Class actions in the Netherlands

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Over the last decade, the Netherlands has become a popular forum for international class actions against multinationals.  Companies are increasingly being confronted with such claims, which are brought by foundations on behalf of groups of interested parties, such as consumers or investors.  These claims can have a significant impact on the operations and reputations of the companies involved.

The Dutch system contains a unique opt-out mechanism for Dutch class members and an opt-in mechanism for foreign class members.

A collective action under Dutch law enables an association (vereniging) or foundation (stichting) to file an action in protection of similar interests of a group of other people. This collective action mechanism has existed since 1994. The association or foundation must represent the interests of the class according to its articles of association. In addition, there must be sufficient safeguards that the interests of the class are adequately represented. The representation requires certain assignment of claims to the collective claimant.

The Dutch class action climate has recently been further strengthened by the new Dutch Class Action Act (the "Act"), which came into force on 1 January 2020. This resulted in the new possibility to claim damages via collective action and more safeguards with regard to admissibility of the claim and representative authority of a collective claimant. A significant number of international class actions have since been filed in the Dutch class action register, including a EUR 5 billion claim against U.S. company Oracle and its Dutch holding company for privacy infringements, as well as several Diesel emissions class actions and claims involving human rights issues.

The Act applies to events which took place on or after 15 November 2016 and proceedings initiated after 1 January 2020. Therefore, we limit this contribution to the Act. Under question 2 we will provide a schedule of specifics of the Dutch class action system.

As indicated under question 1, the 'new' Dutch system contains an opt-out mechanism for Dutch class members and an opt-in mechanism for foreign class members. 

Under the Act, the Dutch class action system is divided into the following four phases:

1. Filing

A Collective Claimant files its claim with the court (writ of summons) and publishes it in the Collective Actions Register in order to be appointed the Exclusive Representative. Other Collective Claimants will have the opportunity to file a claim relating to the same event or subject matter within a period (minimum three months) set by the court.

2. Certification representative

The court checks whether the Collective Claimant meets all admissibility requirements. Where there is more than one collective claimant, the court will select the most suitable Collective Claimant to conduct the litigation as the representative of the class and of the other Collective Claimants (the “Exclusive Representative”). In order to facilitate the appointment of an Exclusive Representative and to streamline the claim, all class actions relating to the same event or subject matter are consolidated before one court. At this stage, the court will also determine the criteria of the individuals who will form the class.

First Opt-in/Opt-out: After the appointment of the Exclusive Representative, members of the class have the opportunity to opt out within a period set down by the court (one month at a minimum). ‘Foreign Victims’ who have no domicile or residence in the Netherlands, but who suffered damage as a result of the same event, will have the opportunity to opt in, unless the court orders that they should be part of the class, save where they opt out. After opting in, they will be part of the class.

3. Settlement

After the appointment of the Exclusive Representative, the court will also provide the parties with an opportunity to try to reach a settlement. This is a mandatory phase. If the parties reach a settlement, it must be submitted to the court for approval. If the court approves the settlement, it becomes binding on the class. 

Second Opt-in/Opt-out: Another opportunity to opt out.

4. Merits/judgment

The court will review the case on its merits. The court may order both parties to submit a proposal for the collective resolution of the damages. If the court rules that the claim and possibly the parties’ proposals are upheld, the court will determine the compensation and the collective resolution of the damages and how the aggregate award of damages is to be distributed among the class. The entire class shall be bound by the judgment (except for those who opted out).

A settlement in the Netherlands can be declared universally binding for every interested party that a claims foundation purports to represent, unless a party has opted out. Such collective settlements have been used for securities/misrepresentation cases involving international investors, and well-known examples include: Shell (2009), Converium (2012) and recently Fortis/Aegeas (2018).

The Act shields companies and their officers from trivial claims and multiple class action vehicles through certain safeguards:

1. The Act has a register for claim foundations / interest groups.
2. An exclusive representative will be appointed by the court (who will litigate on behalf of all advocates).

