DUBLIN — An obscure 400-year-old Irish law is holding back collective legal action against Big Tech firms in Europe.
For decades, consumers in the United States have been banding together to sue companies for billions of dollars in compensation for harm caused by everything from tobacco and oil to online shopping. Five years ago, Europeans got similar rights to file continent-wide consumer class-action cases against corporations, prompted by the "Dieselgate" emissions scandal that forced German carmaker Volkswagen into a settlement of more than $9.5 billion with U.S. consumers.
But many of the world's largest tech giants, with millions of users, deep pockets and a track record of breaking EU rules, have so far been spared from major class action challenges. That's because in Ireland, where many of these firms have their EU headquarters, it is illegal for a funder to finance a legal case unless it is directly involved or has a legitimate interest.
At the same time, the EU's landmark 2020 Representative Actions Directive that enabled class action across Europe stipulates that these cases can only be filed by non-profits, who tend to rely on outside funding to cover the huge costs of taking on Big Tech.
Ireland is the only EU country with such a restriction — a rule rooted in legal concepts dating back to the Middle Ages that were written into Irish law in 1634. And it is holding back rights activists from raising funds to mount new, big cases against tech giants.
Five non-profits are registered in Ireland to take class actions under the new directive, three of which (the Irish Council for Civil Liberties, Noyb and Digital Rights Ireland) have a track record of taking on Big Tech.
So far, only one class-action case has been lodged: the Irish Council for Civil Liberties filed the first such case in Ireland last year against Microsoft over its online advertising system. They were able to fund it through their general budget, which comes from donations and philanthropic grants.
“To take complex litigation like this in Ireland costs at least €1 million in the first instance. We cannot take multiple cases unless the State allows us to raise the necessary funds,” said Johnny Ryan, director of the Irish Council for Civil Liberties' enforcement unit, pointing out the organization doesn't have the resources to launch more challenges.
He characterized the EU's requirement that non-profits lead class action cases and the Irish law's ban on raising outside funding as the “fatal contradiction” for Europeans seeking compensation from Big Tech.
“To bring a case against a Big Tech company, it just costs an awful lot of money,” said Gerard Rudden, an Irish lawyer who helped notorious privacy campaigner Max Schrems bring two landmark legal cases involving Facebook through the Irish courts.
“They obviously have unlimited resources to put into litigation," Rudden said of the tech firms. "It takes a lot of time, a lot of effort, a lot of bodies and it costs a lot of money to do it. This has ramifications across Europe, because if funding was permitted, you could have a European-wide collective redress case against Meta, Google, Microsoft or whoever in Ireland. But at the moment it’s just impossible because it would cost too much.”
The ban's origin comes from Ireland having inherited two legal concepts from English law, called “maintenance” and “champerty.” The concepts date back to medieval times; the Irish 17th century law enacting them is still in effect today.
Maintenance is where an individual funds or supports a lawsuit without a direct interest, while champerty is a form of maintenance whereby the funder is given a share of potential winnings in return for financing the case.
While England abolished the two offenses in 1967, Ireland’s courts have upheld the ban on third-party funding. There are a few exceptions, such as when a case is funded by charitable donations from people who don't expect a share of any payout.
A spokesperson for Ireland’s Department of Enterprise, Trade and Employment, who declined to be named, pointed out that Ireland’s independent Law Reform Commission is due to publish a report later this year on whether the rules should be reformed. Changing the law would be a decision for the government’s justice department, they added.
Irish Justice Minister Jim O'Callaghan has said he is "very hesitant" to introduce third-party funding in Ireland, since there is a risk of "commodifying justice," which could result in lawyers or other financial backers taking a big chunk of payouts. That dynamic has long been criticized as prompting an overload of U.S. class action suits.
When it transposed the EU directive into national law, the Irish government also capped the entry fee for individual consumers to join a class action suit at €25.
Johannes Caspar, the former head of Hamburg’s privacy regulator who has been on the front lines of the EU’s battle to rein in Big Tech, said "collective redress" allows the bundling of compensation claims that individuals would never have the means to bring on their own. "They are time-consuming and there is a high cost before even getting before a court,” he said in an interview.
The Irish enterprise department spokesperson said that the way the directive is written into Irish law aims to “strengthen consumer protection by providing accessible and effective redress mechanisms for mass harm,” and the €25 cap is to meet requirements that fees are “modest and do not deter a consumer from requesting to be represented in a representative action.”
In the “coming weeks,” the Irish government is expected to begin waiving High Court fees (typically in the low hundreds of euros depending on the type and number of filings) for qualified non-profits taking collective redress cases, the spokesperson said.
The European Commission is in “close contact with all Member States, including Ireland” and is “assessing” how the class action directive is being rolled out, it said in response to POLITICO's questions. “Under the Representative Actions Directive, when Member States prohibit third-party litigation funding, they need to ensure that costs of proceedings do not constitute an obstacle for qualified entities to exercise their rights to seek collective action,” they said.
