Collective redress/class action as a resource for lawsuits was brought into Icelandic law on 20 September 2010 by Act No 117/2010. This Act amended Act No 91/1991 on Civil Procedure (the “CPA”) by adding a new Article 19a, which contains all the provisions of the CPA regarding collective redress. Before Act No 117/2010 came into force, there was (and still is) a provision in the CPA (Article 25(3)) prescribing the possibility of forming associations to pursue cases in their own name for recognition of certain rights of their members. Although associations could be established strictly for the purpose of bringing a lawsuit, the provision lacked many important elements found in collective redress regimes and was almost never used for such purposes. 

The explanatory documents with Act No 117/2010 state that upon the enactment of the CPA in 1992, consideration had been given to enacting rules on collective redress/class actions. However, the idea was abandoned as there were no such rules in the other Nordic countries to rely on. As rules on class actions have since been enacted in other Nordic countries, it was thought timely for Iceland to follow this trend. 

In 2001, directive 98/27/EC on injunctions for the protection of consumers’ interests was implemented with Act No 141/2001 on injunction and litigation, to protect overall consumers’ interests (see 1.3 Implementation of the EU Collective Redress Regime).

It can be deduced from the explanatory documents with Act No 117/2010 that the collective redress regime in Article 19a of the CPA was, at least in part, modelled on such legislative regimes in the other Nordic countries. As an example, Article 19a contains a condition, like similar provisions in the other Nordic countries, that the claims of class action members must be sufficiently similar. However, Article 19a differs to a certain extent from the other Nordic countries’ class action regimes. For instance, there is no condition in Article 19a that a class action must be deemed the most convenient way to pursue the members' potential claims, as seems to be the case in Denmark, Norway and Sweden. Furthermore, there is no explicit condition that Iceland should be the correct venue for all the members' claims. Article 19a also does not require plaintiffs to bring forth a specific request in court in order to be allowed to file a class action, which seems to be a requirement in Denmark, for example. Instead, assessment of whether the conditions for collective redress are fulfilled is carried out in the traditional way when procedural issues are examined by the court – see 4.4 Class Members, Size and Mechanism (Opt In/Out).

Iceland has implemented Directives 98/27/EC and 2009/22/EC (the “Directives”), on injunctions for the protection of consumers’ interests, with Act No 141/2001 (on injunction and litigation to protect overall consumers’ interests) and Act No 97/2014 (amending Act No 141/2001), respectively. The provisions of Act No 141/2001 (as amended) clearly meet the minimum requirements imposed on member states by the Directives in that they provide access to competent authorities and courts to quickly stop violations of the directives listed in the annexes of the Directives. 

Directive 2020/1828 (the “Directive”) has not been implemented in Iceland. The Directive is currently under scrutiny by EFTA as to whether it will be incorporated into the EEA agreement. Thus, the Directive and its expected implementation have not yet been addressed or discussed by the legislature.

The four paragraphs of Article 19a of the CPA contain the entire legislative framework for general class actions in Iceland. In other respects, all the rules of the CPA, which contains more or less all the rules for handling civil court cases in Iceland, apply to the extent that there is no explicit deviation from them.

Article 19a provides the possibility for three or more persons (individuals or legal entities) who have claims against the same party or parties, and could have pursued a case in court on their own or jointly with others pursuant to Article 19(1) of the CPA (discussed further in 4.1 Mechanisms for Bringing Collective Redress/Class Actions), to form and entrust an association with filing a single lawsuit in its own name with regards to all their claims, and, as the case may be, to enforce and settle the claims (paragraph 1 of Article 19a).

The collective redress regime in Article 19a is intended for civil cases that are conducted in accordance with the CPA. The remedy is not limited or conditioned to specific types of civil cases.

In essence, a collective redress/class action suit in Icelandic law is where three or more persons, who have claims against the same party or parties that originate from the same incident, circumstance or legal instrument, within the meaning of Article 19(1) of the CPA, form an association to file a single lawsuit regarding all their claims in accordance with Article 19a of the CPA. 

The mechanism for bringing a collective redress/class action suit in Iceland is for three or more persons who have claims against the same party that originate from the same incident, circumstance, or legal instrument, to establish an association which has the sole purpose of pursuing their specific case in court.

The association can be simple in format but must meet the requirements necessary for it to have legal standing. Thus, the association must demonstrate that it has in fact been established (ie, by producing a written memorandum of association or the minutes of the founding meeting) and keep a register of its members. Furthermore, the association must be given a name and have articles of association or by-laws with rules by which the association operates. However, for the sake of simplicity, it is provided in Article 19a, paragraph 1, that where no special articles of association are set out, general articles of association for litigation associations issued by the Minister of Justice by a regulation shall apply. It should be noted that it is not mandatory, although it is possible, to formally register litigation associations with the relevant authorities.

