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The Warsaw Voice » Law » February 23, 2010
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New Rules on Class Action Lawsuits
February 23, 2010   
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On January 18, the long-awaited regulations on Pursuing Claims in Group Proceedings were published in the Journal of Laws (No. 7, item 44).

The group proceedings, which are also known as "class action", originate from the U.S. system as part of the doctrine of virtual representation, under which a person who has not been a party to court proceedings is deemed to have been virtually represented, and thus bound by the judgment. In recent years, several European countries have adopted variants of the class action lawsuit differing in relation to legal standing, opt in/opt out rule and distribution of the proceeds.

The new regulations adopted in Poland define group proceedings as court proceedings in which claims of a single type are pursued by at least 10 people, with the same or analogous factual basis. A group proceeding is admissible in cases where issues of consumer protection, product liability or tort liability arise. It may not be used for the protection of personal interests.

The most interesting aspect of the group proceedings regulation is the assertion of monetary claims. When pursuing a monetary claim, a representative of the group is required to identify a unified level of damages for each member of the group in the light of the common circumstances of the case.

Group proceedings are filed by a group representative, who must be a group member or a city consumer ombudsman and must be legally represented by a lawyer.

The claim must satisfy the appropriate requirements of the Polish Civil Proceedings Code and include elements characteristic for group proceedings, such as the plaintiff's motion to determine the case in group proceedings, an indication that the case fulfills the fundamental conditions of group proceedings and a specification of equal amount of damages for each group member if a monetary claim is pursued. The claim should also contain a statement from the group representative that he is acting as the representative of the group, and this must be supported with statements from all group members attesting that they have acceded to the group and consented to his representation. Moreover, the group representative is also obliged to present the agreement as concluded with their selected lawyer.

The court decides whether the group proceedings are admissible in the case filed. However, a positive decision of the court may be questioned. If the appeal is not successful, the court is authorized to order a press announcement regarding the institution of group proceedings, in which substantial information is given to allow a potential member of the group to join the case. Polish law has accepted the opt-in rule, whereby only these persons who have declared their willingness to join the proceedings shall become party to them. Their participation in the group proceedings is dependent on the agreement of the defendant, who has the right to object. When the list of members of the group is final, the case is further processed by the court. The court may order that the case is directed to mediation at any time of the proceedings. As a general rule, the court will also need to approve the terms of any settlement reached. It will not be approved if it does not comply with the law or good morals, constitutes an attempt to circumvent the law or blatantly violates the interests of the group.

In the ruling, the court is obliged to name all members of the group. If a monetary claim was submitted, the judgment of the court must indicate the level of damages awarded to each member of the group.

Parliament has decided to introduce into the act's wording six months vacatio legis as the new regulation will profoundly change the management of litigation risk. A recent poll indicates that only a small number of enterprises questioned in the poll understands the importance of the new regulation. An EU consultation paper focusing on eight states in which a collective redress mechanism already functions shows that the annual benefit of the redress system per consumer amounts to 910 euros, and to 523 million euros in total. Among industries which may be most strongly affected by the new law the paper mentions pharmaceutical, banking, financial, transport, real estate and, as the recent example of massive Toyota car recalls illustrates, the automotive sector. The new business reality may also lead to the creation of internal procedures that would exclude or limit group proceedings risk and consequently, the liability in damages.

Fortak & Karasiński Radcowie Prawni Sp.P ul. Gdańska 77a/3, 90-613 Łódź; Tel: +48 (042)6769020

ul. Książęca 4, 00-498 Warszawa; Budynek Giełdy Papierów Wartościowych; +48 (0-22) 537 70 65 www.fandk.com.pl
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