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New Act makes the Netherlands more attractive for collective actions

15 October 2019

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The Act on redress of mass damages in a collective action (Wet afwikkeling massaschade in collectieve actie) (WAMCA) was approved by the Dutch Senate on 19 March 2019, building on previous legislation first introduced in July 2005.

One consequence of the new Act is that Dutch courts and Dutch claimant foundations (associations representing an unnamed group with similar interests) may become more attractive for large, international collective actions with respect to events that took place after 15 November 2016.

This is because, among other benefits, WAMCA has improved the position of claimants seeking redress. In fact it makes collective compensation actions possible on behalf of individuals and their legal representatives.

Marcelo Delfos, Director at financial services provider Intertrust, explains: “If a claims foundation wins a case in court, affiliated participants no longer have to enforce their own compensation through an individual procedure, saving time and money for them, the company and the courts.”

Another improvement is that if there are several claimant foundations involved in a specific claim, the court can appoint one exclusive representative. The outcome of that procedure is then declared binding for the other organisations, provided they have not opted out.

The management of the selected organisation must also meet certain quality standards (kwaliteitseisen), such as good governance, administration and financial management. The goal is to prevent a proliferation of claim organisations in order to protect both the claimants and the company.

International attention

The outcomes offered by the new legislation will also attract attention outside the Netherlands. This is because the rules make it possible to have an international case go through a Dutch court and / or Dutch claim foundation.

“The Dutch legal system already has a good reputation in terms of quality and low costs, but the new rules make the Netherlands even more attractive,” says Delfos. “Of course there must be a clear Dutch link in a claim case, for example because a significant proportion of the class live in the Netherlands.”

In addition, the Dutch foundation will often be chosen as the legal association. The legislation explicitly mentions the foundation as a possible legal entity. Dutch foundations are renowned for their reliability and compliance with the law, and this recognition is a major advantage under the terms of WAMCA.

Delfos concludes: “We expect that the new legislation is likely to come into force by January 2020, and that it will lead to more frequent use of Dutch foundations in national and international claim cases.

“Intertrust is currently in discussions with law firms to assist foundations administratively, so that they can meet the new stricter quality requirements. We already have such structures under management for, in particular, foreign investment funds that act as finance partners in class action cases.”

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