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Class Actions

Class actions by interest groups: joining forces and sharing costs 

In Section 3:305a of the Dutch Civil Code the legislature gave interest groups the possibility of settling claims of aggrieved parties in one class action. The interest group then conducts proceedings against the party that caused the loss for the benefit of the injured parties. A few dozen or even thousands of injured parties may be involved.

An important condition is that the interest group must be organised as an association or foundation whose articles provide that it promotes the interests of the injured parties. The interests of those injured parties must furthermore be sufficiently safeguarded. That almost always applies in the case of trade associations and professional or industrial associations. They are therefore eminently equipped to conduct class actions on behalf of their members. In certain circumstances it is also possible for an ad hoc interest group to represent injured parties. The law furthermore sets the condition that the claims to be filed protect similar interests of the members. In other words, the interests of the members (interested parties) that have been harmed must be the same, so that the court can pass a general ruling. A wide range of cases may be involved in practice, such as harm caused by a supplier cartel (such as a cartel of lift producers), the sale of defective financial products (such as interest rate derivatives), the disadvantaging of franchisees by their franchisor, or an unlawful act by medicine producers or other suppliers of products or services, as a result of which an entire sector may be affected.

In a class action all kinds of claims may be filed, such as a request to declare an act unlawful, to prohibit certain actions or to rule that a contractual obligation has been breached. It is not yet possible to claim damages, but a legislative proposal to that effect has been pending since the end of 2016.

In principle, a ruling in favour of the interested parties creates a precedent, in the sense that a judge will be inclined to honour a judgment passed against the defendant in a class action. That defendant will therefore be more likely to settle with injured parties.

In line with a class action, the law allows an interest group to enter into a settlement with the party that caused the loss, whereby the parties agree on damages and related issues. The Amsterdam Court of Appeal may declare that settlement generally binding at the request of both parties; interested parties can then rely on it directly.

However, an individual interested party is not bound by the court’s judgment or by the settlement being declared generally binding. An interested party may protect his or her individual interests in court (opt out) if he or she so wishes.

Advantages of a class action

Taking legal action may be a costly affair for a single injured party. A class action offers the possibility of sharing and thereby limiting the costs (and risks). The interest group may take the lead in that regard on behalf of all its members. It is a major advantage that the interest group then acts on behalf of all its members and is therefore often in a stronger position than a single injured party. Also, an interest group can often exert more pressure on the party that caused the loss than an individual party can, precisely because a judgment passed in a class action may have serious consequences for the party that caused the loss. Finally, the fact that the interested parties can remain anonymous in a class action may be beneficial, to protect their relationship with the party that caused the loss. The interest group litigates in its own name. Until the liability of the party that caused the loss is established, the interested parties are not required to make themselves known and may first await the outcome of the proceedings.

Class Actions at FORT Advocaten

Our lawyers can assist you with regard to:

  • Loss caused by a supplier cartel
  • Sale of defective financial products
  • Prejudicing of franchisees by franchisors