Luxembourg launches collective lawsuits

After years of discussion and more than a hundred amendments, Luxembourg has approved a law that opens the way for consumers to take collective action against companies. From now on, citizens faced with deception, substandard goods or unfair services will be able to seek compensation jointly - but only through authorised organisations such as the Luxembourg Consumer Protection Association (Union Luxembourgeoise des Consommateurs - ULC).

Private individuals are not allowed to initiate such cases on their own - only state-recognised structures such as the ULC or the Institut Luxembourgeois de Régulation (ILR). These organisations will also be able to represent Luxembourgers in international cases if the dispute goes beyond the country's borders.

How the new mechanism works

To launch a collective proceeding, several consumers must report a problem - whether it is a faulty product or misleading advertising. The ULC can gather information from both citizen complaints and its own observations.

If the preliminary examination confirms the grounds for the claim, the District Court of Luxembourg (Tribunal d'arrondissement de Luxembourg) decides whether to allow the case to proceed. If approved, an official notice is published and all those affected - regardless of ULC membership - can join free of charge by submitting evidence (cheques, contracts, etc.).

However, unlike in many countries, the law does not push the parties straight into court proceedings. There is a mandatory six-month mediation stage - attempts to resolve the conflict peacefully. The procedure is free of charge, but each party pays for its own lawyers and experts.

If the parties find a solution - for example, refunds, exchange of goods or vouchers - the agreement is approved by the liquidator, who enforces it. Even after mediation has been completed, other victims can join in the outcome of the agreement. Only if negotiations fail does the case go to court.

Better than France and Belgium

Lawyer Bob Schmitz, who has dealt with class actions in the ULC for many years, said in an interview with RTL that the Luxembourg model, while not perfect, has a significant advantage over its neighbours. The centrality of mediation, he said, makes the system more efficient and dialogue-oriented: "In a small country, it's easier to build direct communication between the parties - and that's our advantage."

However, state resources are not yet fully ready. The website of the National Consumer Mediator Service has not yet been updated, and the promised portal recourscollectif.lu, where citizens can track cases, has not yet been launched.

От Dieselgate до Temu

The law covers a wide range of possible disputes - from high-profile cases like Volkswagen Dieselgate or Booking.com price collusion to small but massive violations. A particularly hot topic will be purchases on foreign online platforms, where unsafe or substandard goods are often found.

Schmitz mentioned that, for example, in the case of Temu Marketplace (or similar sites), the ULC would first try to establish a dialogue with the company. Only if negotiations fail will the organisation file a class action lawsuit.

He urged residents to report such cases, emphasising that the effectiveness of the law can only be assessed through real examples. At the same time, businesses should not be afraid of an influx of lawsuits - only legally justified cases will be considered, and the law applies retroactively only to cases after June 2023.