General climate and recent developments
State of legal development
In general terms, how developed are the product regulation and liability laws in your jurisdiction?
The product regulation and liability laws are well developed in the Netherlands and are largely based on EU law.
Have there been any notable recent developments in relation to product liability law and product safety law in your jurisdiction, including any regulatory changes and case law?
The settlement of collective mass damage claims continues to receive significant attention in the Netherlands. In November 2016 the minister of security and justice submitted a unique legislative proposal to Parliament, introducing a collective damages action in the Netherlands. The proposal introduces the option to claim monetary damages in a ‘US-style’ class action. Therefore, it would lift the existing prohibition on representative organisations claiming for monetary damages in collective actions – it awaits parliamentary approval. If adopted without any major amendments, it would transform the Dutch law approach to collective redress.
Enforcement by the competent authorities remains a hot topic in the Netherlands. Administrative fines of up to €820,000 per violation can be imposed by the competent authorities; turnover-related fines have also been introduced. In October 2017 the minister of health, welfare and sport presented to the House of Representatives a draft decree amending the Administrative Penalties (Commodities Act) Decree with regard to the re-adoption of the turnover-related fines and technical changes. According to the minister, the draft decree should enter into force from July 1 2018. Recent developments show the government's intention to provide the competent authorities with greater leverage to combat Commodities Act violations.
Moreover, a legislative proposal pending before the First Chamber proposes the possibility to claim emotional loss (affectionate damage) for relatives of victims who have died or suffer from serious and permanent personal injury caused by an event for which a third party is liable (see research summary, "Decree on compensation for affectionate damage” (NTBR 2017/43) and “Victims and liability”). The compensation must be paid by the liable person. The aim is to set a fixed compensation amount that will depend on:
- the nature of the victim and the relative's relationship;
- whether the event that caused the liability concerns a crime; and
- whether it concerns serious and permanent personal injury or death.
What primary and secondary legislation governs product safety and liability in your jurisdiction?
The basic Dutch laws governing product safety are set out in:
- the Commodities Act;
- the General Product Safety (Commodities Act) Decree; and
- the General Product Safety (Commodities Act) Regulations.
The Commodities Act and the decree implement the EU General Product Safety Directive (2001/95/EC) in the Netherlands. Both the Commodities Act and the decree govern the safety of all product types.
Further, there are several Dutch laws for specific product types (eg, medical devices, medicinal products, food products, cosmetics, toys and electronics), which implement various EU directives dealing with those specific safety requirements.
Dutch product liability law is based on three grounds:
- the strict liability system of the Product Liability Act found in Articles 6:185 to 6:193 of the Civil Code (implementation of the EU Product Liability Directive);
- contractual liability (Article 6:74 of the Civil Code and certain laws governing specific subjects (eg, Articles 7:24 (consumer sales) and 6:77 (liability for things used that are unfit for purpose) of the Civil Code); and
- tort-based liability (Article 6:162 of the Civil Code).
Regulatory and enforcement authorities
Which government authorities regulate and enforce product safety and liability laws in your jurisdiction, and what is the extent of their powers?
Depending on the product, one of the following authorities regulates and enforces Dutch product safety law:
- The Netherlands Food and Consumer Product Safety Authority (NVWA) is the main competent authority – particularly for food, animal feed and non-food products such as cosmetics, electronics, toys and clothing. The NVWA is also the contact point for notifications from the rapid alert system for dangerous non-food products.
- The Health and Youth Care Inspectorate is the competent authority with respect to medical devices, medicinal products and similar (see “Vigilance: reporting incidents and corrective actions”).
- The National Vehicle and Driving Licence Registration Authority will play a role if the issue concerns vehicle safety (see “Recall of vehicles and parts”).
Should producers or distributors fail to inform the competent authorities about a safety issue, the authority can take measures to ensure that the reporting requirement is fulfilled or initiate a product recall (Article 21 of the Commodities Act). The competent minister can order that the producer informs the rest of the production and distribution chain. However, primary responsibility for taking appropriate measures will always remain with the producer or distributor. The Dutch authority intervenes only when the primary obligation is unfulfilled.
