Class actions in Croatia

  1.  Do you have a specific procedure or procedures for bringing “opt-in” class actions?  If so, please outline such procedure(s) and their key features.
  2. Do you have a specific procedure or procedures for bringing “opt-out” class actions?  If so, please outline such procedure(s) and their key features.
  3. Are there specific rules on standing for bringing claims under these procedures (e.g., that claims can only be brought by consumer associations)?  If so, please summarise those rules.
  4. How frequently are class actions brought in your jurisdiction? Are there any pending changes to your class action rules that are likely to increase the number of claims filed?
  5. Are the procedures for class actions restricted only to certain causes of action/types of claim, e.g., competition claims?  If so, please describe these restrictions.
  6. What types of relief are available, i.e., damages and/or injunctive relief? 
  7. On what basis are damages calculated i.e., compensatory and/or some other basis?
  8. Are punitive or exemplary damages recoverable?
  9. Will domestic law need to be changed to comply with the Representative Action Directive?
  10. Are there special rules for settlement of class actions, e.g., requirement for court approval?
  11. Beyond the existing rules for taking jurisdiction in unitary claims, are there any additional rules on jurisdiction for your class action procedures?  Are there any territorial limitations to who may be members of the class?
  12.  Please describe the “certification” requirements for each of your jurisdiction’s class action procedures, e.g., how similar must the claims be?  Are there any other criteria to be met for the court to approve use of the procedure?
  13. Do you have specialist courts for these procedures?
  14. Are there any special rules for discovery/disclosure for class action procedures that are different to the rules for unitary actions?
  15. Are there any special rules for appeals in class action procedures that are different to the rules for unitary actions?
  16. Can arbitration clauses lawfully contain class action waivers?
  17. Are contingency fee agreements permissible?
  18. What are the rules on cost shifting, i.e., does the losing party ordinarily have to pay the winning party’s costs?  Are adverse costs awards capped?  If so, at what level(s)?
  19. Is litigation funding of class actions permissible?  If so, how prevalent is litigation funding?

1. Do you have a specific procedure or procedures for bringing “opt-in” class actions?  If so, please outline such procedure(s) and their key features.

The Croatian legal system is based solely on an “opt-in” class action system. The class action system can be divided into two stages. The first stage is class action in its true sense i.e., a lawsuit being brought by an association or another legal person for the protection of collective rights and interests.
 
The second stage comes after the decision in the first stage is given. Our answer to question 6 below explains the types of relief and/or orders that a court can make in the first stage. This second stage is where the “opt-in” system comes to light. Based on the decision made in the first stage, individuals can file separate (i.e., individual) lawsuits, such as for compensation of damages. In these individual proceedings, the court is bound by the first stage decision (i.e., the class action stage). Therefore, any individual, provided that its right and/or interest was the subject of a decision in the first class action stage, can “opt-in” by filing an individual lawsuit. 

There are a number of laws, which regulate class actions (i.e., the lawsuit for the protection of collective interests and rights), such as the Consumer Protection Act, Commerce Act, Act on Suppression of Discrimination, etc. However, only one main law regulates the procedural aspects of all these class actions, being the Civil Proceedings Act.

2. Do you have a specific procedure or procedures for bringing “opt-out” class actions?  If so, please outline such procedure(s) and their key features.

The Croatian legal system does not provide for “opt-out” class actions.

3. Are there specific rules on standing for bringing claims under these procedures (e.g., that claims can only be brought by consumer associations)?  If so, please summarise those rules.

The rules for all types of class actions in the Civil Proceedings Act state that only associations, bodies, institutions, or other organisations can bring class actions. These bodies must meet the following conditions:

  1. they must be founded in accordance with the law; 
  2. their registered or statutory activity must be the protection of statutory collective interests and rights of citizens;
  3. they must be expressly authorised to bring such class actions by law; and
  4. they can only bring the actions under the conditions provided by the law that authorised them to file the class action.

Specific laws give more detail on who is authorised to bring a class action (point (iii) above). These include merchant chambers, interest associations of merchants, associations authorised for collective achievement of copyright rights, consumer associations, state bodies competent in the protection of consumers, government-authorised bodies, etc. 

To be more specific, the POTROŠAČ association is authorised to bring class actions for the protection of consumer rights; the Croatian Composers’ Society is authorised to bring class action for the collective achievement of copyright rights; and the association KONTRA is authorised to bring class actions for the suppression of discrimination, etc.

Additionally, natural and legal persons, for whose collective interests the class actions were brought, can take part in the proceedings as interveners.

4. How frequently are class actions brought in your jurisdiction? Are there any pending changes to your class action rules that are likely to increase the number of claims filed?

The frequency of class actions is difficult to determine since there are few official or unofficial statistics. The majority of statistical data concerns class actions for suppression of discrimination. In 2019, no class actions were filed for discrimination cases. 

