Flags of the European Union. Photo: Shutterstock.com

The EU has taken a big step toward making it easier for consumers to file class action-type lawsuits across the European Union.

Negotiators from the European Parliament and the Council of the European Union, which represents the 27 national governments, agreed this week on new EU-wide rules that, if approved by lawmakers, would smooth the way for consumers to file collective lawsuits over mass torts.

The new Representative Action Directive takes in "areas such as data protection, financial services, travel and tourism, energy, telecommunications, environment and health, as well as air and train passenger rights, in addition to general consumer law," according to a statement from the European Parliament.

Although European institutions have been discussing rules for consumer protection lawsuits for years, the rules approved Monday sprang from efforts launched in 2018 after the Volkswagen "Dieselgate" emissions scandal in 2015, where United States-based consumers could sue collectively for damages while European consumers could not.

The new rules deliberately stop short of authorizing U.S.-style class actions, setting limits on who can bring collective lawsuits and incorporating a "loser pays" principle designed to lower the financial barrier for consumers and discourage abusive or frivolous lawsuits.

"We have sought to strike a balance between the legitimate protection of consumer interests and the need for legal certainty for businesses," Geoffroy Didier, a French member of the European Parliament and member of the Committee on Legal Affairs, which help draft the new directive, said in a statement after the agreement was announced.

In an earlier statement, Didier said a goal in drafting the rules was to ensure that "all dangers and failures inherent in American class action are avoided."

The new rules apply and harmonize redress mechanisms across member states so that consumers in multiple jurisdictions can join in one action. Currently, 19 member states have laws that allow for collective redress by consumers, and the rules vary widely from country to country.

Under the new rules, each member state would nominate at least one qualified entity—an organization or a public body—to bring collective actions. These entities would have to comply with compatible criteria in all countries, such as being not-for-profit and having no financial agreements with third parties, including law firms, according to the new rules.

The new rules also require the European Commission to assess within three years if a European ombudsman for collective redress should be established.

The directive now goes to the full European Parliament and the full Council for approval.  Member states will have 24 months to enact the approved directive into national law, and an additional six months to apply it.