The law lists a number of selection criteria that the judge may use in designating the most appropriate claimant as exclusive representative, including:

• the size of the group of persons whose interests are represented;
• the size of the financial interest represented by this group;
• other work performed by the claimant for persons for whom she acts in or out of court; and
• previous activities that the plaintiff has performed or collective actions that she has brought (art. 1018e paragraph 1 Dutch Code of Civil Procedure).

The Act sets strict requirements for a claims foundation / interest group in terms of governance, financing and representativeness. No profit may be made by the persons behind the organization. The Collective Damages Act (“WAMCA”) requires that the interest group be “sufficiently representative in view of its constituency and the size of the represented claim” (or, in other words, representativeness) and have (among other things) a supervisory body, sufficient resources to litigate and a website (with relevant information about, among other things, its organization and the status of the proceedings(s)). 

Stricter requirements also apply to the admissibility of a class action. An interest group must demonstrate that pursuing a class action is more efficient and effective than filing an individual action. This involves looking at similarities between claims, the group size and the potential aggregate claim value.

A new trend under the WAMCA are the more social class actions. The WAMCA provides a "lighter admissibility regime" for claims  - other than monetary claims -  with an idealistic purpose and a very limited financial interest (article 3:305a (6) Dutch Civil Code).

A claim filed on February 2020 by (among others) four interest groups against the Dutch state (STICHTING RADAR I/the Ministry of Defence and the Ministry of Justice and Security, in particular the Royal Military Police) serves a general, collective interest, namely: the termination of alleged ethnic profiling by the Royal Military Police. The plaintiffs elaborate on their admissibility under both the 'lighter admissibility regime' (all four interest groups) and the 'aggravated admissibility regime' (three of the four interest groups). The Court found that the claims of the interest groups do not seek to obtain monetary damages. The claims had been brought with an idealistic aim and with a view to the interests of persons who can be detained on account of their ethnicity and skin color. The requirements of Section 3:305a (6) of the Dutch Civil Code had therefore been met. The Court has therefore not tested a case yet against the requirements of sections 2 and 5 of article 3:305a Civil Code.

In June 2021, the Dutch court (STICHTING BREIN/ YISP B.V) ruled that the following is important in assessing whether there is a special situation that justifies an exception to the tightened admissibility requirements:

• It is not the intention of the more stringent requirements to make it unnecessarily difficult for organizations that already play an important role in upholding collective interests in collective actions and that, by definition, are not aimed at obtaining compensation to continue their work;
• The reason for including more stringent admissibility requirements is a response to criticism mainly of the quality of ad hoc organisations created for the purpose of one specific legal action or of commercial organizations that have made bringing collective actions their revenue model, rather than of existing advocacy groups that already have a long track record;
• The fact that the claim does not aim at compensation is not decisive; in principle, the stricter requirements also apply to claims for declaratory relief (Explanatory Memorandum, p. 15 and 29). However, an exception may be appropriate when a representative interest group initiates a claim other than for compensation and a social interest is involved, unless the declaration of rights is requested as a prelude to a collective redress action;
• The legislator mentions as an example of a procedure that could fall under the exception because of its idealistic purpose and very limited financial interest of the aggrieved parties, a claim in which a certain action is demanded from the sued party and not an amount as compensation. It is explicitly stated that the exception could conceivably apply to an organization that defends the enforcement of intellectual property rights and therefore only seeks an injunction against copyright infringement on behalf of the injured parties it represents.

In this case, the District Court was of the opinion that there were sufficient grounds to grant BREIN an exception to the more stringent admissibility requirements.

Over the last decade, the Netherlands has become a popular forum for international class actions against multinationals. 

By comparison with other EU countries, the Netherlands is a relatively liberal jurisdiction in terms of allowing jurisdiction for class actions against international companies where Dutch (holding) companies are co-defendants, such as in cases involving Steinhoff and Petrobras.

