Group action is a new institution to Polish civil procedure that has been introduced by The Act on Asserting Claims in Class Proceedings of 17 December 2009, the “Polish Class Action Act”. The act came into force on 19 July 2010 and is a step towards unifying Polish law with European Union law. This act is the main regulation, but is not all-encompassing. Issues not addressed in this act are regulated by the Code of Civil Procedure of 1964 according to Article 24 of the Act (the Act on Asserting Claims in Class Proceedings of 17 December 2009). Under this regulation there are certain certification criteria that must be met to bring a class action into court. In this paper I will briefly present crucial aspects of the Polish regulation, such as the certification criteria, the scope of application, requirements for monetary claims, class representatives, stages of proceedings, remedies, and the costs of class actions.
TWO MAIN MODELS OF CLASS ACTIONS
There are two main models of class actions: the opt-in and the opt-out model. The Polish Class Action Law provides for an opt-in model allowing class members to join the case. The opt-in system is provided in most European countries, although there are major differences between European regulations. The only common element in the European regulations is that they do not provide the other model (T. Jaworski, P. Radzimierski, Ustawa o dochodzeniu roszczeń w postępowaniu grupowym. Komantarz, Warsaw 2010, p. 9). The opposite opt-out model is applied in the U.S. and binds all absent members of the class unless they appear before the court and expressly indicate their desire not to be bound by the outcome of the class action. The European jurisdictions did not adopt the opt-out model since it is controversial from a constitutional point of view (J. Jankowski, S. Cieślak, Group Action in Poland, in: Raport polonaise. XVIII International Congress of Comparative Law, Łódź 2010, p. 78). Class actions are still mainly associated with the American system of law.
THE CERTIFICATION CRITERIA
The Polish Class Action Act concerns judicial civil procedure in cases where the same types of claims are sought by at least 10 people. This group quantity requirement is traditionally analysed during the first stage in the course of group action, known as the certification or admissibility procedure. The claims pleaded must be of the same kind (monetary or non-monetary), and must be based on the same or common factual grounds according to Article 1 of the Act. In the first instance, district courts comprised of three professional judges have jurisdiction for class action suits. This type of litigation is also referred to as group litigation or aggregate proceedings (R. Kulski, Aggregate proceedings as tools for providing efficiency in civil procedure, in: Oral and Written Proceedings. Efficiency in Civil Procedure, vol. II, Presentations, ed. F. Carpi, M.O. Ramos, Valencia 2008). The Polish Class Action Act has a limited scope of application. The group action procedure applies only to the following areas of law: consumer protection cases, product liability cases and tort cases. Personal rights protections, for example defamation, are excluded from this type of proceedings.
In accordance with Article 2 of the Polish Class Action Act, monetary claims may be asserted in class action suits only if the amounts sued by each member of the group are unified. This can also be done in sub-groups consisting of at least two people. In cases involving pecuniary claims, the claim may be concerned with simply establishing the liability of the defendant. In that case the quantum of damage is not determined and the claimants are not required to prove their legal interest, which becomes necessary at a later stage when specific monetary amounts are asserted in the courts of individual proceedings.
THE GROUP REPRESENTATIVE
Article 4 of the act states that the action is instituted by a representative approved by all the class members. The group representative may be a member of the group or a local consumer ombudsman. The representative conducts the proceedings in his or her own name, but for all members of the class. Appointing a representative of the group is a solution that derives from the specific nature of class action. In some cases the group may have a lot of members and a representative is necessary to efficiently manage the case (P. Pogonowski, Postępowanie grupowe. Ochrona prawna wielu podmiotów w postępowniu cywilnym, Warsaw 2009, p. 163). The Polish Class Action Act provides that only an advocate or a legal advisor may represent the claimant. Further, it must also be pointed out that it is possible in a class action to contractually set the representative’s fee as a proportion of the amount awarded to the claimant. The fee cannot exceed 20 per cent of the awarded amount. Agreement on the fee is an important novelty. So far the ethical codes of legal professions state that charging only a percentage of winnings is not allowed. The duties of a class representative mainly concentrate on financial responsibilities such as coordinating payments of court fees and lawyers’ fees by all class members.
