German collective redress and the funder’s share.

In Germany, the Act of 8 October 2023 transposes Directive (EU) 2020/1828 Source [1]. Its article 1, the VDuG, has been in force since 13 October 2023 Source [2]. It makes a representative action inadmissible when its funder has been promised more than 10% of the performance owed by the defendant business Source [3]. Outside that framework, the Federal Court of Justice has accepted since 2021 that claims assigned to a collection service provider may be bundled in a single lawsuit Source [7].

The Act of 8 October 2023 and its entry into force.

The statute is called the Verbandsklagenrichtlinienumsetzungsgesetz (VRUG), the act transposing the directive on representative actions Source [1]. The Federal President signed it on 8 October 2023, and the Bundesgesetzblatt, the Federal Law Gazette, published it on 12 October 2023 (BGBl. 2023 I No. 272). Its article 31 brings it into force on the day after publication, 13 October 2023 Source [1] Source [2]. The directive required Member States to apply their measures from 25 June 2023 Source [4].

Article 1 contains the Consumer Rights Enforcement Act (Verbraucherrechtedurchsetzungsgesetz, VDuG). The same statute repeals Book 6 of the German Code of Civil Procedure, which had governed the model declaratory action until then Source [1]. Section 4 of the VDuG, on funding, still reads as it did in 2023 Source [1] Source [3].

The entities that may bring an action.

Two categories of entities may sue Source [2]. Qualified consumer associations must appear on the list kept under the Injunctions Act and receive no more than 5% of their resources from business contributions. An entity from another Member State may also sue if the European Commission has entered it on its list. Where serious doubts arise about the 5% threshold, the court requires the association to disclose its finances Source [2].

It must also show plausibly that the action concerns the claims of at least 50 consumers Source [3]. The statute counts small businesses among them: those employing fewer than 10 people, with annual turnover or a balance sheet of no more than €2 million Source [2]. A higher regional court (Oberlandesgericht), the one for the defendant business’s district, hears the action at first instance Source [2].

The redress action and the model declaratory action.

The VDuG provides for two actions Source [2]. In a redress action (Abhilfeklage), the association asks the court to order the business to provide a performance to the consumers, such as payment of a collective total amount. The claims must then be essentially of the same kind. In a model declaratory action (Musterfeststellungsklage), the entity has the court rule on the factual and legal conditions on which they depend.

When the redress claim seeks a total amount, the judges first rule on liability in principle and invite the parties to propose a settlement Source [2]. Failing that, an administrator they appoint receives the money, checks each registered consumer’s entitlement and pays them. Unclaimed sums go back to the business Source [2].

Consumer registration in the register of actions.

The Federal Office of Justice (Bundesamt für Justiz) keeps the register of representative actions Source [2]. A consumer registers their claim in text form, until three weeks after the close of the oral hearing. Only registered consumers are covered by the effects of the action, which the association must state on its website Source [2]. German law has thus chosen opt‑in, whereas the directive lets each State choose between an explicit and a tacit expression of will Source [4].

While the action is pending, a registered consumer cannot sue the business alone over the same facts Source [2]. A settlement approved by the court also binds them, unless they opt out within one month of its publication in the register Source [2].

In France, a person harmed joins a group action for damages after the judgment on liability Source [11]. The Ministry of Justice circular of 1 August 2025 calls this phase “opt‑in”. Our comparison of group actions and individual cases handled as a series describes both routes.

Third‑party funding and the 10% cap.

Section 4 of the VDuG governs the funding of both actions Source [2] Source [3]. The action is inadmissible if a competitor of the defendant business funds it, or a third party that depends on that business. The section also excludes a third‑party funder “dem ein wirtschaftlicher Anteil an der vom verklagten Unternehmer zu erbringenden Leistung von mehr als 10 Prozent versprochen ist” (our translation: “who has been promised an economic share of more than 10 percent of the performance to be rendered by the defendant business”) Source [3].

The last case concerns the backer’s influence. An action is also inadmissible when it is funded by a third party “von dem zu erwarten ist, dass er die Prozessführung der klageberechtigten Stelle, einschließlich Entscheidungen über Vergleiche, zu Lasten der Verbraucher beeinflussen wird” (our translation: “who can be expected to influence the conduct of the proceedings by the entitled entity, including decisions on settlements, to the detriment of consumers”) Source [3].

When it files its claim, the association discloses to the court where its money comes from. If a third party pays for the proceedings, even at a later stage, the court also receives the agreements made with that funder Source [3]. The statement of claim already gives that backer’s name Source [2]. For an individual case in France, our article on settlements explains who decides whether to accept an offer from the other side.

Assigning claims to a collection service provider.

Outside the VDuG, a creditor may assign a claim to a collection service provider, which enforces it in its own name. The Act on Out‑of‑Court Legal Services (Rechtsdienstleistungsgesetz, RDG) classes this activity as a legal service and allows it for providers registered with the Federal Office of Justice Source [5].