Further, the Dutch authority has extensive enforcement powers under the General Administrative Law Act. For example, under Articles 5(13) and 5(16) of the act, it can request information which is necessary to fulfil its task (ie, supervision of compliance with relevant regulations). Therefore, the authority may request information regarding a product that might pose a danger to Dutch consumers. Article 5(20) of the act also stipulates that any person must cooperate with requests from the Dutch authority.
How is a 'product defect' defined in your jurisdiction?
Article 6:186, Paragraph 1 of the Civil Code stipulates that a product is defective when it does not provide the safety which a person is entitled to expect, taking all circumstances into account, including:
- the presentation of the product;
- the use to which it could reasonably be expected that the product would be put; and
- the time when the product was put into circulation.
Dutch case law gives further guidance on this notion of defect. For example, case law attaches importance to the producer's obligation to warn its consumers – if consumers are not warned sufficiently, there are appreciable consequences for the producer's liability. The Dutch courts have also held that reasonable use includes reasonably expectable improper use.
Causation and burden of proof
How is causation of loss or damage established in relation to product liability claims and where does the burden of proof lie? Can this burden be shifted in any way?
In general, the party claiming damages bears the burden of proof (Article 150 of the Code of Civil Procedure). However, in some circumstances the courts have lessened the burden on the claimant or shifted it to the defendant. In principle, the injured party must prove the causal relationship between the fault or defect and the damage (see also Article 6:188 of the Civil Code). In the event of alternative causality, the burden of proof reverses: where the damage may have resulted from two or more events, for each of which a different person is liable, and it has been established that the damage arose from at least one of these events, the obligation to repair the damage falls on each of the persons. A person will not be obliged to repair if he or she proves that the damage was not the result of an event for which he or she is liable (Article 6:99 of the Civil Code). The Supreme Court judgment of October 9 1992 (NJ 1994/535, AA 1993, p 123 (DES)) held that Article 6:99 of the Civil Code applies to the old product liability regime. It is unclear whether this reversal is compatible with the EU Product Liability Directive.
Legal bases for claims
On what legal bases can a product liability claim be brought?
Injured parties can base the manufacturer's liability on the grounds of:
- the strict liability system of the Product Liability Act found in Articles 6:185 to 6:193 of the Civil Code (implementation of the EU Product Liability Directive);
- contractual liability (Article 6:74 of the Civil Code and certain laws governing specific subjects (eg, Articles 7:24 (consumer sales) and 6:77 (liability for things used that are unfit for purpose) of the Civil Code)); and
- tort-based liability (Article 6:162 of the Civil Code).
Can a defendant be held criminally liable for defective products?
The supply of defective products is a criminal offence under the Economic Offences Act. Under the act, producers that fail to take appropriate action when it appears that their products are defective could be penalised.
Which parties can be held liable for defective products?
A producer or anyone that might appear to be a producer may be liable for supplying a defective product. Article 6:187, Paragraph 2 of the Civil Code defines a ‘producer’ as including:
- the manufacturer of the finished product, raw material or other component parts;
- a person who presents himself or herself as the producer of the product;
- an entity that puts its name, trademark or other distinguishing feature on the product; or
- any person who imports a product into the European Economic Area for sale, hire, leasing or for any form of distribution in the conduct of commercial activity.
If the producer is unknown, the supplier may be held liable. A supplier will not be liable unless it fails to inform the injured person within a reasonable time of the identity of the producer or the person who supplied it with the product. If the party that supplied the product to the supplier is insolvent, liability will not revert to the supplier.
Duty of care in tort can rest on all persons who have caused injury to another and such parties may be liable for damages.
Limitation of liability
Can liability be excluded or mitigated in any way?
In principle, a party can exclude or mitigate its liability in a contract or in its general conditions. However, in certain cases liability cannot be excluded or mitigated. For example, the producer's liability under Articles 6:185 to 6:193 of the Civil Code may not be excluded or limited with respect to the injured person. Further, in consumer sales, the seller's liability cannot be excluded or mitigated.
What is the procedure for filing a product liability claim before the courts in your jurisdiction?