The aspect of the cooperation in the group is not mentioned in the act. Group members are free to regulate this issue in line with the freedom of contract. A representative of the group is a party of a class action, as well as the group and the defendant. The claim must meet the formal requirements established in Article 187 in the Code of Civil Procedure of 1964. According to that regulation, a complaint must specify the claim and describe the actual circumstances that justify the claim. In addition, the Polish Class Action Act imposes additional requirements that a complaint must meet. To institute an action in group proceedings, information such as an application for the case to be considered in group litigation, a statement justifying membership in the group, a specification of the amount of the claim of each member of the group, or each member of sub-groups, a specification of the means of informing potential group members of the possibility of joining the group and a statement that the claimant acts as a group representative must be provided to the court.
STAGES IN THE COURSE OF A CLASS ACTION
There are three stages in the course of class action proceedings. The first, as already mentioned, is the admissibility procedure established in Article 10 of the act. The next stage is the final formation of the group, and the last stage is aiming at the examination and settlement of the case. At the initial stage of the proceedings the court is required to conduct two tests: one factual and one legal. In the factual test, the court determines whether the facts presented by the claimant in the complaint as the basis for the claims of each member of the group are the same or sufficiently similar. In the legal test, the court decides whether the individual claims of each member of the group represented by the claimant are of the same type. If the court finds that the complaint passes both tests then case may go to trial. However, if the requirements for group litigation have not been fulfilled the court will reject the claim.
The parties have the right to appeal a decision on the admissibility of group litigation, as well as a decision rejecting the claim. After the decision on the admissibility of group litigation has become enforceable, the court decides on commencing litigation. After group action is approved by the court, all potential claimants who may join the group must be notified of the action through the press. An announcement should be published in every daily newspaper of nationwide circulation. The purpose of the announcement is to inform all potential members of the group so that they can participate in the proceedings.
The court is required to indicate a date by which group members must join the litigation. The deadline must be mentioned in the obligatory press announcement. Using other means to notify the potential participants is also possible. The statement justifying membership in the group should be addressed to the group representative (P. Grzegorczyk, Ustawa o dochodzeniu roszczeń w postępowaniu grupowym. Ogólna charakterystyka, Warsaw 2011, p. 72). This issue has not been directly expressed in the act and is subject to debate of the doctrine. After forming the final group, the proceedings follow the provisions of the Polish Code of Civil Procedure. The last stage in the course of class action focuses on the examination and potential settlement of the case. Under the Polish Class Action Act, a settlement is admissible at any stage of the proceedings. The court must approve the settlement and determine whether it has been made in good faith. Furthermore, mediation is also possible at any stage of the proceedings as an alternative dispute resolution. An important step in the examination of the case is the quantification of damages. The court must list all the members of the group in its final decision and award a specific sum to each sub-group or member. The judgement is the direct basis for sharing the total amount of the award among the group members.
In cases concerning pecuniary claims, each member of the group or sub-group must be awarded a “unified amount”. Unification means that every member of the group claims the same amount for recovering damages (T. Jaworski, P. Radzimierski, Ustawa, p. 103). Awarded damages may differ only among members of different sub-groups. An enforceable judgement has legal effects for all the group and sub-group members. Types of damages recoverable in group litigation are determined by the scope of application of the Polish Class Action Act.
