Netherlands
Implementation of the European Directive on representative actions
Which national regulations transpose the Directive into national law?
Due to the availability of legislation that allows for the efficient settlement of mass litigation and a professional juridical system, the Netherlands is widely seen as a ‘to-go for’ forum for mass claims. With the introduction of the Resolution of Mass Damage in Collective Action Act (the “WAMCA”) on 1 January 2020, mass litigation has in the Netherlands taken an even further flight. Whereas previously only declaratory and injunctive relief had been available on a collective basis, the WAMCA introduced the possibility for claimants’ organisations to seek monetary compensation. The Central Register for Collective Claims shows close to a hundred collective actions that have been filed since the WAMCA came into force.
The scope of the WAMCA is wider than the Directive on Representative Actions (the “Directive”) as it is not limited to consumer protection claims. Since the regime under the WAMCA comprehensively regulates mass claims in the Netherlands, and is already (for the most part) in line with the principles as set out in the Directive, the Dutch legislator chose to amend and supplement the WAMCA on only a few points via the Dutch Implementation Act, which entered into force on 25 June 2023.
Who is entitled to bring a representative action?
A Dutch organisation is entitled to bring a representative action if it meets the requirements as set out in Article 3:305a Dutch Civil Code:
- the foundation/association has full legal capacity incorporated under Dutch law;
- provides information along with its application that shows: (i) a recent extract from the Dutch Chamber of Commerce; (ii) its most recent management report and annual accounts; (iii) a description of the persons it represents
- has a publicly accessible website containing: (i) the information that, according to its articles of association, the organisation represents consumer interests; (ii) the information that it has publicly done so during the twelve months prior to its application; (iii) various other documents and information, such as the organisation’s articles of association, its governance structure, its objectives, methods of operation and general sources of funding and the most recent management and supervisory body report.
If the court decides that the preliminary requirements have been met, the court will appoint the claiming entity as the exclusive representative of the represented group. In the event that multiple representative actions on the same matter were initiated by different entities, the court will appoint the most qualified claimant as the exclusive representative.
Organisations from other Member States may bring a representative action before the Dutch courts if they have been designated as ‘qualified entities’ in accordance with the Directive in the other Member States.
What can be the subject matter of a representative action?
Contrary to the Directive, which only applies to infringements of EU consumer law, Dutch law does not pose any limitations on types of claims that may be brought on a collective basis. In addition, representative actions are not limited to a particular type of conduct or cause of action, and can have both a contractual and non-contractual base. Having said that, a Dutch court will assess whether litigation through a representative action is more efficient and effective than individual proceedings. Furthermore, a Dutch court will assess whether factual and legal questions of the represented group are similar, and whether the represented group and their financial interests are sufficient.
Which individual consumers are represented in a representative action?
Representative actions bind any Dutch-domiciled member of the represented group, unless the individual actively opts-out. Non-Dutch-domiciled members of the represented group are only bound by the action if they actively opt-in. After dealing with various preliminary issues, but prior to the start of the phase on the actual merits of the matter, the Dutch court sets a period of at least one month to allow for opt-outs and opt-ins. A non-Dutch-domiciled that wants to opt in must inform the court that its interests will not be represented in a representative action or individual action in another Member State.
What will be the outcome of a representative action?
In a representative action for redress measures, any remedy is available to the claimants, including monetary damages, declaratory relief and cease-and-desist orders.
After the opt -in and -out period has passed, the representative action may be stayed to allow for settlement negotiations between the exclusive representative and the defendant. If a settlement agreement is reached, the court can declare that settlement binding on all members of the represented group. If no settlement agreement is reached, the exclusive representative will first be given the opportunity to amend its statement of claim after which the defendant will have the opportunity to file a statement of defend. A second round of written submissions may be granted. After the exchange of all submissions, the court will schedule a hearing, after which a final judgment will generally be issued.
Are there particular rules for the disclosure of evidence?
There are no specific rules in terms of the disclosure of evidence regarding a representative action. The Dutch legislator has emphasized that the Dutch law already contains these kinds of regulations.
It should be noted that the Dutch legal system does not have a system of discovery as is common in common law jurisdictions. Disclosure of evidence is therefore as a starting point left to the parties involved. Having said that, under Dutch law, parties are obliged to state all facts relevant to the decision of the court fully and truthfully. In addition, a Dutch court may order the parties to clarify on certain statements or to produce certain documents relating to the case. Lastly, the DCCP provides the option to demand access to or a copy of certain documents relating to the matter from a person who has these documents at her/his disposal.
Is third party funding possible?
Third party funding of representative actions is allowed, but there are some restrictions. If the case relates to a representative action based on the infringement of EU Consumer Law, funding by a competitor of the defendant or by a party that is dependent on the defendant is prohibited. The organization must state in its statement of claim that it is not receiving funding from a competitor of the defendant or from anyone dependent from the defendant. When these requirements are not met, the court can give an organization the opportunity to still meet these requirements, for example by adjusting the agreements with the funder or by seeking another funder who does meet the requirements. If the organization still does not meet the requirements for funding, the court declares the organization inadmissible.
Conclusion
Dutch law already provided for a well-established statutory regime for class actions and collective redress. The Dutch class action system as set out in the WAMCA makes representative actions possible. Dutch law already complies with the Directive to a large extent. For all these reasons, the Netherlands is seen and will in the years to come only further develop as a ‘to-go for’ forum for the filing and settlement of mass claims.
As far as the Directive is concerned, the most notable change in Dutch law relates to cross-border representative actions, meaning a collective claim brought by an organisation in a Member State. These organisations may only bring representative actions on behalf of consumers to the Dutch courts if they have been designated as ‘qualified entities’ by their home State. Furthermore, the requirements for third party funding have been changed. Regulations on non-Dutch-domiciled members of the represented group have also been adjusted.
Contact
Marie-Helene Berghuijs
T: +31 6 1524 9135 E: marie-heleneberghuijs@eversheds-sutherland.com
Lars van Amsterdam
T: +31 6 2021 0458 E: larsvanamsterdam@eversheds-sutherland.com
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