To date, nine class settlement agreements have been successfully declared binding since the Act on the Collective Settlement of Mass Damage entered into force in July 2005. The most recent case, Fortis/Ageas, offered compensation to investors for a total amount of EUR1.3 billion.

The Dutch class action climate has also recently been further strengthened by the Act. A significant number of international class actions have since been filed in the Dutch class action register, including a EUR 5 billion claim against U.S. company Oracle and its Dutch holding company for privacy infringements, as well as several Diesel emissions class actions and claims involving human rights issues.

The first year of the Act has seen 16 cases being filed in the class action register. To date 45 cases in total have been filed under the act. That is a significant number, particularly given that out-of-court settlements will often be reached before claimants reach the registration stage, as well as the impact of the COVID-19 crisis, which has delayed the process.

We note that on 25 May 2021 a revolutionary climate change judgment was rendered in an environmental collective action against a multinational; Vereniging Milieudefensie v Royal Dutch Shell. In a judgment against Royal Dutch Shell (RDS) dated 26 May 2021, for the first time in history, a court has handed down a judgment that holds a multinational company directly responsible for climate change on the basis of a duty of care following from international treaties such as the UN Guiding Principles and Paris Climate Agreement. The judgment confirmed that RDS has the obligation to reduce its group's CO2 emissions by 45% to meet their reduction goals to prevent climate change. Notwithstanding any possible appeal, with the foundation of this judgment being in international treaties, this judgment is anticipated to be a further catalyst for the current and future wave of climate change litigation against multinational companies in the Netherlands and most likely also in other jurisdictions. 

In light of the existing Dutch infrastructure for class actions (branches of international case funders and U.S. claimant firms), the liberal attitude of the Dutch courts (with the possibility to conduct proceedings in English) and the balanced new class action regime with the lighter admissibility regime for idealistic claims (in combination with good enforceability of its judgments), the Netherlands has all the ingredients for an increase in class action activity in the coming years. Especially in the field of climate change and other common or public interest issues. The current “hard-Brexit” could accelerate this activity even further.

In the Dutch class actions regime, there are no restrictions on the types of class actions that may be brought. This makes the Netherlands a very attractive jurisdiction for claimants.

The types of class actions registered this year underline the variety of the Dutch class action climate:

1. Common interest/human rights claims against the Dutch State (discrimination): four cases
2. IP infringements: four cases
3. Enforcing consumer rights (diesel emission claims with refund): three cases
4. Privacy/GDPR infringements on behalf of consumers: two cases 
5. Collective labour claim: one case

There were no financial and securities (prospectus and misrepresentation) class actions filed this year. We anticipate that these types of class actions will increase in 2021 following COVID-19.

The most important new feature in the Act is the possibility of claiming damages in a class action. The award of damages not only binds the defendant company, but also the parties who suffered damage and whose interests were represented by the representative entity, but who did not opt out. This ultimum remedium is likely to create pressure for the settlement of class actions and the Act should lead to greater empowerment of consumers and consumer organizations.

Under the Act, it is possible to claim monetary compensation in collective actions. Other forms of compensation may be payment in kind, specific performance or a court order or prohibition of certain behaviour in the future. Types of damage that can be compensated in cases of breach of competition law are restitution of incurred losses, loss of profit, and loss of chance.

Under the Act, it is possible to claim monetary compensation in collective actions. 

Damages are assessed 'in a manner most appropriate to its nature'. In principle, this is on the basis of injuries suffered by the claimant. However, it is possible that, at the specific request of the claimant, the judge assesses damages on the basis of the profit made by the defendant. It is at the discretion of the judge to award this request or not.

In class settlement proceedings, a damage scheduling approach is usually applied. In this approach compensation is awarded to claimants based on the characteristics of the group that the particular individual claimant is a member of rather than on the basis of their personal characteristics.