Product liability claims are initiated by the claimant serving a writ of summons on the defendant. Service of a writ must be performed by a court bailiff. The lawsuit commences on the day that the writ is served on the defendant. The claimant must register the writ with the competent court on the date stated on the writ. Claims must be brought in the first instance before the competent district court, unless the parties have agreed on a different form of dispute resolution. If the amount claimed is €25,000 or less, a special district court division (the cantonal division) will handle the case (Article 93 of the Code of Civil Procedure). Both parties must pay a court registry fee.
The digitalisation project of the Dutch legal system entails key deviations to this process. New procedural rules apply in the digital system (see website of the judiciary). This is being phased in from February 2018. At the time of writing (March 2018), the digital system is implemented only in the District Court of Midden-Nederland and the District Court of Gelderland. Other district courts in the Netherlands are expected to implement the digital system by the end of 2018 or early 2019.
Can the court issue interlocutory orders or judgments in product liability cases? If so, what rules and procedures apply?
The court often issues interlocutory judgments in product liability cases. Such judgments concern (for example) orders for the parties to submit certain evidence.
Generally, an appeal against an interlocutory judgment can be lodged only simultaneously with the final judgment, unless the court has specifically allowed an interim appeal (Article 337 of the Code of Civil Procedure).
What pre-trial disclosure/discovery mechanisms are available in product liability cases, if any?
Dutch law does not include the concept of pre-trial disclosure and there is no general disclosure obligation. However, pre-trial disclosure can be obtained by way of the following:
- Disclosure of documents by another (third) party – based on Article 843a of the Code of Civil Procedure.
- Evidentiary seizure – an Article 843a claim may be secured by seizing the evidence. Permission must be requested by submitting a petition to the court; in order for this to be permitted, a well-founded fear of embezzlement must be shown.
- Preliminary witness hearing – parties may request the court to order that witnesses are heard before the proceedings (Article 186 of the Code of Civil Procedure); such requests are rarely denied.
- Preliminary expert report – parties may request a preliminary expert's report by filing a petition before the proceedings (Article 202 of the Code of Civil Procedure).
The main goal of these forms of pre-trial disclosure is to gather evidence and evaluate the chance of success in potential proceedings against a prospective defendant. The claimant need not file subsequent proceedings.
What evidence is accepted to support claims in product liability cases? What formalities apply to evidence submission?
Article 152 of the Code of Civil Procedure states that evidence may be presented in any form, unless the law provides otherwise. Evidence can therefore be filed in essentially every form (eg, paper, oral testimony, samples and voice recording). In practice, the most common forms of evidence include:
- documents (typically electronic);
- witnesses (including witness hearings before the court and written witness declarations); and
- experts (in the form of expert's reports).
Under what circumstances will the court appoint an expert to assist it in examining the merits of the case? What rules and procedures apply?
The court can appoint an expert if (for example) the court needs expert advice on certain aspects of the case (Article 194 of the Code of Civil Procedure). The court decides who shall be appointed, but the parties are allowed to discuss the selection and can comment on the expert's draft report. While the court is not bound by the expert's report and the report has no specific value as evidence, in practice, the courts tend to rely on the report.
Can the parties rely on expert witness testimony to support their claims? If so, what rules and procedures apply?
Parties can rely on expert witness testimonies to support their claims. Such experts are known as 'party experts'. Parties can either submit a party expert report or request the court to hear the party expert during the proceedings (Article 200 of the Code of Civil Procedure).
Are class actions or any other collective proceedings available for product liability claims in your jurisdiction? If so, what is the procedure for their formation and what benefits do they afford claimants? Are class actions formed on an opt-in or an opt-out basis?
Mass tort litigation does not fall within the category of collective action or the Collective Settlements Act. It relates to a recent trend in cases involving claim vehicles whereby (sometimes hundreds of) injured parties have been asked to assign their claim to the claim vehicles. Subsequently, the claim vehicles start proceedings in the Netherlands against defendants acting in their own names. This is often referred to as the Dutch 'assignment model'.
In addition to this so-called ‘assignment model’, Dutch law provides for two formal litigation mechanisms to settle collective mass damage claims: the Collective Settlements Act and collective action based on Article 3:305a of the Civil Code.
The Collective Settlements Act enables the collective settlement of mass damages claims. Under the act, the collective settlement must be concluded between:
- one or more associations or foundations representing the interests of a group of injured parties which suffered alleged damage; and
- the party or parties allegedly caused the damage.
