Dutch law does not provide for an “American style” class action. However, it has a mechanism that facilitates the implementation of collective settlements in a somewhat similar fashion to US class action settlements. This mechanism is rooted in the Act on the Collective Settlement of Mass Claims, known in the Netherlands as the “WCAM”. In recent years the Dutch courts have been prepared to apply the WCAM in international situations. Thereby, the Netherlands has become a viable venue for resolving mass litigation.
The WCAM provides parties to a settlement agreement with the possibility of jointly requesting the Court to declare the settlement agreement binding. If the Court declares the settlement agreement binding, the agreement then binds all persons covered by its terms, unless such person decides to opt out.
On 1 July 2013 an important amendment to the WCAM came into force: the WCAM can now be applied to settlements reached if the liable person is declared bankrupt in the Netherlands. Before this amendment, a trustee in bankruptcy had to examine all claims of the creditors individually – a costly and time consuming process. With the amendment, the WCAM provides for an efficient way for a trustee in bankruptcy to settle all claims at once by requesting the Court to declare a settlement binding (between the estate and the foundation/ association that represents the interested persons). In May 2013, the first request to declare a settlement agreement binding in a bankruptcy was made to the court. In the DSB Bank case, about 100,000 customers may have claims that DSB Bank violated its duty of care. The settlement brought before the court provides for an arrangement that intends to compensate all customers of DSB Bank for the possible violation of its duty of care. The court delivered a second interim decision on 13 May 2014, in which it gave the parties the opportunity to amend the settlement agreement on certain points, given that it deems the compensation offered so far not reasonable in certain respects. If the court approves the settlement, it will be the first ever with regard to a bankrupt entity. Separate and apart from the bankruptcy amendment, the court, thus far, has rendered six final decisions within the framework of the WCAM.
Two of the cases, Shell and Converium, had substantial international scope. Both cases concerned financial loss suffered by shareholders allegedly caused by misleading statements by the company in a certain period. In Shell, one of the Shell entities involved was Dutch (and listed on the Amsterdam Stock Exchange) and the other was English. The majority of the shareholders who bought or sold Shell shares during the relevant period were not residing in the Netherlands. In Converium, both entities involved were Swiss and neither was listed on the Amsterdam Stock Exchange. Also, only a minority of the shareholders who bought or sold shares during the relevant period were residents of the Netherlands. In both cases the Dutch Court accepted international jurisdiction to hear the case.
What this means is that the Netherlands has become a viable venue for collective settlements in international cases. To date, no other European country has a mechanism comparable to that of the WCAM. Companies that are confronted with mass litigation, whatever their home country is and wherever their shareholder base resides, should be aware of this option for resolving mass disputes.