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Netherlands passes new law for redress of mass damages

22/03/2019

On 19 March 2019, the Dutch senate adopted the collective action bill, which is being touted as an effective instrument to redress mass damages. The law should enter into force on the 1 July 2019, or 1 January 2020 at the latest.

Option to claim monetary compensation

The law enables a representative entity to claim monetary compensation on behalf and in favour of a group of victims of mass damages. An example of such claim is a claim for compensation against a company instituted by the Dutch Shareholder Association (VEB) in favour of aggrieved shareholders. Under the former system, a claim for monetary compensation was explicitly excluded.

Specific requirements for representative entities

Furthermore, the new law implements additional requirements regarding the admissibility of a representative entity. The requirements relate to governance of the representative entity, the way a representative entity is financed and the degree of representation the entity exercises.

A sufficiently close connection between the collective action and Dutch jurisdiction is required. A sufficiently close connection is assumed, if:

  1. the majority of the represented people reside in the Netherlands, or;
  2. the defendant is domiciled in the Netherlands and additional circumstances are in place to provide a sufficient link with the Dutch jurisdiction, or;
  3. the action relates to events that took place in the Netherlands.

The representative entity and the collective action must, in principle, meet all the admissibility requirements. If not, the court can rule non-admissibility of the instituted action.

Central register

All collective actions must be entered into a central register within two days after a writ is served.

Appointment of an 'Exclusive' representative entity

An exclusive representative entity will be appointed by the court when more than one representative entity submits a claim for the same event. The other representative entities will remain party to the proceedings.

Opt out and opt in regime

Individuals that the representative entity aims to protect have the option to opt out of the group action after the court appoints the representative entity. After the opt-out period, the action will be decided on its merits. Individuals who choose to opt out can pursue their own individual action and will not be able to benefit from the collective action.

Binding decision: wide scope

The court judgment is binding on all Netherlands-based individuals and non-Dutch residents of the Netherlands who the representative entity represented.

Authors

Remko-van-Baarlen-CMS-NL
Remko van Baarlen
Attorney-at-law
Utrecht
Charlotte-Kaspersen-CMS-NL
Charlotte Kaspersen
Attorney-at-law
Utrecht