Once a settlement is reached, the parties can submit a joint application to the Amsterdam Court of Appeal, requesting it to declare the collective settlement binding on all injured parties falling within the scope of the settlement agreement (whether known or unknown and whether residing in the Netherlands or abroad). Those injured parties that do not want to be bound by the settlement agreement have a limited period to opt out.
Article 3:305a of the Civil Code stipulates that a collective action can be instituted by a foundation or association whose statutory goal is to represent the interests of groups of injured parties having similar damage claims and having a similar interest in holding a third party liable for the damage suffered by such group of injured parties. The initiating foundation or association must also have full legal capacity and have made a sufficient attempt to achieve the objective of the collective action through consultations.
The collective action can be used only to seek a declaratory judgment against the third party. Thus, current Dutch law does not provide for a collective damages action.
In November 2016 the minister of security and justice submitted a legislative proposal to Parliament, which aims to amend the collective action based on Article 3:305a of the Civil Code. If adopted without any major amendments, it would transform the Dutch law approach to collective redress. IT would, among other things, open up the possibility to claim damages in a collective action.
What rules and procedures govern appeals of court decisions?
The losing party may appeal against an adverse district court judgment to a court of appeal in the jurisdiction in which the district court is located.
An appeal against a first-instance judgment in proceedings on the merits should be lodged within three months after the date of the judgment (Article 339 of the Code of Civil Procedure).
Statute of limitations
What is the statute of limitations for filing product liability claims?
Article 6:191 of the Civil Code states that a product liability claim lapses three years following the day on which the injured party became aware or should reasonably have become aware of the damages, the defect and the producer’s identity.
In many cases, a product liability claim can also be based on an unlawful act. The cause of action for damages on the basis of an unlawful act cannot be brought after a lapse of five years after the commencement of the day following the day on which the injured party became aware of both the damage and the person or legal entity liable. In any event, an action cannot be brought after a lapse of 20 years following the event that caused the damage.
What is the typical duration of proceedings in product liability cases?
The duration of proceedings in product liability cases depends on:
- the scale and complexity of the case;
- whether experts and witnesses must be heard; and
- if interim motions are filed.
First-instance proceedings can take up to several years. Appeal proceedings typically take at least 12 months, but can be longer. Proceedings before the Supreme Court take approximately 15 months.
Costs, fees and funding
Can the successful party to the litigation recover court and attorneys’ fees and any other related expenses from the losing party? If so, what rules and procedures apply?
The unsuccessful party is usually ordered to pay the legal costs (eg, court fees, fees of any court-appointed experts and lawyers’ fees) of the successful party (Article 237 of the Code of Civil Procedure).
Lawyers’ fees are fixed by the court according to a scheme, which is based on the value of the case (ie, the amount claimed). The costs, as fixed by the court, are usually much lower than the actual costs. The successful party has no action to claim the remaining part of its lawyers’ fees. The court fees and the expert fees to be paid are the actual costs incurred.
What rules and restrictions (if any) govern contingency fee arrangements?
Under the Netherlands Bar Association Code of Conduct, contingency fees are prohibited for lawyers in the Netherlands. However, in 2014 a five-year temporary exception was introduced as a pilot for personal injury cases and cases in which damages resulting from death are claimed. In those cases, contingency fees are allowed if certain strict requirements are met. This prohibition does not apply to claim vehicles to which injured parties have assigned their claim on the basis of a deferred purchase price (ie, the injured parties assign their claims and will pay the claim vehicle a certain percentage of the successful outcome of the case), whereby the claim vehicle subsequently starts proceedings in the Netherlands against defendants acting in their own names.
Is third-party litigation funding permitted in your jurisdiction? If so, do any rules or restrictions apply?
Third-party litigation funding is not regulated in the Netherlands and is becoming increasingly widespread.
A foundation or association initiating a collective actions claim based on Article 3:305a of the Civil Code has no standing if the court deems that the interests of the prejudiced persons are insufficiently safeguarded. Moreover, a legislative proposal, which aims to amend the collective action based on Article 3:305a, contains a provision which provides that the foundation or association must have sufficient funds to bear the costs associated with the submission of the claim, giving the court more scope to examine the financing arrangement and ensure that the prejudiced persons' interests are sufficiently safeguarded.
