Austria's New Era of Consumer Rights: How the EU's Representative Actions Directive Transforms Class Action

Introduction

The EU Directive on Representative Actions for the Protection of Collective Interests of Consumers (the “Representative Actions Directive”) was introduced in 2020, requiring all EU Member States to integrate its provisions into national law by December 25, 2022. However, not all Member States met this deadline, including Austria. Austria eventually transposed the directive into its national law on July 18, 2024, marking a significant change in its system for representative actions.

European Union representative actions directive

The Representative Actions Directive was established to empower consumers to protect their collective interests through a representative action approach. This directive is a pivotal tool for consumer access to justice and includes safeguards to prevent abusive litigation. Its implementation requires Austria to expand its litigation mechanisms, making procedures more claimant friendly. Austria’s adoption of a collective redress system enables consumers to seek compensation, which is a notable shift from the previous focus on injunctions or declaratory relief

What changes might Austrian class action face?

In Austria, representative actions can be initiated only by qualified organizations to protect consumers’ collective interests, though individual claims can still be pursued through the "Austrian-style collective action," where claims are transferred to another party for joint enforcement. This existing form of collective action remains available and unmodified. However, two new types of collective actions are introduced: representative action for injunction and representative action for redress.

Representative Action for Injunction  

Qualified entities may initiate an action for an injunction against company practices that impact, or risk impacting, consumers' collective interests. Austria permits actions for any legal breach threatening consumer interests, not solely those violating EU law, offering greater flexibility.

Representative Action for Redress  

This type of action applies when consumers have accumulated claims for redress that were previously disputed out of court. To bring this action, at least 50 claimants must share a common issue. A notable feature of this representative action is the option to jointly seek an interim declaratory judgment, part of the redress process, which allows an early decision on whether a specific right or legal relationship exists, binding all involved consumers.

Area of application

The representative action system in Austria applies exclusively to business-to-consumer (B2C) relationships, meaning that only consumers who have purchased goods or services can benefit. Although the Representative Actions Directive sets minimum requirements, allowing some Member States (e.g., Germany) to include small to medium-sized businesses in collective actions, Austria has opted to limit its scope strictly to consumers.

Austria applies the directive to multiple areas of law, so consumers are not confined to a single legal sector but may pursue claims across various fields, offering flexibility in seeking compensation.

Procedure

In Austria, the Commercial Court of Vienna has exclusive jurisdiction over assessing whether cases meet the criteria for collective redress. Once the court approves a representative action, the decision is published publicly, and consumers have three months from the publication date to join the lawsuit.

Once consumers join the collective redress action, the court reviews the facts and legal issues related to each claim. If the collective action is deemed ineligible, the court may extend the statute of limitations by three months, allowing consumers additional time to pursue individual claims if collective action is not approved. The court’s final decision is then published.

Settlements

A representative action can also be concluded through a settlement between the qualified entity and the company, though the court must confirm the settlement for it to take effect. This decision is binding only on consumers who joined the representative action.

Litigation Funding

Austria takes a relatively flexible approach to litigation funding for collective actions compared to other EU Member States. Third-party funding is allowed, meaning external entities can finance collective action lawsuits. Consumers wishing to participate in a collective action must sign an agreement between the qualified entity representing them and the external sponsor, ensuring that the sponsor is compensated for the financial risk while providing consumers access to justice.

Qualitfied entities

In Austria, specific organizations are recognized as qualified entities authorized to bring representative action claims on behalf of consumers. These entities must meet certain criteria and be authorized by the relevant authority. For cross-border and domestic legal actions, Austria designates the Austrian Federal Economic Chamber and the Austrian Federal Chamber of Labor as qualified entities. For domestic actions, additional agencies are recognized, including:  

• The Austrian Chamber of Agriculture  

• The President‘s Conference of the Austrian Chambers of Agriculture

• The Austrian Trade-Union Federation  

• The Association for Consumer Information  

• The Austrian Senior Citizens' Council