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Legislative Proposal introducing class actions in the Netherlands before House of Representatives

Legislative Proposal introducing class actions in the Netherlands

Legislative Proposal introducing class actions in the Netherlands before House of Representatives

05.12.2016 NL law

While the Netherlands is already considered an attractive jurisdiction for claimants bringing cartel damages actions, a new legislative proposal is likely to further enhance the popularity of the Dutch jurisdiction for such proceedings and other class actions. On 16 November 2016, the Dutch Minister of Security and Justice (Minister van Veiligheid en Justitie) submitted a legislative proposal to the House of Representatives (Tweede Kamer), aimed at introducing a US-style 'class action' in the Netherlands.

The Proposal introduces the option to claim damages in a collective action. Under current law, collective actions are limited to requesting a declaratory judgment. Once such a declaratory judgment has been issued, each claimant may initiate individual proceedings to obtain damages, or seek to agree on a collective settlement with the tortfeasor(s) that can be declared binding (a WCAM settlement). However, a collective action for damages is impossible under current law. The Proposal would fundamentally change this.

The Proposal provides for an "opt-out" regime, whereby a representative foundation (stichting) or association (vereniging) brings a claim on behalf of a defined class. The individual claimants falling within that definition are included in the class by default, and need to actively withdraw (in writing) should they not wish to be bound.

Under the Proposal the District Court of Amsterdam will be the designated court for class actions. This will allow the court to build up expertise. In addition, if proceedings are initiated by more than one foundation or association, the court will appoint the one it deems most suitable as the "Exclusive Representative" for all victims.

The Proposal includes a 'scope rule', under which a class action can only proceed if the case has a 'sufficiently close connection' with the jurisdiction of the Netherlands. That threshold, however, is not very high. The Proposal provides that if (i) a majority of the victims represented by the group reside in the Netherlands, or (ii) the defendant has a residence in the Netherlands, or (iii) the event (or events) on which the claim is based, takes or took place in the Netherlands, a sufficiently close connection exists. Thus, the class is not necessarily limited to Dutch claimants. If the defendant resides in the Netherlands, the class will potentially cover victims worldwide.

In terms of its geographical scope, the proposed Dutch class action regime is unprecedented. Other European Member States have introduced or are considering introducing "opt out" class action regimes that are limited to their own residents. The Dutch Proposal goes (far) beyond that. However, the Proposal has received strong criticism. It remains to be seen whether it will be adopted in its current form.

This article was published in the Competition Law Newsletter of December 2016. Other articles in this newsletter:

1. European Commission publishes study on the passing-on of overcharges 

2. Belgian Competition Authority closes investigation into Most Favoured Nation clauses in Immoweb contracts 

Team

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