Is legal aid (ie, public funding) available to claimants in product liability cases? If so, what rules, restrictions and procedures apply?
Under the Act on Legal Aid, single householders with an annual income of less than approximately €26,900 and people who run a joint household with one or more persons with an annual income not more than €38,000 have a right to legal aid paid by the state if certain criteria are met (Article 12 in conjunction with Article 34 of the Act on Legal Aid).
Those criteria include that the legal interests must concern the Netherlands and the costs of the legal aid must be in reasonable proportion to the interests of the case. Legal aid recipients must pay an income-related fee – for 2018 the lowest fee is €196 and the highest is €823. Generally, no fees are payable in criminal cases.
Further, the individual must pay the court fees and, if he or she loses the case, the other party’s costs, as ordered by the court.
What rules and procedures govern the settlement of product liability cases?
The Collective Settlements Act sets out some specific rules and procedures for collective settlements.
Should parties wish to enter into a settlement outside the Collective Settlements Act framework, no specific rules and procedures apply. A settlement agreement may be reached by the parties either before or during the proceedings, either amicably or by an alternative dispute resolution (ADR) procedure.
How common are settlements in product liability cases?
This depends on the circumstances of the case and the parties' willingness to reach a settlement. Generally, settlements in product liability cases are common.
Alternative dispute resolution
Are any alternative dispute resolution (ADR) methods required or advised before or in lieu of proceeding with litigation?
Under Dutch law the ADR methods available are arbitration, binding advice and mediation.
Arbitration can be agreed in advance or when the dispute arises. Arbitration leads to a judgment that will be enforceable.
Parties can also request a third party to give binding advice on the dispute. In the Netherlands, the third party will usually be a disputes committee, such as the consumer conciliation board.
Finally, parties can choose mediation, whereby the parties will be supported in their negotiations by an independent third party until a mutually acceptable solution is found.
How commonly is ADR used in relation to product liability cases in your jurisdiction?
This highly depends on the type of case and the wishes of the parties involved. Mediation and binding advice are likely the most common methods of ADR for product liability cases.
What defences are available to defendants in product liability cases?
Under Articles 6:185 to 6:193 of the Civil Code, producers are not liable if it is proved that:
- the producer did not put the product into circulation;
- it can be assumed that the product did not have the defect, which caused the damage, at the time when the producer put it into circulation;
- the product was manufactured neither for sale nor for any other form of distribution for economic purposes;
- the defect is due to compliance of the product with mandatory regulations issued by public authorities;
- the state of scientific knowledge at the time when the product was put into circulation was not as to enable the defect to be discovered; or
- in the case of the manufacturer of a component, the defect is due to the design of the finished product or the component was made in accordance with the instructions of the producer of the final product.
Sellers under a contractual relationship with the consumer may include the defence that the breach of contract consists of a defect referred to in Articles 6:185 to 6:193 of the Civil Code in circumstances where the seller was not and ought not to have been aware of the defect, and had not promised that the product was free from defects.
Producers and suppliers that are allegedly liable in tort can argue that there was no negligence.
What preliminary procedural mechanisms are available to defendants, if any?
The following mechanisms are available:
- Disclosure of documents – a party may request a third party to disclose certain documents (Article 843a of the Code of Civil Procedure).
- Preliminary witness hearing – parties may request the court to order that witnesses are heard before the proceedings (Article 186 of the Code of Civil Procedure).
- Preliminary expert report – as with a preliminary witness hearing, parties may request a preliminary expert's report by filing a petition before the proceedings (Article 202 of the Code of Civil Procedure).
- The Act on Partial Dispute Procedure –in cases involving loss due to personal injury or death, parties can request the court to judge on a particular part of their dispute (Articles 1019w to 1019cc of the Code of Civil Procedure).
- The Preliminary Rulings Procedure – on the request of the parties or on their own initiative, the lower courts can request preliminary rulings from the Supreme Court regarding mass damage claims and other cases in which a certain question of law is relevant for handling a large number of similar disputes (Article 392 of the Code of Civil Procedure).
What types of damages may be awarded in product liability cases? What rules and standards govern their calculation? Are damages capped?
