent results.

The remedial action should only be admissible if, at the time the action is brought, it can be credibly demonstrated that the claims of at least 50 consumers are affected by the action.

As provided for in the coalition agreement, smaller companies can benefit from the advantages of a class action for the first time.

According to the draft bill, the register of claims is open to companies that employ fewer than 50 people and whose annual turnover does not exceed 10 million euros.

Three different phases

The remedy decision itself is divided into three phases.

First, the court clarifies the liability on the merits or dismisses the action.

The parties then have the last opportunity to reach a settlement.

If this fails, the court announces a remedial judgment.

The court appoints a trustee to implement it.

He not only oversees the "implementation fund" into which the benefits go, but is also responsible for checking eligibility and distributing the funds.

The ministry obviously took the criticism from the judiciary to heart.

Mass cases have put a heavy strain on the input authorities.

From now on, the collective action is to be heard directly before the Higher Regional Court in whose jurisdiction the defendant company has its registered office.

The procedure should be accelerated by the elimination of one instance.

Consumer Protection Minister Steffi Lemke (Greens) took the draft as an opportunity to warn companies: "In emergencies, nobody should try to rip off consumers by ripping them off," she said at the German Consumer Day.

It is crucial that "consumers can easily assert their rights".

Consumer advocates not only consider the model declaratory action to be deficient because the customers themselves have to take care of enforcing their claims.

It is also criticized that the legal hurdles for consumer associations are too high.

Judith Skudelny, spokeswoman for the FDP parliamentary group for the environment and consumer protection, told the FAZ that she was "very satisfied with the planned further development of consumer law".

According to the plans of the Ministry of Justice, consumers and the economy would be “brought on an equal footing”.

Consumer rights would be strengthened without creating problems for the economy.

The requirements for the consumer associations entitled to sue are also balanced.

"The redress lawsuit is not intended to be an economic model to seek consumers willing to sue," she said.

Initial reactions from industry were also generally positive.

It is a "balanced solution," said Stephan Wernicke, the chief legal officer of the Association of German Chambers of Industry and Commerce (DIHK), of the FAZ would have led to dubious litigation financing.

"Collective actions must not become an investment."