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Introduction of the Belgian Collective Redress Act and Impact on the Financial Sector

The Belgian collective redress act (the Collective Redress Act) entered into force on 1 September 2014. The Collective Redress Act will have a major impact on litigation involving consumer damage caused notably by banks and other financial institutions located in Belgium, and also potentially outside of Belgium.


The Collective Redress Act has been included in a chapter on "class actions" which are governed by specific procedural rules that depart from the common rules of Belgian civil procedure. The courts of Brussels have exclusive jurisdiction over these cases.
The main features of the procedure are as follows:

"C2B" disputes – large spectrum of industry sectors

The Act is limited in scope in that it is meant as a tool for "C2B" disputes, ie those involving consumers as claimants and businesses as defendants. Collective redress is only admissible under the Collective Redress Act if the damage alleged by the claimants arises out of a contractual breach or a breach of one or more of the specific statutes and regulations listed in the Collective Redress Act.

The list is fairly comprehensive and includes a wide range of sectors including financial services, banking and insurance.

Class representative

The Act states that only one representative may represent the class in court and that this representative must either be a consumer protection association or an organisation which was set up at least three years before the collective action was initiated with a purpose related to the interests of the class.

Opt-in and opt-out

The group of claimants may either be classed as "opt-in" (meaning that each member must confirm their willingness to be part of the class, which typically results in a smaller group) or "opt-out" (meaning that the class will comprise all members who have not expressly asked to be excluded from the class, which will typically result in a larger group).

The Act leaves it to the court to decide which mechanism is the more suitable on a case-by-case basis. However, opt-out will only be applicable to Belgian residents.

Four-phased process

The procedure can be summarised in four phases:

Phase 1 (the admissibility phase): the court decides, among other things, whether a collective suit is admissible, ie the most appropriate way to resolve the dispute and whether the class representative conforms with the standards set out in the Act.

Phase 2 (the settlement phase): once the collective action is ruled admissible, there is a mandatory cooling off period during which parties must attempt to settle their dispute. Any settlements reached during this phase must be approved by the court. The court may refuse to approve a settlement if for, among other reasons, the court decides that the compensation in the settlement agreement is "blatantly unreasonable".

Phase 3 (on the merits): if no settlement is reached during phase 2, the parties go on to litigate the case on its merits, within the boundaries of traditional court proceedings.

Phase 4 (the implementation phase): If the claimants are successful on the merits, the court will entrust a liquidator with the task of distributing the compensation paid by the defendant to the claimants.


The Act will only apply to collective damages caused after the date on which the Act came into force, ie 1 September 2014.

Banking and Finance Sectors

The Act contains an exhaustive list of statutory provisions on which a claim can be based. In other words, if the statutory provision is not in the list, no claim is allowed under the Act. The list refers to the following specific financial law provisions (as well as to their implementing regulations):

  • provisions on payment services and consumer credit (including consumer mortgage credit) (Chapter VII of the Code of Economic Law)1 (including compliance with the licence and registration requirements);
  • prohibition against the manipulation of reference indices (the prohibition applies if the relevant actions have taken place in or from Belgium, regardless of whether the reference indices are calculated)2,
  • provisions setting out certain disclosure requirements, including the requirement to provide correct, clear and non misleading information when offering or providing financial products or financial services (including the requirement to clearly identify marketing materials as marketing materials) to (potential) clients3, this also includes certain MiFID disclosure requirements (information regarding the firm, the financial instruments and the proposed investment strategies, the places of execution and the costs)4,
  • specific requirements regarding savings accounts offered to consumers5,
  • regulations with respect to: (i) product ban;, (ii) product label; and (iii) the use of the reference question lists:6  the Belgian FSMA has the power to ban the marketing of financial products to retail consumers and has used this power in the past;
  • conducting of regulated activities without the appropriate licence or registration,7
  • offering of collective investment funds (including AIFs) in breach of the relevant fund marketing regulations,8
  • public solicitation of funds without the appropriate licences or registrations,9
  • regulations regarding certain financial sureties (granted without specific considerations),10 and
  • regulations with respect to dormant accounts and safes.11

In the insurance sector, certain regulations governing insurance contracts are within the scope of the Act.12

Book VI of the Code of Economic Law regarding market practices and consumer protection is also included in the list of legal provisions that can form the basis for a claim under the Act.13 Book VI also applies to the offering of financial services and financial products, including the public offer of securities (subject to certain specific implementing provisions).

