Class action legislation to appear in parliament by 2011

The draft legislation was originally mentioned in passing by Parliamentary Secretary Chris Said during a press conferencing on Monday, launching a bill for the establishment of a long-awaited Malta Competition and Consumer Authority.

A spokesperson for the Parliamentary Secretariat for Consumers, Fair Competition, Local Councils and Public Dialogue confirmed that work on the class action draft “has been initiated.”

“Once the first draft of the law is ready, it will be sent for consultation with all stakeholders including constituted bodies, social partners, the Consumers’ Association etc,” the spokesperson said.

“Normal procedure requests that the draft is presented at MCESD level and then there will be a number of one-to-one meetings.”

The spokesperson added the first draft “will then be amended accordingly to better reflect the proposals put forward by all those consulted.”

He said “the legislation shall be put forth for discussion in Parliament during 2011.” The spokesperson however declined to commit himself on when exactly the proposed legislation would be presented debated in parliament, or forecasts on when it would come into force. He also declined to say what approach is being adopted in the finalisation of the legislation.

The concept of class actions is intimately tied to a controversial issue upon which tensions run high. Following a European Commission ruling in February 2009 that car owners who bought new or second-hand cars since Malta's EU accession, and paid VAT over and above the normal registration tax, may claim a refund as the tax was charged against EU laws.

The caveat was that affected taxpayers would first have to file a court case and prove they had in fact paid the "illegal" tax and, in order to demand the refund, the court has first to rule in their favour.

The issue became a veritable ‘crusade’ in its own right, as well as a political hot potatoe, when the Labour Party took up the issue, later instituting a joint lawsuit in the name of the 18,000 individuals who answered its call and signed up.

Class actions, also know as representative actions, are lawsuits in which large groups of individuals can collectively bring a claim to court and/or in which a class of defendants is being sued.

The lawsuit originated in the United States and is still predominantly a U.S. phenomenon despite having been adopted in several European countries. Changes have been made in recent years to allow consumer organizations to bring claims on behalf of large groups of consumers.