In the summons submitted to the court, a claim must be made in one piece in the name of the association. Furthermore, details of the members must be stated in the summons and, if the claim is for a sum of money, what share each of them has in the claim. Although it is not a requirement per se, it would be considered good practice to specify in the summons how the members' claims originate from the same incident, circumstance, or legal instrument, if it is not obvious. Apart from the above, the general rules of the CPA on the content of the summons apply. A class action suit can be brought in the same courts as other civil cases, ie, one of the eight district courts that has jurisdiction over the matter. In this regard, it would generally be sufficient if the relevant court had jurisdiction over just one of the members' claims.

The procedure for bringing a collective redress/class action suit is the same as for bringing other civil cases. The litigation association must serve the summons on the defendant(s) by the means provided for in the CPA on lawful service of summons. In the summons, the defendant(s) is/are summoned to a court session in the district court where the association submits the claim together with other court documents. Thereby, proceedings are started before the court. 

Article 19a stipulates that although the litigation association is the party to a case, its members will each have the interests that the case concerns and enjoy status as parties, except as follows from other provisions of Article 19a. However, the association has full authority to take all types of decisions regarding the case, including to cancel it or end it through a court settlement. The Article does not require a person to be selected or specified to represent and act on behalf of the association. It could, however, be practical to do so. In this regard, it should be noted that ministerial articles of association mentioned in 4.1 Mechanisms for Bringing Collective Redress/Class Actions entail that a board or chairman is elected to make decisions for the company and act on its behalf. Such a board or chairman would presumably be considered to represent the association in a case.

Member Eligibility and Size

As stated in 4.1 Mechanisms for Bringing Collective Redress/Class Actions, three or more persons who have claims against the same party or parties that originate from the same incident, circumstance or legal instrument can bring a class action suit. There is no statutory maximum number of class action members. 

No special request must be made to the court for authorisation to file a class action lawsuit, as in some legal systems. Rather, the court will examine this in the same way as it generally examines whether there are formal/procedural defects in a lawsuit. Regardless of whether a demand is made in this respect by the defendant, the court would most likely examine whether most if not all the conditions for a class action are met. Thus, a court would presumably examine whether the formal requirements for the establishment of a litigation association are met, whether the claims of the members are against the same party or parties, and whether the members’ claims originate from the same incident, circumstance or legal instrument.

Mechanism for Joining a Class Action (Opt In)

Article 19a only prescribes an opt-in option in the sense that all members of a class action must specifically agree to participate in the class action. A member can at any time – or at least up until the main proceedings – withdraw from a class action. If a member withdraws from a class action after the case has been filed, the member might still be ordered to pay a share of the legal costs awarded to the defendant, if applicable. 

A party may at any time before the main proceedings in a case become a member of a litigation association and join a class action. If a new member joins a class action after a lawsuit has been filed, the association can increase its claims in favour of the new member. Such a change or increase in the claims shall, as necessary, be made by serving a supplementary summons on the defendant as per 4.2 Overview of Procedure. 

There are no special rules on case management powers for the courts in respect of class action suits, but general rules on procedure apply. As mentioned in 4.4 Class Members, Size and Mechanism (Opt In/Out), the court will at early stages in the proceedings examine whether most, if not all, the conditions for a class action are met. In other respects, the court will presumably not actively interfere with the proceedings.

The duration of proceedings in a traditional civil case before the district courts is on average approximately one year, but may take less or more time depending on the scope of the case. The little experience of class actions in Iceland suggests that such cases can take longer than average, as they can be larger in format. However, it should be noted that few such cases have been brought and the sample is therefore not large.

There are no special rules regarding delays or acceleration of proceedings in respect of class actions. The general principle is to expedite proceedings as quickly as possible, but if there are special reasons to delay a case, such a request can be submitted to a judge who will decide on it. It is possible to apply for acceleration of proceedings in certain types of cases, ie, cases relating to a decision or act of an administrative authority, or a strike, lockout or other action in relation to labour disputes. It is a condition for expedited proceedings that there is a need for a quick resolution and that it is of general significance or relates to important interests of the plaintiff(s). 

Costs

According to Article 130(1) of the CPA, a party that loses a case in all substantive aspects will normally be ordered to pay the counterparty’s legal costs. The same applies to class action suits. If a litigation association loses a case and is ordered to pay the defence party's legal costs, the obligation to pay rests with the association as well as all its members, jointly and severally, as it is prohibited to limit the liability of members vis-à-vis the association’s obligations. 

Funding

Arguably, the most common way to fund a class action suit is through membership fees or guarantees. In this regard, it should be noted that in the articles of association issued by the Minister of Justice, discussed in 4.1 Mechanisms for Bringing Collective Redress/Class Actions, it is stated that membership fees can be levied to cover the cost of the association’s operation. Membership fees will be determined at the founding meeting or at a general meeting of the association. 

Third-party funding is also an option, as nothing in the law prohibits such funding of a class action. With regards to legal aid granted by the government under certain conditions, it is uncertain whether such funding remedy can be used in class actions. One of the ideas behind the class action remedy is to collect a number of claims which individually are so low that they would not justify bringing a lawsuit due to cost. If a member of a class action suit is eligible for legal aid to pursue their claim, it is unclear whether they could use the legal aid for the benefit of a class action. Possibly, in such a case, legal aid might be granted to a member to cover their cost of participation, but there are no precedents that confirm this. In a related matter, it is also uncertain whether funding through individual member’s legal expenses insurance is a possibility. 