Note that a breach of a contractual obligation by a firm can also form the basis for a claim under the Act. This potentially broadens the scope of potential claims under the Act in cases where there is no clear basis for a claim under one of the listed legal provisions.

Breaches of the Prospectus Law14 and the Takeover Law15 are not included in the list of relevant provisions under the Act. There was a discussion prior to the introduction of the Act over whether to include a reference to the Prospectus Law, but it was decided that this reference was not to be included. However, it cannot be excluded that the scope of the Collective Redress Act might be broadened in the future.

Note also that certain other provisions, such as, for example, the disclosure requirements for listed companies are not included in the list.


The number of major class actions being brought not only in the United States, but around the globe, has risen steadily in recent years. Once thought of as only a U.S. phenomenon, class actions are now becoming commonplace elsewhere, in particular in Europe. Allen & Overy LLP has seen a significant number of class actions claims arising from alleged mis-selling in the financial services sector, shareholder unrest over corporate acquisitions in the boom times, and antitrust follow-on damages cases. Legislative reform has taken place in many European countries.

At EU level, in June 2013 the European Commission published a Recommendation on collective redress. It invited Member States to adopt collective redress mechanisms, for injunctive and compensatory relief for breaches of EU law rights (such as competition, consumer and environmental law rights,) which are consistent with a set of basic principles set out in the Recommendation. The Recommendation aimed at a coherent horizontal approach to collective redress in the European Union, without harmonising Member States' systems.

The Recommendation included various safeguards. Most significantly, unlike the UK competition specific action, it recommends an "opt-in" regime. It also proposes "loser pays" costs rules, limitations on contingency fees and on the use of litigation funding.

The Recommendation is non-binding, but states that Member States should implement the principles within two years. This two year timeframe is nearly up and so it will be interesting to see whether the Commission considers that further action is needed.


1. Article XVII.37, 1° and 17° of the Code of Economic Law and Article 86bis § 1, 2° of the Law of 2 August 2002 on the supervision of the financial sector and the financial services (the Financial Supervision Law).
2. Article XVII.37, 17° of the Code of Economic Law, Article 25 § 5 and Article 39 § 3 of the Financial Supervision Law.
Article XVII.37, 17° of the Code of Economic Law and Article 27 § 3 of the Financial Supervision Law.
Article XVII.37, 17° of the Code of Economic Law and Article 27 § 3 of the Financial Supervision Law.
Article XVII.37, 17° of the Code of Economic Law and Article 28ter of the Financial Supervision Law.
Article XVII.37, 17° of the Code of Economic Law and Article 30bis of the Financial Supervision Law.
Article XVII.37, 17° of the Code of Economic Law and Article 86bis § 1, 1°-3° of the Financial Supervision Law.}
Article XVII.37, 17° of the Code of Economic Law and Article 86bis §1, 4° and 4°-1 of the Financial Supervision Law.
Article XVII.37, 17° of the Code of Economic Law and Article 86bis § 1, 5° of the Financial Supervision Law.
Article XVII. 37, 26° of the Code of Economic Law and the Law of 3 June 2007.
12. Article XVII. 37, 28° of the Code of Economic Law and Articles 23-52 of the Law of 24 August 2008.
Article XVII. 37, 8° of the Code of Economic Law.
Article XVII.37, 1° of the Code of Economic Law.
The Law of 16 June 2006 on the public offer of investments instruments and the admission of investment instruments on the regulated market (implementing the European Prospectus Directive).
The Law of 1 April 2007 on public takeovers.

Northern Europe