The new civil proceedings involving a class action for a declaratory judgment: an overview

On 1 November 2018, the new civil procedure for a class action for a declaratory judgment came into force. The expectations for the class action for a declaratory judgment are high, especially from the political and consumer perspectives. 

Legal basis, requirements and procedure

The class action was provided for in the coalition agreement for the 19th legislative period and is based on recommendations under European law (BT-Drs. 19/2439, 1). According to its explanatory memorandum, one of its aims is to improve the enforcement of consumer rights by bundling the claims of numerous similarly injured consumers, in order to provide collective redress against the same defendant. In addition, the class action for a declaratory judgment is also intended to help relieve the burden on the judiciary (Bundestag printed materials 19/2439, 1, 15, 32). Claims can be asserted in all consumer-law matters with a class action; there is no limitation to a specific field of law (BT-Drs. 19/2439, 15 f.). The most frequent use of class actions will probably be in the area of claims for damages against large corporations.

The provisions on class actions have been implemented in the 6th book (§§ 606-614) of the Code of Civil Procedure (ZPO). Under Section 606 (1) of the ZPO, a class action may be brought by qualified entities seeking to establish the existence or non-existence of factual and legal prerequisites for the existence or non-existence of claims or legal relationships (declaratory objectives) between consumers and a business. The legal concept provides that the involved consumers do not themselves become a party to the class action because only certain qualified entities have standing; the class action proceedings are conducted exclusively between the plaintiff consumer protection association and the defendant party (BT-Drs. 19/2439, 1, 16). The courts of first instance with substantive jurisdiction are the Higher Regional Courts (§ 119 para. 3 GVG), and the court at the defendant's general place of jurisdiction has exclusive local jurisdiction for actions in class actions if the defendant is located in Germany (§ 32 c ZPO).

The essential requirements for admissibility are laid down in § 606 ZPO: A class action for a declaratory judgment is only admissible if it is brought by a qualified institution within the meaning of § 606 (1) sentence 2 ZPO in conjunction with § 3 (1) sentence 1 no. 1 UKlaG and if it is additionally substantiated that the claims or legal relationships of at least ten consumers depend on the declaratory objectives of the class action and that at least fifty consumers have effectively filed their claims or legal relationships for entry in the register of class actions two months after publication of the class action for the declaratory. § Section 606 (1) sentence 2 ZPO in conjunction with Section 3 (1) sentence 1 no. 1 UKlaG defines when a qualified entity as defined in Section 3 (1) no. 1 UKlaG is to be established. § 606 (1) sentence 1 ZPO (Code of Civil Procedure). For consumer centres there is irrebuttable presumption that they and other consumer associations, which are predominantly supported with public funds, fulfil the requirements of § 606 (1) sentence 2 ZPO (cf. § 606 (1) sentence 4 ZPO).

In order to make it as easy as possible for consumers to exercise their rights, the law provides for the public announcement of a class action in the register with the essential details of the class action (e.g. designation of the parties; brief description of the facts of the case; declaratory objectives), cf. § 607 (1) ZPO. Consumers who may have similar claims against the defendant are accordingly informed about the essential content of the class action and are then able to file claims, depending on the declaratory objectives, which are then entered in the action register pursuant to § 608 ZPO. Registration in the register of claims is free of charge and representation by lawyer is not required (cf. BT-Drs. 19/2439, 16, 17).

Civil procedural effects and special features

§ 613 ZPO standardizes the most important procedural effects of a class action. The final decision in a class action bind any other court hearing a dispute between a registered consumer and the defendant to the extent the latter court's  decision relates to the declaratory objectives of the class action and the facts adjudicated in the class action. Thus, the judgment in the class action, whether upholding or rejecting the claim, is binding in subsequent proceedings between a registered consumer and the defendant (BT-Drs. 19/2439, 28). A consumer can only "escape" the binding effect of the design finding judgment by effectively withdrawing his application for registration (Sections 613 (1) sentence 2, 608 (3) ZPO). The ruling in the class action is always only the first step for the consumer on the way to enforcing the consumer's rights because the final enforcement of the respective claims continues to be the responsibility of each individual consumer, either through legal action or out-of-court settlement of the dispute (cf. BT-Drs. 19/2439, 17). The filing of a class action for a declaratory judgment, however, interrupts the running of the statute of limitations for the claims filed in the register of claims, so that the risk of loss of rights due to passage of time is prevented (cf. § 204 para. 1 no. 1a German Civil Code (BGB)). In addition to the binding effect of the decision in the class action, the filing of a class action blocks any further class action against the defendant from the point in time when the class action becomes pending to the extent that the subject matter of the dispute relates to the same facts and declaratory objectives (§ 610 (1) ZPO). In addition, § 613 (2) ZPO regulates the suspension of proceedings brought by the consumer against the defendant in the action register prior to the publication of the information about the class action to the extent that such proceedings concern the declaratory objectives and facts of the class action. However, the suspension will only take place if the consumer joins the class action.

Subject to any special provisions in Book 6, the provisions applicable in first instance proceedings before the Regional Courts also apply accordingly to class actions. A special procedural aspect is that the issuance of a decision without a prior oral hearing and the issuance of a summary judgment based on a waiver of rights are excluded (§ 610 (5) ZPO). Further provisions in the ZPO have been supplemented by new clauses relating to class actions. It is to be expected that § 148 (2) ZPO in particular will play a greater role in litigation in the future. Under Paragraph 148(2) of the Code of Civil Procedure, a court may, at the request of the applicant who is not a consumer, order proceedings be suspended until a class action has been resolved if the decision in the dispute depends on the declaratory objectives of the class action. Specifically the provision in § 148 (2) ZPO clearly shows that the legislature obviously assumes a de facto binding effect of the findings in class acti9ns also for proceedings conducted by non-consumers (see Bundestag circular 19/2741, 24). 

Appeal

A class action judgment is published in the register of class actions. The finality of a class action judgment and the filing of an appeal are also published (§ 612 ZPO). Only an appeal before the Federal Supreme Court of Justice(BGH) against the class action judgment is admissible, and there is a legal presumption that the class action has fundamental significance within the meaning of § 543 (2) no. 1 ZPO (cf. § 614 ZPO).

Evaluation and outlook

There are still a lot of unresolved legal issues. Experience with the first class actions will show whether this legal instrument meets the high expectations placed on it. In view of the long road to a final enforceable judgment, it is to be expected that consumers will only prefer a class action compared to an individual action if there is a fear of a definitive loss of rights due to the imminent expiration of the statute of limitations. Since there is no risk of litigation costs for registered consumers, a class action also offers a special incentive for consumers who are not insured against legal expenses and would otherwise completely forego pursuing their claims by way of an individual action due to the often incalculable cost risk.

Dr Julia Christine Pohl, Attorney at law
Frankfurt


December 2018


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