The Netherlands has a long-standing practice of collective redress with two statutory collective redress mechanisms.The first is a representative collective action which can be used by a foundation or association on behalf of interested parties to obtain a declaratory judgment against a third party. The second statutory mechanism enables a collective settlement of mass damages claims on an opt-out basis with a potential worldwide class (the class is not limited to Dutch members).
Key development in the Netherlands is a legislative proposal submitted to parliament in November 2016 aimed at introducing a US-style 'class action' in the Netherlands (the "Legislative Proposal").
The Legislative Proposal introduces the option to claim monetary damages in a collective action on an opt-out basis (a collective damages action).
What makes all (existing and proposed) collective redress mechanisms in the Netherlands unique within Europe is that the use is not restricted to a certain type
of damages.
All mechanisms can therefore be used to claim damages suffered as a result of violation of privacy laws.
Although privacy litigation is not yet booming in the Netherlands, this may change with the arrival of the GDPR and the collective damages action.
Dutch Collective Settlements Act (WCAM)
Dutch law firstly provides for a system based on a collective settlement on an opt-out basis.
The rules governing this collective settlement can be found in the Wet Collectieve Afwikkkeling Massaschade, hereinafter, the "WCAM".
The WCAM enables the collective settlement of mass damages claims.
Pursuant to the WCAM, the collective settlement has to be concluded between, on the one hand, one or more associations or foundations representing the interests of a group of injured parties who suffered alleged damage and, on the other hand, the party or parties allegedly causing the damage.
Once such settlement is reached, the parties can submit a joint application to the Amsterdam Court of Appeal (that has sole jurisdiction), requesting it to declare the collective settlement binding.
If the Amsterdam Court of Appeal declares the collective settlement binding1, the settlement agreement will, in principle, bind 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 who do not want to be bound by the settlement agreement have the option to opt out, but they must do so within a specified limited period of time.
Collective action
Secondly, Dutch law provides for a collective action which 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 foundation or association initiating the collective action must also have full legal capacity.
However, a foundation or association shall have no course of action if, in the circumstances, it has not made a sufficient attempt to achieve the objective of the collective action through consultation.
The collective action can (only) be used to seek a declaratory judgment against the third party that the third party acted wrongfully.
Thus, current Dutch law does not provide for a collective damages action (which is about to change).
Despite the fact that currently no damages can be claimed through an action, such collective actions have been employed successfully to obtain declaratory judgments in which it is confirmed that one or more defendants acted wrongfully and are liable to pay damages.
Although individual victims still need to file follow-on suits to obtain damages (or enter into a (collective) settlement with the former defendant), they can rely on the findings of the court that heard the collective action on common issues such as wrongfulness and duty of care.
The future: collective damages actions
The Legislative Proposal introducing a 'US style' class action may form a boost for privacy litigation in the Netherlands.
The Legislative Proposal is intended to facilitate claims for monetary damages in such collective actions on the basis of an opt-out system.
The class will in principle be limited to Dutch class members only, giving foreign class members the opportunity to opt in.
No rule without an exception: upon request by one of the parties, the court may also apply the opt-out regime to those foreign class members who are 'easily identifiable'.
In view of the fact that victims of violation of privacy law can be often be identified without too much trouble, the new collective damages action can potentially have an international scope in privacy litigation cases.
The Legislative Proposal still requires approval from both chambers of Parliament.
Should the Legislative Proposal be adopted (without any major amendments), it is expected that this will change the current Dutch landscape with respect to collective redress significantly.
In practice no successful class actions on privacy matters yet
Privacy Litigation is still scarcely out of the egg in the Netherlands, despite there being a long-standing, full-grown collective redress practice. Dutch case law shows one reportable (unsuccessful) collective action in the privacy field2.
The case concerns an action brought forward by a Dutch foundation called Privacy Claim against Precent Ltd, which used sensitive personal data (health information) without a legal basis.
In this case, the Dutch District Court ruled that the privacy claim did not meet the criteria for filing a collective action, among others as the interests of the affected data subjects were not sufficiently protected, the claim was not supported by the affected data subjects and the articles of association of the foundation did not contain securities that granted damages would be paid to the affected data subjects.
Footnotes
- In order to decide whether or not the collective settlement can be declared binding, the Court of Appeal has to determine whether the settlement meets the statutory requirements and whether the interests of the injured parties are sufficiently protected. In this respect, the Court of Appeal should determine, amongst other things, whether the statutory goal of the foundation or association requesting the Court of Appeal to declare the settlement binding on all injured parties, is to represent the interests of the injured parties and whether the amount of the compensation to be paid to the injured parties is reasonable (thereby taking into account the extent of the damage, the ease and speed with which the compensation may be obtained and the possible causes of the damages).
- District Court Oost-Brabant 20 July 2016, ECLI:NL:RBOBR:2016:3892 (Privacy Claim/ Precent B.V.)
Next steps
To learn more about data class actions in other jurisdictions, you can view our Data class actions: the era of mass data litigation guide, of which this article forms part.
Take advantage of the far-reaching changes brought about by the GDPR with our European Privacy Tool, which offers realistic, practical and workable insights as well as templates, helping to ensure that you are successful in meeting the applicable regulatory requirements.
With the future arrival of the GDPR and a collective damages action, privacy litigation is expected to expand in the coming years.
