Major revision of the regime for collective actions in the Netherlands

Michelle Krekels & Daniëlle Brouwer / 17 Jan 2020

Introduction

The Dutch regime of collective actions has been thoroughly revised. This revision has created new opportunities for damages actions, requiring claimants, funders and other players in this field to conduct a comprehensive assessment of methods by which they can advance their case.

On March 19, 2019, the amendment of the Act on the Resolution of Mass Claims in Collective Action (‘Wet Afwikkeling Massaschade in Collectieve Actie’) (‘’WAMCA’’) was approved by the Senate and has come into force and effect on January 1, 2020. This amendment introduces the possibility to claim damages in a collective action while at the same time adding stricter requirements for claim vehicles to have standing, as well as changing the international aspects of future collective actions. Furthermore, courts will appoint a quasi-lead plaintiff (“Exclusive Representative“) when there are competing actions. This will be further elaborated upon below, and clarified in a schematic overview.

The possibility to claim damages

In the Netherlands, a claim vehicle (foundation or association) can represent the interests of injured parties and initiate a claim against the responsible party before the Dutch court. Under the old regime, the claim vehicle could not claim collective damages on behalf of the injured parties as it could only seek a declaratory judgment regarding liability. Each injured party had to bring its own claim for compensation in follow on litigation, or settle on a collective or individual basis.

Since January 1, 2020, it is allowed to also claim damages on behalf of the injured parties. It is expected that this will fill in a significant void in the old regime.

Standing of the claim vehicle

The WAMCA adds stricter requirements regarding the standing of a claim vehicle (article 3:305a of the Dutch Civil Code) in terms of governance, objective, representation and funding. Although many of these aspects were adhered to by professional players of good repute on a (semi) voluntary basis anyway, as they tended to apply the Dutch Claim Code, it is now mandatory to have (i) a non-commercial objective, (ii) a supervisory board, (iii) a mechanism for decision-making by the persons whose interests are represented, (iv) sufficient economic means for the costs of the class action and (v) sufficient experience and expertise for running a class action.

The scope of the collective action

Until now, Dutch courts have proved to be welcoming of collective actions with international aspects. Under the WAMCA, for the Dutch courts to have jurisdiction, it is required for the case to have a sufficiently close connection with the Dutch jurisdiction. A sufficiently close relationship exists if (i) the majority of persons whose interests are at stake have their habitual residence in the Netherlands; or (ii) the party against whom the legal action is directed is domiciled in the Netherlands and additional circumstances suggest a sufficient relationship with the Netherlands; or (iii) the event(s) to which the legal action relates took place in the Netherlands.

The appointment of an “Exclusive Representative”

Before a claim vehicle can start a collective action under the WAMCA, it has to make a reasonable attempt to settle the case with the counterparty. A letter that gives the counterparty two weeks to respond is sufficient in this case. After two weeks, the claim vehicle is allowed to submit a writ for a class action.

Under the WAMCA the claim vehicle has to register its collective action in a public register after the submission of the writ, within two days after the filing of the action (‘Centraal register voor collectieve vorderingen’). The entry in the registry triggers a three-month period, during which other claim vehicles can file alternative (competing) collective actions that are based on the same event(s). This period can be extended by the court with another three months.

If several claim vehicles bring a collective action addressing the same events, these collective actions will be consolidated. If the court grants the claim vehicles that brought a collective action standing, it will appoint one of them as the Exclusive Representative to represent the interests of the class and of the other claim vehicles. The Exclusive Representative is chosen by the court from the central register based on all facts and circumstances, indicating that such a party is the most appropriate and well equipped to have that role. This is likely to have as an effect that less professional parties, and ad hoc commercial initiatives, may find it harder to enter the market of collective actions.

Although the other claim vehicles remain parties to the proceedings, the court will decide whether to allow each claim vehicle to file their own pleadings. This resembles somewhat the lead plaintiff system in the United States.

Opt-out and opt-in possibilities

Under the old regime, there was only one opt-out moment: after a settlement agreement is reached and declared binding by the court upon the class. Under the WAMCA there are two opt-out moments. The first one is after the appointment of the Exclusive Representative and the decision of the court on the scope of the action and the definition of the “class”. The second opt-out option is after a settlement agreement is reached between parties and declared binding by the court.

Under the WAMCA, a class settlement is not required, but attempting to reach one is an integral part of the proceedings.

A major change is that foreign injured parties can only be represented in the proceedings when they opt-in under the WAMCA – under the old regime this was on an opt-out basis. This may impact the size of the cases to be brought before the Dutch courts.

In conclusion, under the WAMCA a court decision granting or dismissing the collective action is binding on all members of the class who reside in the Netherlands and did not use their right to “opt out” of the action. The same applies to members residing abroad, who joined the collective action by opting in.

Settlement agreement or judgement

The collective action ends with the approval by the court of a settlement concluded by the parties or with the judgement of the court on the claim of the claimants. The judgement of the court can either be a rejection or granting of the claim(s). The settlement agreement approved by the court or the giving judgement by the court are also recorded in the public register (‘Centraal register voor collectieve vorderingen’).

Transitional law

The WAMCA applies to collective actions for damages initiated on or after the date of its entry into force for events that took place on or after 15 November 2016. The old regime will apply to actions that relate to events that took place before 15 November 2016.

Expertise

bureau Brandeis’ collective action team boasts specialists in collective actions and mass claims settlements and often works with interest groups and class action claim funders. Our team is also active in class actions which are mainly based in the US and have their effects in the Netherlands as well.

For more information please contact Michelle Krekels.

 

Related articles

Cartel Damages Litigation – Quarterly Report III of 2019

Hans Bousie & Louis Berger & Sophie van Everdingen & Bas Braeken & Jade Versteeg & Nathan van der Raaij & Tessel Bossen / 30 Dec 2019

This is the third bureau Brandeis quarterly report of 2019 on the developments in the area of cartel damage litigation. You may download our quarterly report here. Would you like to receive the next edition…

Cartel Damages Litigation – Quarterly Report I of 2019

Hans Bousie & Louis Berger & Bas Braeken & Sophie van Everdingen & Nathan van der Raaij & Tessel Bossen / 22 Oct 2019

This is the first bureau Brandeis quarterly report of 2019 on the developments in the area of cartel damage litigation. You may download our quarterly report here. Would you like to receive the next edition…