Croatia implemented a Directive via a new law which entered into force on 25 June 2023. The name of the law transposing the Directive (EU) 2020/1828 of the European Parliament and of the Council of 25 November 2020 on representative actions for the protection of the collective interests of consumers and repealing Directive 2009/22/EC (“Directive”) is the Act on Representative Actions for Protection of the Collective Interests of Consumers (“Act”), hence the only purpose of the said Act is to implement the Directive into the Croatian legal system.

Until the Act entered into force, Consumer Protection Acts (as newly enforced and amended from time to time) and the Civil Procedure Act (Official Gazette No 53/91-114/22 (“CPA”) were applicable to collective actions.

In Croatia, plaintiffs are entitled to bring an action for: (i) declaratory reliefs that the defendant breached the listed laws; (ii) injunctive measures aimed at stopping the unlawful practice, and (iii) redress measures for compensation. Croatian legislators did not opt for means of redress measures other than compensation.

The question of who bears the costs of litigation under the Act is governed by the Croatian Civil Procedure Act, which, in essence, proscribes that the unsuccessful party is liable for the costs of the winning party.

The Directive’s rules from Article 12(2) and 12(3), according to which an individual consumer in action for redress measures shall not pay the costs of the proceedings except in case the costs were incurred as a result of the individual consumer’s intention or negligent conduct could be traced in Article 156(1) CPA, according to which the party is obligated, regardless of the outcome of the lawsuit, to compensate to the opposing party the costs incurred as a result of its own fault or negligence, as well as in the Act, in which it is prescribed that the individual consumer can only be responsible for settling of symbolic fee that could not be higher than 5% of the claim for redress measure and in any case not higher than EUR 70.00.

There are no particularities regarding the national transitional provisions. The Act transposes the basic rule that all actions initiated before the Act entered into force on 25 June 2023, shall be governed by the laws applicable until then (by the Consumer Protection Act), while for all the representative actions initiated after 25 June 2023, the Act shall be applicable.

One of the mandatory elements in claims for distress measures is the list of names of consumers with their statements consenting to representation in the lawsuits and the amount of damages that are to be attributed to them. The said list could be amended until the main hearing is closed. Hence, consumers can opt-in and opt-out of the lawsuits for redress measures until the closing of the main hearing.

Croatian legislators fully transposed Article 4 into the Croatian legal system. Namely, representative actions could only be initiated by qualified entities that are listed on the List of qualified entities for bringing representative actions.

In order that an entity/organization to be designated as a qualified entity, the following criteria should be met: 1.) The entity shall be registered in the register of organizations and non-profit organizations; 2.) the entity is founded for the purpose of protection one or more consumers’ interests provided in Croatian legal system and recognized under the Directive; 3.) to actively operate for at least 12 months prior to filing of a representative lawsuit; 4.) there is no ongoing procedure on termination of the organization, 5.) that transparent financial operations are conducted in accordance with the regulations on accounting for nonprofit organizations, 6.) contractual obligations are duly fulfilled in relation to implementation of approved financial support from government bodies and other public authorities, 7.) that  payment obligations for taxes and other contributions to the state budget and budgets of local and regional self-government units are duly fulfilled, 8.) that no criminal proceedings are initiated against the person(s) authorized to represent the organization for criminal offenses prosecuted ex officio, 9.) that the evidence is presented that their actions are not influenced by non-consumer persons, especially traders, who have an economic interest in filing certain lawsuits,10.) that organizational, human, spatial, and financial resources are secured for the performance of basic activities in accordance with the association's financial plan and work program, 11.) that the organization is solvent, 12.) that the organization regularly, clearly, and comprehensibly publish the information on the above listed information on their website, together with information on sources of funding, their organizational and management structure, and membership structure.

Based on the request enclosing the evidence on the above requirements, the ministry competent for the protection of consumers (currently: the Ministry of Economy and Sustainable Development, (“Ministry”) assesses whether the association or another form of association fulfills the conditions and decides on including the applicant on the list of qualified entities.

The Act defines the term “collective consumer interests” as the general interests of consumers, particularly in representative actions for redress measures, where the interest of the consumer group is at stake. Under the CPA, which subsidiary applies to the Act, the collective interests can include interests related to the environment, such as human ecology and the natural surroundings. Also, it encompasses moral, ethnic, consumer, anti-discrimination, and other interests that are legally protected and must be significantly harmed or seriously endangered by the actions or general conduct of the person against whom the lawsuit is filed.

The most notable class litigation in Croatia, initiated under the framework of CPA and the Croatian Consumer Protection Act (as applicable) was the class action initiated by consumers that entered into bank loan agreements in CHF currency, dated in 2012, which was initiated under the lead of consumer protection organizations “Potrošač” and “Franak”.

Croatian courts dismiss “manifestly unfounded cases” only by exception, meaning that in most cases, as long as a statement of defense has been filed, the courts shall decide on the ruling (by accepting or denying the claim) only after the preliminary and main hearing has been conducted and all evidence examined.

However, under the CPA, a court may dismiss the manifestly unfounded case even if the statement of defense has not been filed, provided that the following requirements are met: (i) the lawsuit has been duly delivered to the defendant, (ii) there are no publicly known circumstances indicating that the defendant had justifiable reasons for not submitting a response to the claim, while (iii) the relief does not arise from the facts stated in the claim and/or (iv) facts from the claim on which the claim is based are contradictory to the evidence submitted by the plaintiff or to the facts that are publicly known. In that case, thus, the court is exceptionally allowed to dismiss the claim as manifestly unfounded without entering deliberations and conducting the preliminary and main hearing.

