On 19 March, the Dutch Senate approved the bill entitled Act on the Settlement of Mass Damages Claims in Collective Actions without debate. Once in force, the new law will allow for claiming damages in a collective action. The new law also allows plaintiffs to file collective actions to claim compensation from defendants found liable for damages under the current law.
Current situation
The existing Act on the Collective Settlement of Mass Damages Claims (WCAM) already allows a court to declare binding on an entire group of persons a settlement agreement between an organisation representing the interests of the group and the liable party or parties, providing compensation for a large number of similar claims — a mass damage.Article 3:305a of the Dutch Civil Code also stipulates that a foundation or association with full legal capacity may start legal action aimed at protecting similar interests of other persons. This may, for example, concern a declaration of entitlement. However, this legal claim cannot serve to request compensation.
New law
The new law creates the possibility of a collective action for compensation. In practice, the need for such an action exists because the defending party is not always willing to negotiate a settlement. Even when liability is established, the party that caused the damage is not willing to negotiate because it expects that the individual victims will not go to court. This happens, for example, when the size of each individual claim is too small — ‘dispersed damages’ is the example used by the legislator.There will soon be a single regime for collective actions based on Article 3:305a of the Dutch Civil Code, regardless of whether they are intended for monetary compensation. When various interest groups file collective claims for the same event, concerning similar factual and legal questions, the judge will designate the most suitable party among them to act as the exclusive representative of the class. The decision of the judge in the proceedings is binding on all class members who do not opt out.
Compensation culture fears
The possibility of a collective compensation action could lead to fear of an American style compensation culture. The legislator tried to overcome this problem by imposing new requirements on interest groups. In addition to other requirements, an organisation must have its own workings and finances in order. If the organisation does not meet these requirements, it court can deem it not admissible. The law will enter into force January 1st 2020.
Do you want to know more about the new law? Visit our Class actions page and don't hesitate to get in contact with us if you have any questions.