In the Netherlands, it is not possible for the court to award punitive damages. Only damages actually suffered are eligible for compensation.  

The Act is already in line with the proposed EU Directive on representative actions for the protection of the collective interest of consumers, which is now in its final phase of implementation. This makes the Netherlands a frontrunner in this respect.  The new regime applies to class actions initiated on or after 1 January 2020 and that relate to events that took place on or after 15 November 2016.

Please see the Dutch collective claim system under question 1.

A requirement is that there must be a close connection with the Dutch legal sphere (to prevent forum shopping) with regard to the class action proceedings. 

In general, such a connection exists if: a) the majority of the individuals of the 'class' are domiciled in the Netherlands; b) the defendant is domiciled in the Netherlands and additional circumstances indicate a sufficient relationship with the Netherlands; and/or c) the events which resulted in the class action took place in the Netherlands. In general, the Dutch courts are quite liberal in accepting international claims.

Dutch courts have jurisdiction if the defendant is domiciled in the Netherlands (outside the scope of Regulation 44/200112). Besides this, in actions for damages because of an unlawful act, the Dutch court has jurisdiction if the acts that caused the damage took place in the Netherlands (lex loci delicti). If there are several defendants, and the Dutch courts have jurisdiction with respect to (at least) one of them, jurisdiction is also awarded with respect to the other defendants, provided that the claims are so closely connected that it is expedient to handle these cases jointly.

Please see under question 3. Dutch law does not have a mechanism to certify the persons represented by a claim vehicle as a class.

Collective claims can be brought in every court in the Netherlands, as long the court has territorial jurisdiction. 

Since 1 January 2019, the Netherlands has also had a specialiszed Commercial Court for international disputes, which handles cases in English and has been actively promoting itself as a forum for ad hoc class actions and collective settlements. 

No. In principle, all documents can be presented as evidence and the court decides the value of the evidence presented. One exception is for notarial deeds, which are considered conclusive evidence.

 No.

In general, parties that (by contract) have agreed to arbitration are not allowed to bring an action for damages before the civil court at the same time, even if they would prefer this.

It is questionable if an arbitration clause and class action waiver will hold in court in case of consumer rights. There is no recent case law about this. It depends on the specific circumstances if this clause will be considered unreasonable.

Alternative dispute resolution methods such as arbitration and mediation can be helpful mechanisms during the negotiation of a private and non-court supervised class settlement.

It is not yet completely clear whether representative collective actions can be brought in arbitration proceedings in the Netherlands.

Yes.  The only limitation under the rules of the Dutch Bar Association is that Dutch lawyers are not allowed to work on the basis of contingency fees that are completely or substantially dependent on the outcome of the case. In the Converium case, the Amsterdam Court of Appeal held that a fee amounting to 20% of the settlement amount was allowed and not unreasonable.

An interesting feature of the Dutch regime is that in general adverse cost risks are low. In general, the losing party is responsible for some of the litigation costs. The court decides what portion of the costs they should pay. These costs rarely cover the actual costs and lawyers' fees incurred by the other party. The costs granted by the court are based on relatively low standard amounts for standard activities and on the amount of the claim.

However, the Act allows the court to award a much higher amount of costs to the winning party in some circumstances. 

If the court orders a collective claim settlement, it can also order, if so requested, that the defendant pay reasonable and proportionate court costs and other costs that the claimant has incurred, unless fairness dictates otherwise.

Yes, litigation funding of class action is permissible and often used in the Netherlands. There is only the limitation in the Act that the Collective Claimant itself is not allowed to make profit with the action. However, third party funding arrangements are likely to be approached critically by the court to assess whether the interests of the persons being represented are sufficiently safeguarded. In Fortis/Ageas, the Amsterdam Court of Appeal ordered parties in collective settlement proceedings to give information about their funding so that the court could assess whether the interests of the class members were sufficiently protected.

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