THE COSTS OF CLASS ACTIONS
The costs of bringing a class action to court are an important matter. The Polish regulation adopts the ‘loser pays’ rule. This principle derives from Article 98 of the Code of Civil Procedure, which states that the losing party must, upon request from the winning party, reimburse any reasonable costs of the winning party asserting its rights and defending itself. Court fees, legal costs, including attorneys’ fees, and other expenses are all recoverable. However, at the end of the proceedings, when the party presents a breakdown of the costs incurred, the court may impose a limit on those costs, finding that everything above a certain limit was unnecessary to handle the case properly and diligently. As mentioned, issues not addressed in the Class Action Act are regulated by the provisions of the Code of Civil Procedure of 1964, although there are certain enumerated articles that do not apply to these proceedings.
The Polish Class Act also imposes serious financial obligations upon the claimant. Article 8 of the regulation states that the claimant must give security for costs, at the defendant’s request. A request must be made by the defendant before undertaking any procedural activity. The court makes decisions concerning security for costs, about the time for satisfying the request for security for costs, as well as about the amount of the deposit. The deposit should be paid in cash and may not exceed twenty per cent of the value of the dispute. Securities of costs in the group proceedings protect against baseless claims, but may also impede a reasonable and necessary action. Moreover, it has not been taken into account that at this stage of the proceedings the group formation process is not complete and the value of the dispute may change, as well as the security costs (P. Grzegorczyk, Ustawa, p. 93). If the deposit is not paid by the date set by the court, the case or appeal is dismissed. At the motion of the defendant, the court may also order that the costs awarded be paid from the deposit.
CONCLUSIONS
Enabling the parties involved to bring a class action seems a good procedural solution in terms of procedural efficiency. Under class action, cases that rely on similar facts will be heard jointly, enabling courts to grant unified rulings in similar cases. Access to court is improved, as the costs of proceedings are reduced to two per cent of the value of the subject-matter of a dispute, rather than five per cent under standard proceedings. It is also important that the costs of the professional representative are distributed among all the members of the class bringing the action. The commencement of group litigation does not exclude the possibility of individual claims being brought by anyone who did not join the group, or by those who left the group. Under the Class Action Act, only those who expressly accede to the proceedings may become a party to the class action suit, and the rights of those who do not expressly do so cannot be asserted on their behalf.
In Polish doctrine connected with matter of class actions there are two major issues that are brought up as loopholes of the regulation. There are limitations in the application of a class action suit and it is not altogether coherent with substantive law, which is tailor-made for individual cases. The limited scope of application reduces its influence. As for the other issue, the Civil Code was not amended to suit class action proceedings, which results in cases of self-contradiction. The Polish Class Action Act relies on general rules of civil procedure and there are no appropriate provisions in the substantive law concerning grounds for seeking damages and the rules of their assessment. There are not enough judicial levers to efficiently manage litigation. This problem is especially flagrant in cases with a lot of casualties and a huge variety of damage levels (P. Terelecki, Class Action in Poland – milestone or useless procedural tool?, bussinesslawblog.eu).
Summing up, given the benefits that it brings, the introduction of class action in Polish procedure must be seen as a positive development. This regulation is meant to perform important functions besides the compensation aim. The advantages that are pointed out in the doctrine are mainly the diminishing costs of trial, facilitating access to justice, assuring the equality of rights against economically strong subjects as well as protection against discrepant judgments being given in similar cases with similar factual grounds (P. Pogonowski, Postępowanie, p. 48). The doctrine also underlines the disadvantages of this type of action. The disadvantages raised are that it provides far too easy access to justice, forces companies who care about their reputation to reach agreements, conducts cases only in the interest of professional attorneys and often involves disproportionately high remuneration of attorneys compared to their working time, to name but a few.
Group action is not currently widely used in Polish civil proceedings. This new and innovative regulation raises all kind of opinions, but only the time and practice can verify its significance and meaning in the Polish legal system (see also: A. Gołębiowska, R.Bugiel, Class Action in Polish and other European Jurisdictions, TerraLex Connections eNewsletter – February 2010; I. Gabrysiak, Poland, in: The International Comparative Legal Guide to: Class & Group Actions 2014, Global Legal Group 2013).
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