In America, class actions are already part of established practice. But class actions are also increasingly common in the Netherlands, particularly in social issues, for example in the areas of consumer rights and privacy. The AVG even explicitly includes the right to instruct an interest group to file a complaint and, if national law allows it, claim damages.
In Dutch law, for a very long time there was no possibility to claim damages in a collective action, this was even explicitly excluded. For example, in the case SEKAM c.s./The State that I blogged about earlier, the court found that the State was liable, but could not directly assess and award damages. For that, all injured parties had to start individual proceedings. This is about to change, as the Mass Damage Settlement in Collective Action Act was passed by the Senate on March 19. This law makes collective damages actions possible, and thus provides for the possibility offered by the AVG to claim damages.
The new Class Action Mass Claims Settlement Act also tightens the admissibility requirements, particularly in terms of governance (structure within the organization), financing and representativeness. The aim is to keep out so-called "claim cowboys," both to protect victims and the party sued.
Interest groups are (claim) foundations or associations whose statutory purpose is to represent the similar interests of a group of aggrieved persons. The interest organization's collective claim must show that the interests of the victims are adequately safeguarded. There must be no self-interest of the interest organization, for example, financial gain. The Act on Settlement of Mass Claims in Collective Action now stipulates that the interests of the victims are sufficiently safeguarded if the interest organization is sufficiently representative, given its constituency and the size of the claims represented, and also has:
a body that oversees the governance of the interest group or a one tier board structure (a board composed of board members and supervisors);
An appropriate and effective mechanism for participation of member aggrieved persons in decision-making of the advocacy organization;
sufficient financial resources to bear the costs of bringing the class action, such as through Third Party Litigation Funding (external funding);
a publicly accessible Internet page on which information is available to affiliates, such as the organization's goals and practices, how to join, and an understanding of how any financial contribution from the aggrieved will be calculated.
In addition to these requirements, additional admissibility requirements apply, namely that the directors involved in the interest organization may not have a profit motive, the collective claim has a sufficiently close connection with the Dutch legal sphere (to prevent claim tourism) and the interest organization has sufficiently tried to achieve the claimed through consultation with the defendant. Excluded from this strict entry test are claims with an idealistic purpose and a very limited financial interest or when the nature of the claim gives reason to do so.
Furthermore, there will be one specialized court, namely the one in Amsterdam, and a register will be kept in which all collective actions pending before the court will be registered. The plaintiff must register the collective action within two days of the filing of the summons.
The Class Action Mass Claims Settlement Act codifies a number of principles from the pre-existing Claims Code. The Claim Code is a governance code for interest groups and ensures that the board always puts the interests of victims who have joined at the center.
On March 4, the new 2019 Claim Code was published. The first Claim Code was published in 2011 and had not been updated since then. The update mainly looks at governance, funding and oversight. Among other things, the Claim Code states that the board must consist of a minimum of three people, that the advocacy organization investigates the track record of an external funder, and that the lawyer hired must not accept assignments from the external funder in the relevant case. The goal is to prevent as many rogue claims foundations as possible. The Claim Code is not a law like the Class Action Mass Claims Settlement Act, but it does contain guidelines that judges in practice test against and have even rejected claims on.
In addition to the Mass Damage Settlement in Collective Action Act and the Claims Code, there is the Collective Mass Damage Settlement Act (WCAM), which makes it possible for an agreement that the interest organization has entered into with the liable party and provides for a settlement to compensate for damages to be declared generally binding by the court for the entire group of victims. This means that the injured parties can claim the agreed compensation. This arrangement is therefore important if the interest group and the liable party can agree on the extent and compensation of damages without the judgment of a court.
In the meantime, therefore, there are various possibilities for groups of victims to sue a liable party collectively, both in and out of court and both for compensation for damages and for claims with a different scope. Victims can be represented by an advocacy organization that represents their collective interest. In order to ban claim cowboys, strict requirements are imposed on the set-up of such an interest organization and the admissibility requirements of the interest organization in proceedings.
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