The lack of information can be attributed to the fact that not all court judgments are made public, so the number of class actions cannot easily be determined. The main source of information on filed class actions is the media, such as the extensive coverage of the class action filed by the POTROŠAČ association against eight Croatian banks regarding Swiss Franc loans.

Currently, there are no pending changes to Croatian class action rules.

5. Are the procedures for class actions restricted only to certain causes of action/types of claim, e.g., competition claims?  If so, please describe these restrictions.

The provisions of the Civil Proceedings Act, which is the main procedural act for class actions, do not limit the interests by which a class action may be brought. The Act states that these interests may concern environmental, moral, ethical, consumer, antidiscrimination, and other interests. That said, the interest for which a class action may be brought are limited to those that are guaranteed by law.

6. What types of relief are available, i.e., damages and/or injunctive relief? 

With a class action (the first stage of which is described in Question 1 above), associations and other authorised bodies can request:

  1. a determination that specific actions or omissions of the defendant represent a breach, or that they threaten the statutory protected collective interests and rights of the persons who the claimant is authorised to represent;
  2. a prohibition of actions by which the interests or rights of the persons the claimant is authorised to represent are being breached or threatened. These actions may include the use of certain contractual provisions or business practices;
  3. that the defendant be ordered to undertake actions to remedy the actual or potential damaging consequences of his prohibited actions, including restitution (although the scope of this can vary);
  4. publication of the judgment in the media at the expense of the defendant.

Before or after the class action is filed, the claimant can request that the court order an interim measure (i.e., injunction), such as one preventing them from carrying out specific actions. For the court to grant such measures, the claimant must prove that:

  1. the defendant has acted in a way, which has breached or seriously threatened the collective interests or rights (the protection of which is requested by the class action); and
  2. the measure is necessary to remove the danger of irreparable damage or to prevent violence.

The above is stipulated in the Civil Proceedings Act. Other acts that regulate the protection of collective interests or rights either do not state what can be sought by the lawsuit, in which case the above will apply, or are similar to the above. Apart from that, the Consumer Protection Act does not require that specific circumstances are required for a court to order an interim measure forbidding certain actions.

After the decision on the class action is given (i.e., stage 1) and it is determined that the defendant’s actions breached the rights of persons the claimant is authorised to represent, every individual (a natural or legal person since this is the part where persons can opt-in) can file a separate lawsuit requesting compensation for damages or payment from the defendant. In these second proceedings, the court is bound by the findings of the court that determined the class action. In other words, if the class action was accepted and the court determined that there was a breach of rights, the court deciding on the individual lawsuit cannot rule there was no breach of rights.

7. On what basis are damages calculated i.e., compensatory and/or some other basis?

Damages are calculated on a compensatory basis. The general rules for compensation of damages apply. This means that compensation for pecuniary damages are compensated by restoring the state of things as they were before the damage occurred (i.e., restitution). If this is not enough to eliminate the damage, then a certain amount of money will be provided as compensation. 

Compensation for non-pecuniary damages can be given in the form of publishing the judgment, or by correcting or retracting the statement causing the damage or in any other form just compensation can be achieved. The court can order payment or a just monetary compensation if the severity of the breach and the circumstances of the case justify it. The form of compensation will naturally be determined on a case-by-case basis. For instance, a monetary compensation is usually awarded for non-pecuniary damage due to personal injury.

8. Are punitive or exemplary damages recoverable?

The Croatian legal system does not provide for punitive or exemplary damages. 

9. Will domestic law need to be changed to comply with the Representative Action Directive?

Yes, to an extent. Although the provisions of the Directive and the Consumer Protection Act are similar, the law will need to be amended to fully implement the Directive. In our opinion, the provisions concerning the review and standing of the qualified entities will need to be adopted or more precisely regulated in the Consumer Protection Act. The legislator can implement the Directive by adding a new part of the Law concerning cross-border class actions only.

10. Are there special rules for settlement of class actions, e.g., requirement for court approval?

There are no special rules for settlement of class actions. The court will not allow a court settlement for claims the parties cannot dispose of (i.e., those contrary to mandatory provisions and rules of public policy). This also applies to out-of-court settlements used by parties agree to conclude proceedings (e.g., by withdrawal of the lawsuit, by renouncing the claim or by admitting to the claim). The court will not allow such settlements, again based on the same principles that the disposal of the claim is contrary to the mandatory provisions or rules of public policy. The consequence would be that the out-of-court settlement cannot be fulfilled.

11. Beyond the existing rules for taking jurisdiction in unitary claims, are there any additional rules on jurisdiction for your class action procedures?  Are there any territorial limitations to who may be members of the class?

The Civil Proceedings Act stipulates specific rules regarding jurisdiction in class actions. Class actions can only be determined by the court territoriality competent for the defendant (i.e., the court where the defendant has his residence or seat). Alternatively, it would be the court where the action was committed that breaches the interests or rights subject to the class action. 