To the best of our knowledge, the Act is the only law regulating third-party funding in Croatia.

On the general side of regulating third-party funding, the Act prescribes that it is necessary to ensure that (i) conflicts of interest are prevented, and that (ii) the financing provided by the third-party, who has an economic interest in filing the lawsuit or an interest in the outcome of an action for redress measures, does not affect the protection of the collective interests of the damaged consumers pursued through the lawsuit.

In relation to the actions for redress measures specifically, the Act prescribes that a third-party funder is prohibited from influencing the decisions of a qualified entity acting as a claimant in such lawsuits, including the decision to enter into a settlement following the mediation proceeding as prescribed under the Act in a way that would harm the collective interests of the consumers to whom the claim relates. Also, it is prescribed that financing of the actions for redress measures by the defendant's competitor or a person dependent on the defendant is prohibited.

The Act is silent on the court’s power to order disclosure of the third-party agreement, from which the conclusion arises that the court could not order it. Under the Act, the court is entitled to request from the qualified entity acting as a claimant in a specific case to provide a financial overview with a list of the sources of funds used to support the action for redress measures.

The Act regulates settlements in the following way:

• During the preparatory hearing regarding the action for redress measure, the court will inform the parties about the possibilities of resolving the dispute through a court settlement or through mediation and explain these options to them. The provisions of the law governing civil proceedings on court settlements and mediation shall be applied to a court settlement and mediation in the lawsuits for representative actions. Before the conclusion of the court settlement, the court shall examine whether the settlement is in line with the mandatory provisions, public policy and fairness and the court shall postpone rendering the decision on refusal of the settlement in case it is necessary to obtain additional information on these circumstances.
• Croatian legal system did not transpose in the Act the possibility to accept or to refuse to be bound by settlements as provided in Article 11(4) of the Directive, meaning that all the individual consumers concerned by the action (as determined until the closing of the main hearing) shall be bound by the settlement.

The Act regulates the above matter in a way that qualified entities are obliged to publish information on their websites, and if necessary, through other appropriate means, regarding: (i) domestic and cross-border representative actions they intend to initiate, (ii) the status of already initiated domestic and cross-border representative actions, and(iii) the outcomes of actions listed in (i) and (ii).

The defendant is obliged to inform interested consumers about the initiated representative action for redress measures that are being raised against it and such notice shall be provided by the defendant in a manner that ensures timely delivery to all potentially affected consumers.

Under the Act, the obligation for publication of information also touches the Ministry competent for consumers – it is obliged to publish information on its website about (i) qualified entities and (ii) ongoing and legally concluded domestic and cross-border representative actions. The Commercial Court to which a representative action has been submitted is obliged to regularly provide the Ministry with information on filed domestic and cross-border representative actions, final decisions on such actions, and concluded court settlements.

The Ministry publishes and provides information to the European Commission about (i) the number and type of final decisions and concluded court settlements in representative actions, (ii) the parties involved in representative action proceedings, (iii) the types of violations covered by representative actions, (iv) the outcomes of initiated representative actions and concluded court and out-of-court settlements (v) the website where the data from this provision will be published. The Ministry shall provide the above information to the European Commission no later than 26 June 2027, and thereafter every four years.

The court may order the defendant to publish, in whole or in part, the judgment on declaratory relief or for injunctive measures aimed at stopping the unlawful practice, in a format deemed appropriate by the court, or to publish a statement indicating the established violation of the regulations. In a court decision rejecting the claim for redress measure, the court shall order the qualified entity, at their own expense, to inform the affected parties covered by the final decision about the dismissal or rejection of the claim through means appropriate to the circumstances of the case and within the specified deadlines, and, where appropriate, by individually notifying each affected party. The said obligation does not apply if the affected parties have been otherwise informed of the final judgment or approved settlement.

The Act expressly provides rules for discovery/disclosure applicable to representative actions. Namely, the Act prescribes that, if, in a representative action or no later than the preliminary hearing, the qualified entity acting as a plaintiff referred to evidence held by the defendant or a third party that is necessary for the proper establishment of the facts, the court shall order the defendant or the third party to submit such evidence or otherwise enable its presentation.

The prescribed rule also works vice versa so, if, in response to the claim or no later than the preliminary hearing, the defendant refers to evidence held by the qualified entity acting as plaintiff or a third party that is necessary for the proper determination of the facts, the court shall order the qualified plaintiff or the third party to submit such evidence or otherwise enables its examination.

Under the Act, qualified entities previously appointed in another Member State may also file a cross-border representative action for the purpose of submitting cross-border representative actions before Croatian courts. Also, a representative action can be filed by multiple qualified entities from different Member States for the purpose of protecting collective consumer interests.

Croatian legislators did not provide any additional requirements for cross-border qualified entities willing to initiate representative action in Croatia, however, Croatian legislators decided that the criteria listed in the Article 4(3) Directive apply to the designation of qualified entities for the purpose of bringing domestic representative action in Croatia, as allowed under the Directive, from which it follows that standards for cross-border qualified entities and Croatian qualified entities are harmonized and corresponding.

Not applicable. Croatian legislators did not foresee that redress funds could be outstanding, which is in line with the rule that all consumers willing to participate in action for redress measure should be named and attributed with the exact amount of damages until the end of the main hearing, meaning that no outstanding funds should be available.

None at this time.