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    The ever developing opportunities for collective redress in the Netherlands

    In the past ten years, the Netherlands has developed into a prime venue for (cross-border) collective settlements. This is testified to by the settlements in Royal Dutch Shell and Converium and, more recently, Ageas (formerly: Fortis). These matters concerned collective settlements with respect to damages allegedly suffered by (foreign) shareholders as a consequence of misleading statements.

    These collective settlements were declared binding by the Amsterdam Court of Appeal under the Act on the Collective Settlement of Mass Damages, known in the Netherlands as the ‘WCAM’ (Wet Collectieve Afhandeling Massaschade). The WCAM is inspired by the U.S. damages class-action mechanism. The fundamental difference with the American system is that the WCAM requires that parties representing the purported injured parties first agree a settlement with the alleged wrongdoer(s). Subsequently, the parties representing (potential) injured parties and the alleged wrongdoer(s) request the Amsterdam Court of Appeals to declare the settlement binding on all injured parties, including those not represented in the discussions with the alleged wrongdoer and the application for a binding declaration of the settlement agreed in such discussions. If a settlement is declared binding, in its decision the Court sets a deadline within which aggrieved parties may choose to opt-out of the settlement, which otherwise binds them.

    Apart from this mechanism for the binding declaration of collective settlements, Dutch law provides for the possibility for a foundation or association which pursuant to its articles of association represents the interests of a group of claimants, to file a claim against a purported wrongdoer. The (collective) claim may take various forms. The representative foundation or association may (for example) claim for specific performance, for avoidance of an agreement or for declaratory relief that the wrongdoer has acted unlawfully. Also, the representative organization may file a petition for preliminary witness or expert hearings.

    Currently, parliamentary discussions are pending on proposals for offering representative foundations or associations the right to claim for damages. At the same time, stricter rules are proposed as to who may act as a representative of (alleged) injured parties. Under the proposed changes to the collective redress regime, claim vehicles are to meet stricter standards as to governance, funding, and representativeness. These measures are proposed to further enhance the effectiveness of the remedies available.

    In sum, Dutch law provides for two separate mechanisms for the resolution of mass claims. These mechanisms have each proven effective. Their effectiveness is further increased by the fact that they may be applied in combination, i.e. a request for binding declaration of a settlement under the WCAM may be preceded by a claim for declaratory relief that the purported wrongdoer has in fact acted unlawfully. The legislator has proven pro-active in taking action to further improve the Dutch jurisdiction's status as a prime venue for the resolution of mass claims, also in cross-border matters.

    This article was previously published in the e-book 'Insurance annual Review 2018/19' by Browne Jacobson LLP. You will find the e-book below.

    e-Book: Browne Jacobson LLP - Insurance Annual Review