Claimants can recover damages in kind (eg, replacement of products) and in certain circumstances receive advance payment of damages in summary proceedings. Advance payment may be awarded by the judge if it is likely that damages will be awarded in the proceedings on the merits and if the claimant has an urgent interest in obtaining advanced payment.
Damages for death can be claimed only by those persons referred to in Article 6:108 of the Civil Code (ie, the spouse, registered partner and children of the deceased). Other relatives of the deceased by blood or marriage can claim damages provided that at the time of death the deceased maintained them. A pending legislative proposal should introduce the possibility to claim emotional loss ('affectionate damage') for relatives of victims who have died or suffer from serious and permanent personal injury caused by an event for which a third party is liable.
Damages for personal injury (including physical and mental injury) are recoverable under Article 6:107 of the Civil Code. These include (for example) hospital costs and costs for future care. If such costs were incurred by a third party for the benefit of the injured person, they may also be recoverable.
Damages for mental injury can be claimed only in respect of tortious unlawful acts.
Under the Product Liability Act (Article 6:190 of the Civil Code) the producer will be liable for two kinds of consequential damages: personal injury and property damage caused to another product that is normally used for private use and from which the amount of the loss exceeds €500.
Article 6:190 of the Civil Code is limited to personal injury of a physical nature and excludes mental injury. However, the term ‘personal injury of a physical nature’ is construed to include illness and harm that is a consequence of a physical injury, and could include pain and suffering relating to that physical injury.
On September 1 2009 the 's-Hertogenbosch Court of Appeal clarified that if claims are based on the Product Liability Act, emotional damages will not qualify for compensation because Article 6:190 of the Civil Code explicitly limits the compensation of damages in cases of product liability to damages caused by death or personal injuries.
Non-material damages can also be claimed in the Netherlands in respect of unlawful acts under Article 6:106 of the Civil Code. The damages should be fairly assessed and largely relate to damage to the claimant’s honour, reputation or right to privacy. Generally, modest amounts are awarded for non-material damages.
Reasonable costs made to avoid or limit damages (‘costs of mitigation’) can also be claimed under Article 6:96 of the Civil Code.
Are punitive damages allowed?
Punitive damages are not available in the Netherlands.
Are any other remedies available?
Under Dutch law, distinction must be made between an agreement between a consumer and a supplier and an agreement between two professional parties. Many of the conditions in Title 1, Book 7 of the Civil Code are mandatory only in the event that a contract of sale is concluded with a consumer. In other situations, these conditions are directory law (ie, in a contract of sale concluded between professional parties, such parties can deviate from such conditions).
Under Articles 7:21 and 7:22 of the Civil Code, if a product does not conform to the contract, the consumer has the right to:
- delivery of which is lacking;
- replacement; and
- contract dissolution or price reduction if repair or replacement will not be possible or cannot be reasonably required.
These rights can be used together with and without prejudice to the rights which may be used on the basis of general contract law (Article 7:22, Paragraph 4 of the Civil Code), including:
- compensation for damages;
- contract dissolution on the basis of Article 6:265 of the Civil Code; and
- the right to suspend performance.
If the non-conformity relates to a safety defect under Articles 6:185 to 6:193 of the Civil Code, the seller will not in principle be liable for the damage (Article 7:24, Paragraph 2 of the Civil Code). This will not apply if:
- the seller was aware or ought to have been aware of the defects;
- the seller has promised freedom from defects; and
- the damage relates to things for which, under Articles 6:185 to 6:193 of the Civil Code, there is no right to compensation on the basis of the threshold provided for in these articles, without prejudice to its defences and in accordance with the general provisions for damages.
If the non-conformity does not relate to a safety defect, the seller will be liable under the general principles of Book 6 of the Civil Code (Article 7:24, Paragraph 1 of the Civil Code).
Are there any statutory criteria under which a product must be recalled or other corrective action be taken?
The Commodities Act prescribes that a matter requires notification if a producer or distributor supplies a product that it knows or should know can be dangerous for humans when used as intended. The type of measure to be taken will depend on the level of risk of the product. Based on the Dutch case law and literature available, the adequacy of the measures depends on, among other things:
- the nature of the product;
- the probability that accidents will occur from further use of the product (likelihood of dangers);
- the gravity of the consequences (damage) deriving from a potential accident (seriousness of the danger);
- the burden of taking adequate precautions; and
- the probability that someone will not exercise the required attention and care.
