16 « July « 2007 « Comparative Consumer Law

Damage claim in collective lawsuits

July 16, 2007 · Leave a Comment

According to the Nikkei shimbun, OECD pointed out that the lack of the provision regarding the damage claim in collective lawsuits procedure by consumer groups was improper and such system should be introduced.[1]

Only injunction

Revised Consumer Contract Law furnished the provision of the collective lawsuits procedure and the law was enforced in Jun 7th, 2007.[2] Although the law gave the right of petition to the authorized consumer group, the petition is limited to the claim of injunction.

Necessity of the right of damage compensation

The advisory panel of the Cabinet Office compiled recommendation[3] prior the law reform. While the scope of consumers’ injuries tends to be widespread, the amount of damage is usually small. Therefore, the report recognizes the importance of the role of the damage compensation.In case that the individual damages are small, victims are reluctant to sue damage by virtue of the legal cost even if the English rule does not exist. As a result, rogue traders can retain illegal profit. The claims of damage through the collective lawsuits may curb the wrongdoing by rogue traders.Recommendation of the advisory panel Above stated, the panel never denies the usefulness of the claim of damage in the collective lawsuits system. Notwithstanding, the panel was reluctant to give the consumer group the right of damages; the panel referred to the entity of lawsuits by appointed party, improvement of small claim litigation procedure and enrichment of small claim court system. Finally, the panel concluded that the introduction of the damage compensation should be considered after observing the enforced collective lawsuits procedure.

Why not?

The meaning of above mentioned recommendation is quite ambiguous. The various remedies that the panel indicated are certainly important to materialize the consumer redress. But these measures never reject to introduce the damage claim in the collective lawsuit procedure. The panel also said that more consideration was necessary whether the damage claim in collective lawsuits should be introduced. What to be considered? Why not introduced? The damage claim is already introduced in other countries such as UK, Claims on behalf of consumers in Enterprise Act 2002, Part2. No inconvenience has been reported so far. We, practicing lawyers dealing with consumer injuries, feel strongly the necessity of such measures for pursuing comprehensive consumer redress.[4] Is it allowed that the rogue traders continue retaining the illegal profit? Nobody think so except wrongdoers.

Reform of the truth-in-advertising laws

Our government plans to introduce the collective lawsuits procedure in the Law for Preventing Unjustifiable Extra or Unexpected Benefit and Misleading Representation[5] and asks the public consultation now[6]. To as above mentioned, the necessity of introducing the damage claim in collective lawsuits procedure in this law reform is apparent.