1st ICAI 2020

International Conference on Automotive Industry 2020

Mladá Boleslav, Czech Republic

for 11.1% of all litigation spending in the US (Carlton Fields 2019). Labels of “class action culture” or “a culture of litigation abuse” are therefore not rare in the European narrative. Moreover, this image is widely supported by the media, which spreads this view mostly without appropriate context or qualified analysis. Public opinion is therefore to a large extent dominated by the spectre of US style class action. Any assessment of the import of the negative effects of the US class action system must, nevertheless, refer to different common law principles. In light of the broader context, the threat of US style class action in the Czech legal context and the panic of looming Americanisation of the national litigation culture largely vanish. The rationalisation of class action has to filter common prejudice that ignores mainly the following facts. Firstly, the difference in the damage compensation concept, being a key issue of any class action considerations, is often ignored. The US system of punitive damage is not compatible with the continental legal tradition. The European concept of damage compensation does not employ repressive and deterrent functions – the functions are performed entirely by public law (Englard, 2012). Class action in the US, however, is traditionally based on these repressive and deterrent principles, awarding damages to the injured parties in an amount many times the actual damage (McGovern, 2010) The principal differences can be illustrated well in the procedures and outcome of Dieselgate litigation in the US and Europe so far. The disproportion of the defendant’s willingness to settle and the value of the final settlement have to be primarily interpreted in light of the risks of punitive damages involved and the corresponding negotiating position of the defendant. Secondly, the different system of cost remuneration largely affects the class litigation system. The US split-cost system leaves the successful party of the proceedings without the possibility of remuneration for the costs by the loser. The US system of splitting litigation costs includes more financial risks and consequently generates a greater need for external financing mechanisms involving banks, funds, law firms and other investors in order to diversify and minimise the potential overall financial impact (Hensler, 2014; Coffee, 2017). The European litigation culture is fundamentally different, with the collective compensatory redress based on the “ loser pays” principle. This principle is also emphasised as a key element by the DRA. The right to final remuneration for the cost of collective proceedings from the losing party significantly limits the financial risks and will shape the European litigation culture differently. Thirdly, the crucial difference in the systems is lay people’s participation in the decision- making process. The American jury trial constitutes one of the key constitutional principles of American democracy and is presently available also in a large number of class action cases (Scarlett, 2020). The drawbacks of the jury system in class actions, on the other hand, are well-known: e.g. the reduced predictability of the final compensation, media coverage affecting the emotional aspects of decision-making including the potential prejudice against corporations are often present in jury cases. (Hoefges and Lancaster, 2000). The above factors also significantly support the strong tendency for settlements avoiding adjudication in the US where the current rate of settlements in class actions amounted to 73.1% in 2018 (Carlton Fields 2019). The current Czech litigation culture fundamentally contrasts to the American tradition

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