Major revision of the regime for collective actions in the Netherlands

Michelle Krekels & Daniëlle Brouwer / 19 aug 2019

Introduction

The Dutch regime of collective actions will be thoroughly revised, creating new opportunities for damages actions, and requiring claimants, funders and other players in this field to thoroughly assess how to go about advancing 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 enactment of the act may take place within weeks. This amendment will introduce 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. Currently, the claim vehicle cannot claim collective damages on behalf of the injured parties as it can only seek a declaratory judgment regarding liability. Each injured party can then bring its own claim for compensation in follow on litigation, or settle on a collective or individual basis.

Under the new law, it will be allowed to also claim damages on behalf of the injured parties. It is expected that this will fill in a significant void in the current regime.

Standing of the claim vehicle

The WAMCA will add 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 will become 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 new WAMCA, for the Dutch courts to have jurisdiction, it will be 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 new WAMCA the claim vehicle shall register its collective action in a public register after the submission of the writ, within two days after the filing of the action. 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 current regime there is only one opt-out moment: after a settlement agreement is reached and declared binding by the court upon the class. Under the new WAMCA there will be 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 new WAMCA, a class settlement is not required, but attempting to reach one will be 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 – until now 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.

Transitional law

The new WAMCA, when enacted, will apply 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 current 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.

 

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