News Update Class Actions

On 1 November 2022, the Dutch Senate adopted the bill to implement Directive (EU) 2020/1828 on representative actions for consumers (the "Directive"). The Dutch legislature is therefore well on schedule, as Member States are required to adopt and publish the implementing legislation by 25 December 2022. The Dutch Implementation Act (only in Dutch) is expected to enter into force on 25 June 2023. 

The Directive obliges every Member State to provide for a representative action procedure for consumers in its national law. Representative organisations ("qualified entities") must at least be able to seek injunctive and redress measures, including compensation, in the collective interests of consumers for breaches of EU consumer law that is listed in Annex 1 of the Directive. The Directive includes requirements on the standing of qualified entities, which must be fulfilled if those entities bring collective actions in a Member State other than that in which they were designated ("cross-border actions"). The Directive also includes requirements on the funding of representative actions for redress measures and on information obligations for parties regarding the collective actions. 

Most of the Directive's requirements are already included in Dutch class action law by virtue of the entry into force of the Act on collective damages claims (Wet afwikkeling massaschade in collectieve actie or WAMCA) on 1 January 2020. The Implementation Act only changes the WAMCA as far as necessary to comply with the Directive and – with a few exceptions – only for collective actions that fall under the Directive's scope.

Key takeaways

• The Implementation Act transposes the Directive's requirements on third-party litigation funding, but – according to the explanatory memorandum – not further than necessary because representative organisations largely depend on this kind of funding. The Implementation Act therefore only prohibits a collective action under the Directive against a defendant that is a competitor of the funding provider or against a defendant on which the funding provider is dependent (Article 10(2)(b) of the Directive). The other requirements regarding third-party funding should considered to be already included in the WAMCA, according to the legislature.
  
  
• The WAMCA has standing requirements that are less strict if the collective action is brought for an idealistic purpose (not for damages) and has a very limited financial interest. The Implementation Act makes these requirements slightly stricter for actions under the Directive.
  
  
• The Implementation Act prohibits an opt-out regime for collective actions that are brought under the Directive in the interest of consumers that live outside the Netherlands. These consumers can opt in. This is also the default situation under the WAMCA for persons living outside the Netherlands. However, under that Act the court has the possibility to declare an opt-out regime applicable. 
  
  
• Consumers living outside the Netherlands that opt in for a collective action under the Directive must also declare to the court registry that their interests are not represented in a collective or individual action in another Member State. 
  
  
• The Implementation Act expands some of the WAMCA's information requirements.
  
  
• The Implementation Act contains the necessary provisions to make cross-border actions possible. 
  
  
• The Implementation Act does not use the Directive's option to lay down rules on the destination of any outstanding redress funds that are not recovered within the established time limits (Article 9(7) of the Directive). However, the Research and Documentation Centre (WODC) will conduct research into the possibilities of a process fund for collective actions (cy pres awards).

The Implementation Act will be applied to collective actions that are brought on or after the date of its entry into force (25 June 2023), even if the event for which the action is brought occurred beforehand. It is as yet unclear how the latter should be interpreted in light of the transitional law that is applicable to the WAMCA, as that regime only applies to claims brought for events that took place on or after 15 November 2016.

For more information, please see our News Updates about the Directive and the WAMCA. 

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