Some specific laws also have provisions for jurisdiction. For example, the Consumer Protection Act states that the Commercial courts have jurisdiction. The Commercial court on whose territory the defendant has its seat, branch or residence has territorial jurisdiction. If there is no territorially competent Commercial court for the defendant (i.e., the defendant has a seat abroad), then the territorial jurisdiction will be determined by the place where the breach of consumer interests (the law gives a specific list) occurred or could have occurred or the place where the damaging consequences occurred. 

The Act on Suppression of Discrimination states that the Municipal court has jurisdiction for class actions. Territorial jurisdiction applies to the Municipal court in whose territory the seat or residence of the defendant is located or on whose territory the action of discrimination was undertaken. Otherwise, the Municipal Court in Zagreb will have territorial jurisdiction. 

The Act on Prohibited Advertising states that Commercial courts have jurisdiction for class actions. The Commercial court on whose territory the defendant has its seat or residence will be territorially competent.

There are no territorial limitations on who may be members of the class. 

12. Please describe the “certification” requirements for each of your jurisdiction’s class action procedures, e.g., how similar must the claims be?  Are there any other criteria to be met for the court to approve use of the procedure?

There are no ”certification“ requirements for class action procedures (i.e., the set number of claims that may justify filing of a class action, similarity of claims, etc.). 

The Consumer Protection Act provides that a requirement must be met before a class action can be brought. According to this requirement, the claimant must, prior to bringing a class action, send a written warning to the potential defendant that if they do not cease with the prohibited actions, a class action will be brought against them. The claimant cannot bring a class action before 14 days have lapsed from the delivery of the warning.

13. Do you have specialist courts for these procedures?

No, there are no specialist courts for class actions.

14. Are there any special rules for discovery/disclosure for class action procedures that are different to the rules for unitary actions?

The Croatian legal system generally does not provide for disclosure/discovery rules. There are some provisions that are similar (e.g., when a party is relying on a document, the party must submit the document), but the system is not the same as in common law. 

The Consumer Protection Act provides for special discovery/disclosure rules for class actions. The Law states that in class actions brought for specific breaches regarding unfair business practices (e.g., statements by the defendant that are untrue or are misleading to consumers), the court can take into account the circumstances of the case and the justified interests of the defendant, and can request that the defendant deliver evidence proving the factual statements put forward in the scope of his business practice. If the evidence is not delivered or the court finds them incomplete or not sufficient, the subject factual statements will be considered not true. A similar provision is contained in the Act on Prohibited Advertising.

15. Are there any special rules for appeals in class action procedures that are different to the rules for unitary actions?

There are no special rules for appeals in class action procedures that differ from the general rules that also apply to unitary actions. The Act on Suppression of Discrimination states that a revision is always permitted in lawsuits for the protection against discrimination, which also applies to class actions.

16. Can arbitration clauses lawfully contain class action waivers?

In our opinion, arbitration clauses that contain class action waivers are not permitted, but we are not aware of any cases where this issue has arisen.

17. Are contingency fee agreements permissible?

Contingency fee agreements are permissible. The Croatian Lawyer’s Tariff states that in civil cases a lawyer can agree with the client that his fees will be determined in proportion to the success of the client in the proceedings. The maximum proportion is 30%. For example, if the client is awarded HRK 100 as compensation for damages, and the client and the lawyer agreed that the lawyer’s fee is 30% of the amount successfully claimed, then the lawyer’s fee will be HRK 30.

18. What are the rules on cost shifting, i.e., does the losing party ordinarily have to pay the winning party’s costs?  Are adverse costs awards capped?  If so, at what level(s)?

General rules apply regarding costs, meaning that the losing party pays the costs of the winning party. There are exceptions to this rule. For example, a party will be obliged to reimburse the other party’s costs caused by the first party. 

The court calculates the costs by first determining the percentage of success of each party. The lower percentage is subtracted from the higher percentage and the result is the percentage of costs that the court will order the losing party to pay the winning party. The court essentially offsets the costs of the proceedings between the parties. 

The costs are capped by the Croatian Lawyer’s Tariff. The cost that can be requested for each action undertaken before the court is determined by the value in dispute. For example, if the value in dispute is HRK 10,000, the claimant can request HRK 750 for drafting the lawsuit. The full amount can be requested for only a limited number of motions (e.g., four motions in the first-instance proceedings). The costs for further motions will amount to 25% of the full amount. A similar limitation is also applied to costs for attending hearings.

19. Is litigation funding of class actions permissible?  If so, how prevalent is litigation funding?

No. The Croatian legal system does not prohibit litigation funding, but there are no active funders of litigation in Croatia.

See the Overview of the Representative Actions Directive >>
Portrait of Vedrana Vučković
Vedrana Vučković
Attorney-at-Law for Dispute Resolution
Zagreb
Portrait of Sandra Lisac
Sandra Lisac
Partner
Zagreb