Mass claims are exciting. Large, powerful and wealthy parties such as KLM, Tata Steel or the Dutch state that have to answer for themselves in court and run the risk of having to pay millions or even billions of euros in damages. They also sometimes have a direct impact on the stock price of the defendant company or on the political debate.
The number of claim cases in the Netherlands is increasing every month. The counter is up more than 70 procedures, all filed after January 1, 2020. On that date, the new Collective Settlement of Mass Damages Act (Wamca) came into effect. This made it possible for a large group of people to claim compensation, where previously they had to go to court individually.
It happened twice again last week. Landlords, united in the Fair Rent Foundation, want to use the court to force the government to scrap stricter rental rules. And the Netherlands Data Protection Foundation reported that it had summoned tech giant Amazon for violating consumer privacy.
Shortly after the introduction of the new law, lawyers noticed a rapid growth in the number of mass claim cases. They warned about it a year and a half ago NRC that the Netherlands was in danger of becoming a claim paradise, resulting in overburdening of the legal system. Now that the courts have handed down their first verdicts, it is time for a preliminary conclusion. Is the Netherlands under the spell of a claims culture?
You can roughly distinguish between two types of cases, says lawyer Machteld de Monchy of De Brauw. There are procedures where no compensation is demanded, also known as idealistic claims, such as about the level of nitrogen emissions or the government’s rental rules. For example, claimants only want policy to be tightened or inactivated. “You also had those claims before 2020,” says De Monchy. She cites the Urgenda case, in which activists managed to force the government to implement stricter climate policy, as an example. And then there are claims for damages, in which, in addition to a substantive judgment, compensation is also demanded.
‘Hunting’ for lucrative damage claims
This new option in particular has led to the law “catching fire”, says Bart-Adriaan de Ruijter, lawyer at CMS. He sees that a “vibrant economy” has emerged around the filing of mass claims. For example, there are active investors who pay for all legal and legal costs in order to receive part of the claim amount if a case is won. According to De Monchy, some investors “hunt” for opportunities to file potentially lucrative claims for damages. They look for company or government policy that involves friction, and then position themselves as advocates for a group of people.
In recent years, several law firms have also opened their doors that specialize in this form of collective litigation. Even American firms such as Scott & Scott, Milberg and Hausfeld crossed the ocean to establish branches in Amsterdam. In total, the claimed amount of damages for all claims filed in the Netherlands between 2020 and 2022 was 26.9 billion euros, it turned out from international research from CMS. 12 percent of all European mass claims over the past five years were filed in the Netherlands, putting the Netherlands in second place after the United Kingdom.
De Ruijter calls the Netherlands a forerunner in Europe in the field of mass claims. According to him, the legislation here is progressive, the judiciary has an international reputation and the turnaround time is short compared to other countries.
This makes it an interesting place for investors and law firms to file their class action claims. It also helps that Dutch courts often consider themselves competent to hear international claim cases against multinationals, partly because important offices of the companies are in the Netherlands.
Claims under ‘magnifying glass’
But according to De Monchy, this does not yet make the Netherlands a claimant’s paradise. “Investors are under a magnifying glass in court,” she says. “In judgments you have recently seen that judges are looking for a middle ground, by more critically assessing purely commercially driven initiatives.”
A ruling by the Hague court last month is a good example of this. In a case brought on behalf of investors against aircraft manufacturer Airbus the judge found that one of the claimant foundations was in fact an empty shell. The club had no knowledge and expertise in-house, but mainly functioned as a vehicle for the investor. He hoped to benefit from any damages claim that may have been awarded. The judge ruled that the foundation was not allowed to represent the interests of the investors. The ruling hit fundraisers hard. The judge’s strict test may have consequences for their revenue model.
However, not all investors should be fooled, says lawyer Michael Bacon of Kennedy Van der Laan. “The frame that they are all money grabbers who are emptying the market is unjustified,” he says. “Of course, the investors want to see their money back and make a profit, but some of them also finance things with a genuine interest in making normal citizens stronger. To be able to take a stand against the hegemony of multinationals.”
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‘More business through ESG standards’
De Ruijter thinks that the new law may also provide some relief to the workload of judges. They no longer have to deal with countless individual procedures, but can deal with one claim case in which the entire group of victims is represented.
However, he predicts that the number of claim cases will rise further in the coming years, partly because companies must meet strict ESG standards. From 2024, they must report accurately on what they do for the environment and society. According to De Ruijter, claim organizations will see opportunities to take companies to court based on this data. “Mass claims therefore pose a major business risk,” he says.
In addition, according to the CMS report, the Netherlands is one of the hotspots in the field of fundamental climate and environmental matters. A case by Fossil Free Netherlands, in which KLM is accused of pretending to be greener than it really is, is being monitored “worldwide” because it could be followed in other countries if a ruling is made in favor of Fossil Free.
The legal field is also still developing in other areas. For example, courts in Amsterdam and The Hague ruled differently on the question of whether damage-causing events that occurred before November 15, 2016, the day on which the Wamca bill was submitted, fall under the new law if they continued to cause damage after that date. And last week, a judge decided that unions were not allowed to represent the interests of workers at the Temper flex platform, because some of them had indicated that they did not feel represented. A unique one.
According to De Monchy, this continuous development of case law means that the future will show whether the Netherlands will actually become a claim paradise. “The new law can bring a lot of good. Although he has ensured that more opportunistic investors are active, but the court is looking at this critically.” De Ruijter agrees: “The intention of the legislator was to create a balanced system. That also seems to be happening. The legal field is maturing in the Netherlands.”