Pre-trial Disclosure 

Even though a party has not raised a claim in connection with an incident in court, it may seek proof of an incident in court by requesting oral testimony or submission of documents or other visible evidence, if one of these two conditions is met:

• if there is a risk that the possibility of obtaining evidence of an incident, concerning the legally protected interests of a party, will be lost, or that it will be significantly more difficult to obtain this evidence later; or
• an incident concerns the legally protected interests of a party and obtaining evidence of the incident may determine whether the party will bring a lawsuit because of it.

Unless an intended counterparty in a suit agrees, the above method cannot be used to obtain evidence in the counterparty's possession, and the counterparty will not be compelled to give oral testimony. If it is shown that the intended counterparty is in possession of requested evidence, the requesting party cannot obtain that evidence from a third party either, but must challenge the intended counterparty to submit it during the proceedings of the court case after it has been brought (see below under “Trial Disclosure”).

In addition to the above, a party may request the court to appoint an assessor to assess matters that require expertise if this is done to verify a claim or to prove events or circumstances on which it could be based.

Trial Disclosure

During the proceedings of a court case, the above methods and conditions for obtaining evidence pre-trial also apply during the trial, except (naturally) the two conditions mentioned in the first paragraph. A third party can be compelled by the court to give oral testimony or submit documents, but a counterparty cannot. If a party in legal proceedings does not respond to a counterparty’s request for documents, then the judge may find that the former party has accepted the latter party’s assertions regarding the substance of the documents, provided that the substance is relevant in the proceedings.

Rules of Privilege

The following persons may refuse to give testimony and/or submit documents, either totally or to some extent: 

• a person who is, or has been, the spouse of a party;
• a party’s relatives in direct line of descent, siblings and persons related to the party in this way by adoption;
• a party’s step-parent or step-child; and
• a party’s parent-in-law or child-in-law.

The judge may release other persons who are, or who have been, very close to a party, from the obligation to give evidence if the judge considers the relationship between them to be very close.

Witnesses are entitled to refuse to answer questions or submit documents if there is reason to believe that an answer or submission could constitute an admission, or an indication, that they have committed a punishable offence or an act which could bring them into moral disrepute or cause them substantial financial loss. Furthermore, the judge may exempt witnesses from revealing secrets regarding their commercial dealings, discoveries or inventions or other such activities if the judge considers the witness’s interest in maintaining secrecy to substantially outweigh the interest of a party in obtaining the evidence.

Furthermore, witnesses may not, without the permission of the person concerned, answer questions or submit documents concerning: 

• secret plans, resolutions or agreements made by persons exercising state power on matters with a bearing on the security, rights or prosperity of the state, or which are of great significance for the nation’s trade or financial standing;
• the identity of the author of, or the source of the information in, an article, report or announcement which has been published without the author or source being named, if the witness is responsible in law for the contents of the printed publication or for other material which is published, or has gained a knowledge of the identity of the author or source through working for the person responsible;
• an individual’s personal circumstances about which the witness has been told in confidence or about which the witness has become aware in another manner through work as an accountant, social worker, lawyer, pharmacist, physician, minister of religion or psychologist, or an assistant of any of these persons, or through other work to which a similar nondisclosure obligation pertains;
• matters which they have found out by working in an official position and which should be kept secret; and
• secrets pertaining to commercial dealings, discoveries or inventions or other such activities of which they have become aware in the course of their work.

The same remedies are available through class actions as for traditional court cases, in particular, claims for sums of money based on a contract or for damages, declaratory claims for the recognition of the rights of the plaintiff(s) or obligation of the defendant(s), etc.

The same settlement/ADR mechanisms exist for collective redress/class action disputes in Iceland as for other disputes. These mainly involve referring a dispute to arbitration or a conciliator pursuant to a contract. If a dispute is brought before the conventional courts, the presiding judge will hold one session in the case with a view to seeking a settlement. Furthermore, the judge may comply with a party’s request to refer the case to the district commissioner for mediation if the judge considers this is likely to produce results and will not lead to unnecessary delay. The parties may also agree on referring their case to the district commissioner without the assistance of the judge. It should be noted that this remedy is rarely used.

Judgment

A judgment in a case brought by class action is binding on its members in accordance with the principle of the res judicata effect of judgments. This means that, by joining a litigation association, a member must accept how the association has chosen to handle the litigation since, after the judgment has been passed, a member cannot file a lawsuit again in their own name on the same subject matter.

Enforcement of Judgments

Following the conclusion of a case, an association can seek satisfaction of the members’ rights in its own name. Thus, if an enforceable judgment is obtained through a class action, the association is authorised to enforce it pursuant to conventional enforcement measures, and ultimately settle all the members' claims through distribution.

No policy developments or initiatives exist or have been proposed. 

There are no legislative reforms in progress or planned. 

Brexit has not had any impact on the collective redress/class action regime or lawsuits in Iceland. 

COVID-19 has not had any impact on collective redress/class action suits in Iceland.