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Class action and interruption of the limitation period (annulment pursuant to article 1:89 DCC)

Class action and interruption of the limitation period (annulment pursuant to article 1:89 DCC)

Class action and interruption of the limitation period (annulment pursuant to article 1:89 DCC)

26.01.2016 NL law

On 9 October 2015 (ECLI:NL:HR:2015:3018) the Dutch Supreme Court decided, upon preliminary questions posed by the Amsterdam Court of Appeal, that a class action interrupts the limitation period applicable to the annulment of securities lease contracts.

Factual background

On 13 October 2000 the appellant entered into a securities lease agreement with (the predecessor of) Dexia. The appellant was married at the time. Under Dutch law, spouses can annul certain legal acts that their partners have entered into without their approval by means of a written statement addressed to their partner and the partner’s counterparty (article 1:89 DCC). February 2005, the appellant’s husband annulled the securities lease contract pursuant to article 1:89 DCC, which was not accepted by Dexia on the basis that the husband’s entitlement to annul the contract had become time-barred .
The appellant claimed that the limitation period was interrupted by a class action that had been initiated against Dexia in 2003. This class action was withdrawn after the Amsterdam District Court declared a collective settlement on claims against Dexia generally binding in May 2005. The appellant, however, signed an “opt out” declaration and was consequently not bound by the collective settlement.

Interruption of limitation periods in the Netherlands

The claimant can interrupt the limitation period regarding a claim for damages by either initiating legal proceedings against the opposite party or by sending a written notice to the opposite party in which the claimant unequivocally reserves all his rights (an interruption letter). If the limitation period is interrupted by means of an interruption letter, a new limitation period starts to run. If the limitation period is interrupted by means of legal proceedings and the filed legal claim is rejected by the court or the proceedings end otherwise without an awarding judgment, the limitation period will only have been interrupted if, within six months after the final and binding judgment or, in absence of a judgment, the ending of the proceedings, a new action is brought by the claimant (article 3:316 (2) DCC).
Different rules apply to the entitlement to annul a legal act. That entitlement becomes time barred three years after the date on which the entitlement to annul the legal act arose. A legal act can be annulled by means of a written declaration addressed to the parties of the legal act or by means of a claim in legal proceedings. The limitation period applicable to the entitlement to annul legal acts can be interrupted by initiating proceedings in which the annulment is claimed, but not by means of an interruption letter.

Class actions and the interruption of claims for damages

Dutch law allows for class court actions to be brought by certain legal entities on behalf of classes of interested persons (article 3:305a DCC).
Legislative history shows that a class action interrupts the limitation period of a claim for damages Furthermore, the Dutch Supreme Court decided on 28 March 2014 (ECLI:NL:HR:2014:766) that a legal entity which is entitled to bring a class action (pursuant to 3:305a Dutch Civil Code), can also interrupt the limitation period regarding claims for damages on behalf of a group of people it represents by means of an interruption letter (pursuant to article 3:317 DCC). Class actions and the limitation period for annulment

The District Court ruled that the appellant’s claim to annul the securities lease contract had expired. The appellant appealed against this ruling and he argued before the Amsterdam Court of Appeal that the limitation period had been interrupted by the class action.
The Court of Appeal submitted two preliminary questions to the Dutch Supreme Court to determine: (i) whether the class action interrupted the limitation period applicable to the entitlement to annulment of securities lease contracts pursuant to article 1:89 DCC, and if so (ii) whether the extrajudicial statement had the same legal effect as “bringing an action” if it is brought within six months after the class action ended without an awarding judgment? The latter question was relevant because the class action did not end with awarding a judgment but was withdrawn because of the collective settlement..
The Dutch Supreme Court replied in the affirmative to both questions and attached great importance to the purpose of article 3:305a DCC namely that it ensured the effective and efficient legal protection for the people represented by legal entities pursuant thereto and the promotion of collective settlements.
Given the purposes outlined above, the Dutch Supreme Court held that a class action pursuant to article 3:305a DCC interrupts the limitation period applicable to the extrajudicial entitlement of annulment. Although the Dutch Supreme Court considers that the extrajudicial statement doesn’t qualify as “bringing an action” (article 3:316 DCC), the Dutch Supreme Court held that in light of the purpose of article 3:305a DCC the extrajudicial statement has the same legal effect if it is brought within six months after withdrawal of the class action.

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