Last update 4 December 2019
The Netherlands has always been at the forefront of collective redress in Europe. Since the early nineties, a claim organization that represents a certain group of interests can start a class action to obtain declaratory relief. Current Dutch law, however, does not facilitate a class action for monetary damages. After entering into force the act will facilitate a class action for monetary damages, which is an important development in the field of class actions throughout Europe.
Proceedings for class actions: one regime
A class action can be litigated through the competent Dutch civil court. The same rules apply for all class actions, whether monetary relief is sought or not, and irrespective of the legal grounds for damages. As a starting point, the judgment in a class action is binding on all Dutch residents that fall within the scope of the claim organization.
Enhanced standing and admissibility of claim organization
A claim organization only has standing in a class action if it sufficiently safeguards the interests it represents. The WAMCA introduces enhanced standing and admissibility in terms of governance, representation and funding. The claim organization is required to have (i) a supervisory board, (ii) a mechanism for decision-making by the persons whose interests are represented, (iii) sufficient economic means for the costs of the class action, and (iv) sufficient experience and expertise for the class action.
Sufficiently close connection with Dutch jurisdiction
In addition, the class action must have a sufficiently close connection with the Dutch jurisdiction. This connection will exist if (i) the majority of the persons on behalf of whom the class action is initiated are Dutch residents, (ii) the defendant resides in the Netherlands, or (iii) the events on which the class action is based occurred in the Netherlands.
The claim organization has to register the class action in a register within two days after filing. As a result, other claim organizations will formally be aware of a class action brought earlier. The court will stay the class action proceedings to enable other claim organizations to bring their class action for the same event(s) on similar points of law and of fact. If multiple claim organizations bring class actions, the court will appoint an exclusive representative that litigates the class action on behalf of all interested persons. With a view on alignment between the different organizations, the other claim organizations will also be parties to the class action proceedings. This system (with an exclusive representative) bears resemblance to the lead plaintiff system in the United States.
Binding on class, subject to opt out
The topic of the class action proceedings is the collective claim of the group of persons that fall within the scope of the claim organization(s). The judgment is binding on all Dutch residents in such group, with the exception of those having opted out. As a starting point, the opposite goes for non-Dutch residents: those persons can voluntarily consent to their interests having been represented by the class action (i.e. opt in). Alternatively, the court can order that the opt out system applies to a precisely specified group of non-Dutch residents anyhow. It remains to be seen how the Dutch courts will use this option.
Collective settlement alternative
The Act on collective settlement of mass damages (WCAM), effective since 2005, enables the Amsterdam Court of Appeal to declare a collective settlement generally binding on certain other interested parties. The main criticism on the WCAM is that it does not (sufficiently) bring the defendant round to negotiate. The WAMCA aims to create the big stick, meanwhile leaving room for a consensual collective settlement. In the class action, the court can order the exclusive representative and the defendant to submit proposals for a collective settlement. The court can (then) singlehandedly determine a collective settlement, likely on the basis of such proposals.
Date of effect
The new provisions will apply to class actions relating to event(s) on or after 15 November 2016 that are brought after the WAMCA has taken effect on 1 January 2020.
The WAMCA brings important changes to the dynamics surrounding class actions. Our team has extensive experience with class actions, WCAM-settlements and other forms of collective redress. For more information please contact Mijke Sinninghe Damsté or Huib Schrama.