The Federal Court of Justice (Bundesgerichtshof) handed down a landmark ruling on 27 November 2019 (VIII ZR 285/18) Source [6]. A Berlin tenant had assigned to the company Lexfox, registered as a collection service provider, his claims under the rent brake. It charged its fee, a third of the annual rent saved, only if it succeeded. The judges upheld the assignment, holding that the notion of debt collection called for “eine eher großzügige Betrachtung” (our translation: “a rather broad reading”) Source [6].

On 13 July 2021, the same court accepted bundled claims (II ZR 84/20): “Der II. Zivilsenat hat heute entschieden, dass ein sogenanntes Sammelklage‑Inkasso zulässig ist.” (our translation: “The Second Civil Panel ruled today that so‑called collective collection by lawsuit, Sammelklage‑Inkasso, is permissible.”) Source [7]. The provider was suing the former manager of Air Berlin for seven of the airline’s customers, in return for 35% of the net proceeds if it succeeded Source [7].

Since 1 October 2021, the RDG has provided that contractual reporting obligations to a funder do not on their own warrant a presumption that the legal service is jeopardised Source [5] Source [8]. If a backer is to cover the cost risks, the provider must tell the consumer so before they sign. It must also mention the agreements reached with that third party on the conduct of the case Source [5].

On 12 May 2026, the Court’s Cartel Panel set limits on this model (KZR 6/24), in recent case law, liable to change Source [8]. A provider was claiming about €500 million from the manufacturers in the truck cartel, on claims originally assigned by 3,266 cedents, and a litigation funder was paying for the case. The Court accepts such bundled actions in principle. However, if the bundling makes effective judicial protection practically impossible, the court may require the provider to prepare the separation of proceedings, failing which the action is inadmissible Source [8].

The Court also sent back to the court of appeal the defendants’ application for an order to produce the 2017 litigation funding agreement. According to the Court, that contract could create a structural conflict of interests “if the litigation funder can have a significant influence on the conduct of the proceedings”, and render the assignments null and void Source [8]. The provider was to receive a success fee of 33% of sums received, plus VAT Source [9]. By its own account, the funding agreement barred it from settling individual claims if the settlement impaired, among other things, the funder’s share of that percentage Source [9].

What the texts leave to the funder.

In its resolution of 13 September 2022, the European Parliament considers that agreements should depart only in exceptional circumstances from the general rule that “a minimum of 60% of the gross settlement or damages is paid to the claimants” Source [10]. These recommendations to the Commission have no binding force, and our overview of litigation funding in Europe sets these rules in the context of each country.

In France, article 16 of Act no. 2025-391 of 30 April 2025 transposes the same directive for group actions Source [11]. As the Ministry of Justice circular of 1 August 2025 explains, their funding may not aim at or result in the funder influencing how they are brought or conducted Source [11]. The rule targets influence that could harm the interests of the people represented. An individual case rests on contractual freedom. Under article 1102 of the French Civil Code, everyone is free to determine the content and form of a contract within the limits set by law Source [12]. No statute then caps the funder’s share, which the agreement sets.

Hello Justice, the first French company dedicated to mid‑market litigation funding, funds individual cases, some of which form a series. The page on disputes handled as a series presents this way of working.

The online eligibility test and submitting a case are free of charge. Outside the Swiss franc loan programme, the case analysis that precedes any funding costs €1,500 excluding VAT (€1,800 including VAT), whatever the opinion. For an accepted case, Hello Justice pays the lawyer’s fees and receives a commission of 14 to 30% including VAT of the sums recovered, only on success. If the case is lost, the client repays nothing, and the agreement settles how the procedural indemnity under article 700 is handled. A Swiss franc loan is checked free of charge, and the programme, in French, has its own terms.

Litigants and their counsel can submit a case. A specialised partner lawyer then analyses its eligibility, reviewing the features of the dispute, the limitation period, the completeness of the documents and reasonable prospects of success. Not every case is accepted.

Frequently asked questions.

Can a funder take more than 10% in a German collective action?

Not when an association brings the action under the VDuG. It becomes inadmissible if its funder has been promised more than 10% of the performance owed by the defendant business Source [3]. Assigning claims to a collection service provider falls under another framework, where the contract sets the provider’s pay Source [6] Source [7].

Who can bring a collective action in Germany?

A qualified consumer association that receives no more than 5% of its resources from companies, or a qualified entity from another Member State Source [2]. The action must concern at least 50 consumers, small businesses included Source [2] Source [3].

How do I join a collective action in Germany?

The consumer registers their claim in the register kept by the Federal Office of Justice, until three weeks after the close of the oral hearing Source [2]. Without registration, the action does not cover them.

Is assigning claims to a debt collection company legal in Germany?

Yes, if the company is registered as a collection service provider Source [5]. The Federal Court of Justice accepted the model in 2019, then for bundled claims in 2021 Source [6] Source [7]. On 12 May 2026, it set limits on that model, in recent case law, liable to change Source [8].