The Netherlands Food and Consumer Product Safety Authority provides tools on its website that can help to determine whether a general consumer product is dangerous. Reference is made to the Guidelines for the Notification of Dangerous Consumer Products to the Competent Authorities of the Member States by Producers and Distributors in Accordance with Article 5(3) of the EU Directive 2001/95/EC.
What rules and procedures govern notification of the product recall to government authorities and the public?
Article 21(b) of the Commodities Act stipulates that when a producer or distributor knows that it supplies dangerous products, it should inform the competent Dutch authority immediately and outline the measures that it will or has already undertaken to ensure safety.
Besides the Commodities Act, sector-specific legislation (eg, for food products, medicines and cosmetics) may provide for distinct rules and procedures regarding notification requirements.
Repairs, replacements and refunds
What rules and procedures govern repairs, replacements and refunds for defective products?
Under Dutch consumer law, a producer or other supplier must offer to repair or replace recalled products or, if repair or replacement is impossible, offer other compensation.
What penalties apply for non-compliance with the legal provisions governing product recalls?
Civil law penalties do not exist under Dutch law for non-compliance with the legal provisions governing product recalls, but failure to comply with these laws can give rise to liability under the Civil Code. Administrative and criminal penalties exist under Dutch law.
Non-compliance with the Commodities Act can be dealt with by enforcement by the authorities (administrative enforcement) and enforcement by the public prosecutor if the non-compliance is also classified as a criminal offence (under the Economic Offences Act or the Criminal Code). If the public prosecutor has instituted criminal proceedings and the examination in court has started, or if the public prosecutor has issued a penalty order, an administrative fine cannot be imposed (in accordance with the ne bis in idem principle, Article 5(44) of the General Administrative Law Act). Enforcement by the public prosecutor is possible only where an intentional or reckless offence causes a direct danger to public health and safety or the administrative fine will be significantly exceeded by the offender's economic profit (Article 32a, Paragraph 3 of the Commodities Act).
Administrative penalties A specific decree is available in regard to administrative fines for violating decrees and regulations under or in accordance with the Commodities Act: the Administrative Penalties (Commodities Act) Decree. The fine may be increased if the natural person or legal entity to which the violation can be attributed has already been fined for a similar offence in the past two years and the seriousness of the offence demands an increased penalty (Article 3, Paragraph 4 of the Administrative Penalties Decree). The maximum administrative fine is €820,000.
The Administrative Penalties Decree also allows for turnover-related fines. Therefore, if a company violates a provision of the Commodities Act or related legislation, a fine can be imposed of a certain percentage of their annual turnover. However, this fine is limited to large companies with an annual turnover of €10 million or more. Turnover-related fines can be imposed only where there is either intention or gross negligence on the side of the perpetrator.
Culpability is a key factor with a distinction drawn between:
- intentional violations; and
- violations resulting from gross negligence.
For gross negligence, a fine of 0.5% of the annual turnover can be imposed. For intentional violations, the fine may rise to 1% of the annual turnover. The Administrative Penalties Decree creates the possibility to impose higher fines in cases of repeat offenders. The maximum amount for turnover-related fines is set out in the sixth category of Article 23(4) of the Criminal Code (currently €820,000).
Criminal penalties If a producer fails to take appropriate action, it could be subject to the following penalties under the Economic Offences Act:
- a maximum of two years’ imprisonment, community service or a criminal fine of up to €20,500 (Article 9 of the Criminal Code in conjunction with Article 6 of the Economic Offences Act);
- a maximum criminal fine of up to €82,000 if the value of the goods with which the criminal offence was committed or of the goods obtained by means of the criminal offence exceeds one-quarter of the amount of the fine (€20,500);
- a maximum criminal fine of up to €82,000 if the offender is a legal entity and a lower fine would not be appropriate;
- if both situations apply, a criminal fine of up to €820,000 – the highest category for criminal fines under the Penal Code (if a sixth category fine is not deemed to be an appropriate penalty, a criminal fine of up to 10% of the legal entity’s annual turnover);
- a possible one-year ban in trading for businesses; and
- publication of the court judgment.