By Adrian Andrychowski, adwokat, attorney-at-law, counsel, JDP Law
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Poland is currently having its second take on implementing the EU Directive 2020/1828 on representative actions to protect the collective interests of consumers, which should have been implemented back in 2022. The bill proposed by the Council of Ministers is currently in Parliament, where it will discussed.

The draft aims to introduce new legal means to improve enforcement of consumer rights, including in the banking sector. However, with Poland’s past experience of group actions, the questions remains open whether the new regime will actually be able to have an influence on banking practices in Poland.

Current state of group actions

Group actions in an opt-in model were introduced in Poland in 2009. Initially much hope was associated with them that they will be effective tools for mass consumer-rights enforcement. However, the practice of the state courts proved otherwise, with lengthiness of the proceedings being not the only issue.

Several group actions were initiated against Banks around 2014-2016 and were related to the Swiss-franc mortgage claims. The group claimants demanded a declaration by the court that some of the clauses related to the calculation of the mortgage instalments constituted unfair contract terms. The first hurdle was the process of group certification; this took between two and four years. Several of them were dismissed after a decade of litigation. Instead of pursuing one structured legal actions against Banks, consumers have turned instead to mass claim litigation in the form of individual lawsuits, which have been quite successful after several judgments issued by the Court of Justice of the European Union.

The changes look promising, but only time will tell if the implementation will have a lasting impact. The bill upholds the opt-in regime, but makes an attempt to overhaul some of the weaknesses of the current procedure.

The first major change concerns entities which will be qualified to bring group actions on behalf of the consumer. The Financial Ombudsman (Rzecznik Finansowy) will be able to initiate actions in financial services litigation, but will not have the exclusivity to do so. Other consumer organisations will however have to meet specific criteria in order to be regarded as ‘qualified entities’. These include having at least 12 months of prior activity before filing a lawsuit and independence from any business entities that could economically benefit from the group action.

The president of UOKiK, Poland’s office for competition and consumer protection, will be responsible for maintaining a register of these organisations. The second criterion mentioned above is a consequence of the Directive itself, however, it’s hard to say how it will be checked. Courts will also have the power to review whether the ongoing litigation is actually beneficial to consumers and not just a business opportunity to third-party funders. If the court finds that there is a conflict of interest, then the court will first request the qualified entity to rectify the situation. If the entity does not obey with the court order, the court will issue a separate order to the qualified entity, where it will be obliged to inform each group member on how the current financing influences their consumer rights and that the qualified entity can be changed to a different one within six months from the issuance of such court order. Thus, if a potential conflict of interest actually arises, then under the proposed procedure, it will be possible to preserve the group action.

It is proposed that the qualified entities themselves will be exempted from court costs and thus group actions will be financed by a sign-up fee charged on joining consumers or through third party funding. This means that the main costs will be attorney fees and other ongoing costs such as expert’s opinions. Currently in most instances the consumers have to bear a 2% court fee for filing the statement of claim, and although litigation finance is allowed, it is not regulated.

The other significant change allows consumers to join ongoing court proceedings, while in the current procedure any fluctuations after the certification process were not allowed, which caused issues in situations where some of the claimants wanted to resign from the group.

As regards the scope of group actions, then it will be widened as according to the bill, they can be initiated in matters concerning practices that violate the general interests of consumers or in matters concerning claims related to the use of such practices. In addition, group claimants will be able to be part of the group if their claims are based on the same legal grounds, which means that group proceedings will be able to be initiated if the claimants share the same legal grounds, but have different factual grounds for their claims. So far this requirement (having the same legal and factual background of each claim) was rigorously enforced, which effectively hindered development of group litigation.

It is still too early to say how the new law might influence the sector

Although the proposed legislation is definitely a significant step forward in enhancing consumer protection and ensuring collective redress in Poland, the first introduction of a group action regime was viewed with similar hopes. However, in that situation the practice of the courts has buried those hopes.

Broadening the criteria of claimants who can be part of one group also should effectively increase the use of this legal institution. Another issue to be observed is whether mass claim litigation actually need a group-action regime. The Swiss franc mortgage claims have shown that individual litigation can be more effective.

Representatives of the financial sector (along with their respective colleagues from other countries) will probably be asking whether the new regime will really serve consumer protection, rather than just becoming a vehicle to fill litigation funders’ pockets. However, in such arguments it is often omitted that access to justice for consumers can be limited, and only new legal developments such as group actions or third-party funding will be able to properly balance the parties’ positions in a dispute.