GERMANY Law and Practice Contributed by: Thomas Lennarz, Peter Wende and Christian Piroutek, CMS
• The Consumer Rights Enforcement Act ‒ this entered into force in 2023 to transpose the EU Representative Actions Directive. It created the redress action, enabling qualified entities to directly pursue damages or other remedies (eg, repair, price reduction, or contract termination) on behalf of consumers and micro-enterprises. • The model declaratory action ‒ this was introduced in 2018 in the German Code of Civil Procedure. It allows consumer organisations to establish gen- eral factual or legal issues in cases affecting large groups, but does not permit direct compensation. • The Act on Model Proceedings in Capital Market Disputes ‒ this provides for model proceedings in investor disputes where at least ten similar claims are filed. Courts can determine common ques- tions of law or fact with binding effect for all related cases. • The Injunctions Act ‒ this allows consumer asso- ciations and certain business chambers to seek injunctions against unlawful commercial practices or unfair contractual terms. These mechanisms operate within the broader frame- work of the German Code of Civil Procedure. The Code of Civil Procedure provides the general rules of litigation, whereas the Consumer Rights Enforcement Act and the Act on Model Proceedings in Capital Mar- ket Disputes contain special procedural provisions on admissibility, registration of claims, collective settle- ments, and distribution of relief (if applicable). 2.2 Scope of Areas of Law to Which the Legislation Applies The scope of collective redress in Germany is broad and in principle covers all types of claims between consumers and companies, provided that the statuto- ry requirement of similarity ( Gleichartigkeit ) is met. For redress actions under the Consumer Rights Enforce- ment Act, admissibility requires that claims arise from the same or comparable factual circumstances and raise materially similar legal questions (Section 15 of the Consumer Rights Enforcement Act). Where claims differ too much ‒ for example, owing to varying con- tractual bases, divergent facts, or complex individual damage calculations – the similarity threshold will not be satisfied and the court may dismiss the action as inadmissible.
Within these boundaries, collective redress has been applied to a wide range of disputes. 2.3 Definition of Collective Redress/Class Actions German law does not provide a single, overarching definition of “class action” or “representative action”. Instead, several procedural mechanisms exist that together form the framework for collective redress. • Model declaratory action ‒ this procedure allows recognised consumer organisations to obtain a binding court ruling on factual or legal questions that are relevant for a large group of consumers. While it does not result in direct compensation, it creates the legal foundation for subsequent indi- vidual claims. • Redress action ‒ this mechanism empowers quali- fied entities to pursue monetary and non-monetary remedies on behalf of consumers and micro- enterprises. Possible outcomes include damages, contract termination, repair, or reimbursement, making it the most far-reaching collective tool under German law. • The Act on Model Proceedings in Capital Market Disputes ‒ applicable in investor disputes, this statute enables courts to decide on key factual and legal issues that arise in multiple parallel cases, such as claims based on prospectus liability. The model ruling is binding for all related proceedings. • Injunctions under the Injunctions Act ‒ these grant consumer organisations and business chambers the ability to prevent companies from continuing unlawful practices (eg, the use of unfair terms in general conditions or the use of misleading adver- tising). Although not designed to award damages, it plays a central role in consumer protection. In practice, collective redress in Germany therefore functions as a bundle of specialised mechanisms. Common features include opt-in participation, strict standing requirements for qualified entities, and a focus on compensatory relief.
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