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Willem Visser
Netherlands Commercial Court, Amsterdam
NCC@rechtspraak.nl

On 1 January 2020 new legislation came into force in the Netherlands, introducing a comprehensive system for dealing with collective actions.^[1] It holds out the prospect of substantial advantages to groups of people injured by the same event, as well as the person or entity held liable to resolve claims in a single collective action.

What’s new?

The key characteristics of this new legal framework are:

• the action must be initiated by a foundation or association focusing on similar interests, which should satisfy certain additional requirements safeguarding the interests of the injured individuals;
• the claim may be for money damages (under the previous legislation this was not permitted);
• a three-month waiting period of is introduced so that other claimants can join the action;
• in case of multiple claimants – designation of an ‘Exclusive Representative’ who is in charge of the litigation on the claimants’ side; and
• the introduction of an extensive set of procedural rules which may ultimately lead to the court awarding compensation.

What is the scope of the new legislation?

The new legislation applies to collective actions initiated on or after 1 January 2020, provided the action pertains to events that occurred on or after 15 November 2016. Collective actions may be initiated in all areas of civil law. This means all types of consumer cases can be dealt with in a collective action.

However, the action must have a ‘sufficiently close connection to the Netherlands’.^[2] For example, if in the Netherlands:

• the majority of the persons involved is domiciled;
• (one of) the defendant(s) is domiciled; or
• the place is located where the harmful event occurred.

There is debate among scholars as to whether this ‘scope rule’ is compatible with EU law.^[3]

Is it an ‘opt-out’ or ‘opt-in’ system?

It is essentially an ‘opt-out’ system, except with regard to persons who do not have a domicile or abode in the Netherlands. These persons may ‘opt-in’ to the collective action or the court may direct that the opt-out system also applies to them.^[4]

Which court has jurisdiction?

First, the Dutch courts must have jurisdiction under the ordinary private international law rules. Next, the domestic jurisdictional rules (i.e. based on the residence of the defendant, the place where the harmful event occurred or a choice-of-forum clause) determine which court in the Netherlands is the proper venue for bringing the case. The commercial chamber of that court will then deal with the case. This applies also to consumer cases where the Subdistrict Court generally would have exclusive jurisdiction: in consumer class actions, this general jurisdiction rule does not apply.^[5]

The English-language chamber of the Amsterdam District Court (the Netherlands Commercial Court)[6] may also deal with the case, provided:

• the Amsterdam District Court has jurisdiction;
• the collective action concerns an international civil or commercial matter within the autonomy of the parties; and
• the parties to the collective action – the claimants’ foundation/association and the defendant(s) – agree the proceedings will be in English before the NCC (NCC agreement).

There are two types of collective proceedings where a specific Dutch court has exclusive jurisdiction. Claims pursuant to Regulation (EC) No 2006/2004 on cooperation between national authorities responsible for the enforcement of consumer protection laws are dealt with by The Hague Court of Appeal.^[7] Applications seeking the approval of domestic or international out-of-court class settlements go through the Amsterdam Court of Appeal,^[8] or the Netherlands Commercial Court of Appeal where the additional requirements are met.

Which law applies?

The ordinary private international law rules designate the law applicable to the case.

What does the procedure look like?

There are four phases.

Phase one: admissibility and other procedural issues

The court first needs to establish whether the association/foundation has standing. This is referred to as ‘admissible’ in the new legislation. There are four admissibility requirements:^[9]

• the association/foundation is sufficiently representative, given its constituency and the size of the claims represented, and fulfils all other legal requirements;
• the directors of the association/foundation are not motivated by profit;
• the legal action has a firm connection to the Netherlands; and
• the association/foundation has made sufficient efforts to achieve its goal in negotiations with the defendant.

The case will move forward to the next phase only after the court has ruled that:^[10]

• the admissibility requirements are met;
• the claimant sufficiently shows that it is likely that bringing a collective action is more efficient and effective than bringing an individual action, on account of a sufficient commonality of the factual and legal questions at issue, a sufficient number of persons whose interests the action seeks to protect and these persons’ having a sufficiently large financial interest, individually or jointly; and
• the collective claim is not, after summary enquiry, without merit at the time the proceedings are initiated.

If there are multiple claimants, the court designates one of them as ‘Exclusive Representative’.^[11] In its determination, the court takes into account:

• the size of the group of persons on whose behalf the claimant acts;
• the size of the financial interest represented by this group;
• other work that the claimant performs for the persons that it represents in or out of court;
• previous work carried out by the claimant or collective actions brought by the claimant.

At this stage the courts will generally schedule a case management hearing to listen to arguments on admissibility and other procedural issues (such as jurisdiction and applicable law), and discuss a timetable for potential further procedural steps.

Phase two: liability

Next, the court schedules a hearing on the merits of the case, which are typically issues on the defendant’s potential liability. Within a time limit set by the court, the defendant may submit its defence on the merits. At the hearing, the parties have the opportunity to present their case.

The court sets a date for judgment on the issue of liability only. If the defendant is held liable, the case moves forward to the next phase.

Phase three: settlement negotiations

The court sets a time limit for negotiations on a settlement agreement.[12] If the parties conclude a settlement agreement, it is submitted to the court for approval.^[13] The court will not approve the agreement, if it does not satisfy the requirements safeguarding the interests of the injured individuals set out in Article 907 of Book 7 DCC. For example where:

• the agreement does not specify the group of people eligible for compensation, and how such compensation is determined and can be obtained;
• the amount of the compensation awarded is not reasonable, given the size of the loss, any alternative causes for the loss, and the time gained by not having to litigate in court; or
• the agreement does not provide for independent resolution of disputes that may arise from the agreement.

If no settlement is reached, the case moves forward to the next phase.

Phase four: compensation scheme

The court sets a time limit for the parties to submit a proposal for compensating the loss suffered by those individuals who did not opt out, or in the case of foreign nationals, opt in to the collective action.[14] Next, the court will schedule a hearing.

Using the parties’ proposals in its judgment, the court will determine a collective compensation scheme which safeguards the interests of the injured individuals. It will give a ruling on whether the amount of the compensation awarded is reasonable, and where possible, how the compensation is to be set for each class. Finally, the court will give an order for costs, awarding all ‘reasonable and proportionate’ legal costs and other costs incurred by the successful party, ‘except where this would cause injustice’.^[15]

Are there currently any pending collective actions under the new legislation?

A list of cases pending is maintained at the Central Register of Collective Actions, which can be viewed online at: https://www.rechtspraak.nl/Registers/centraal-register-voor-collectieve-vorderingen.

Conclusion

The new comprehensive collective action system in the Netherlands offers groups of people injured by the same event the option to sue for money damages. At the same time, it enables the person or entity held liable to fully concentrate its efforts to defend these claims in a single collective action. Accordingly, it holds out the prospect of substantial advantages to both sides.

However, it remains to be seen whether the new Dutch system (which at least in some ways may resemble the US class action system) will attract international cases as the ‘scope rule’ referred to above may complicate matters.

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