The American Lawyer - Focus Europe, Summer 2011

American ‘damages class action’
procedure, and in particular the
way it operates in practice. The
WCAM is however different from
its American counterpart in one
essential area, in that it requires
the parties to have reached an
agreement for the benefit of a
group of injured parties on the
manner of settling the
compensation, whereupon they
may jointly approach the court
with a request to declare the agreement to be binding.

By contrast, a ‘damages class action’ procedure involves a representative injured party asking the court to order the other party to pay compensation for the loss sustained by a group (the ‘class’).

Sidney Berendsen

WHAT CASES HAVE BEEN THE MOST SIGNIFICANT CLASS SETTLEMENTS IN THE NETHERLANDS SO FAR AND WHY? The Dutch Collective Settlement Act has been drafted in order to provide for the collective redress of mass personal injury allegedly caused by diëthylstilbestrol (DES), a drug that was prescribed on a large scale to pregnant woman between 1947 and 1976. The Act has been used four more times since the implementation. Other cases in which the Act was used are: Dexia (regarding financial damage allegedly caused by failure to warn about the risks of certain securities lease products), Vie d’Or (regarding financial damage allegedly suffered by life insurance policy holders as a consequence of the bankruptcy of a life insurance company), Shell (regarding financial damage allegedly suffered by shareholders as a consequence of Shell misrepresenting its oil and gas reserves on its books) and Vedior (regarding financial damage allegedly caused by insider trading).

WHY WAS THE MORRISON RULING SO SIGNIFICANT? TO
WHAT EXTENT DID IT LEAVE A GAP IN THE MARKET FOR A
NEW JURISDICTION FOR THE PURSUIT OF COLLECTIVE
ACTIONS AND CLASS SETTLEMENTS?
In the Morrison case the U.S. Supreme Court ‘blocked’
the security class actions by non-US investors related to
securities in companies not listed in the U.S. and traded
outside the U.S., the so called “foreign-cubed-cases”. In
these kind of situations where a US court believes it
lacks jurisdiction injured parties may want to seek
recourse overseas, for example by initiating collective
or class actions in Europe in addition to the action(s) in
the U.S. The Dutch legal system provides claimants with
several possibilities to bring a collective action against
the allegedly liable party(ies), provided that the Dutch
court can base its jurisdiction on either the Brussel I
Regulation and the Lugano Convention or Dutch
international private law rules. In addition, claimants
may have recourse to the Amsterdam Court of Appeal

for a class settlement with a copy of the Converium decision in their pocket. Also, in view of the likely recognition by other European Courts, the collective action and settlement may prove to be a valuable alternative for certain U.S. class actions and class settlements recognition of which is uncertain in other European countries.

WHAT ARE THE RECENT DEVELOP-
MENTS IN DUTCH LEGISLATION ON CLASS SETTLEMENTS?

In a letter to the parliament of 1 December 2010, the Minister of Justice expressed his explicit intention to open up and improve the Act for international collective settlements of mass damage claims. In order to – amongst others – increase the effectivety of the Act in cases regarding international collective settlements, the Minister of Justice prepared some technical improvements to the Act which were submitted to the parliament as legislative proposal at the beginning of 2011. ■

Loyens & Loeff is an independent full-service law firm specialising in providing legal and tax advice to companies, financial organisations and governments. The intensive cooperation between attorneys, tax lawyers and civil law notaries places us in a unique position in our home market, the Benelux. Internationally, Loyens & Loeff is well-known for its strength in tax, corporate law, financial and capital markets, cross-border financing, private equity, real estate, energy, European law, regulatory law, VAT, employment law and litigation.

The litigation department of Loyens & Loeff has been involved in numerous substantial mass damage claims, including the actions arising from Madoff, Icesave, KPNQwest and several anti-trust cases relating to the so-called air cargo cartel.