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    Home » How the Netherlands Became Europe’s Prime Class Action Jurisdiction

    How the Netherlands Became Europe’s Prime Class Action Jurisdiction

    February 28, 20227 Mins Read Litigation
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    In the past two years, several foundations whose sole aim is to bring class action lawsuits have been incorporated in the Netherlands. These claim vehicles have taken aim at the anti-competitive behavior of Apple and Google, the data collection practices of TikTok, Salesforce and Oracle, the company misconduct of Airbus and the service charges of Airbnb.

    International law firms have taken note. U.S. litigation law firm Scott+Scott went first, opening an office in the country’s capital in 2019. Global boutique litigation firm Hausfeld established a base in Amsterdam a little later through a tie-up with local firm Zippro Meijer, while global litigation firm PGMBM launched its first office in the Netherlands this past December.

    In the space of only two years, the Netherlands appears to have become the European jurisdiction of choice for class action lawsuits.

    Approximately 50 class-action suits—most of them focused on the climate, privacy, securities, anti-trust and corporate misconduct—have currently been lodged, according to a public central register. “I would expect at least 30 new claims this year,” said Isabella Wijnberg, counsel in Houthoff’s Amsterdam office. “There’s [been] an exponential growth.”

    Wijnberg added she expected more international litigation-focused firms to establish bases in the Netherlands in the coming years and for firms that are already present to beef up their litigation practices.

    Along with the U.K. and Portugal, the Netherlands has long been seen as a claimant-friendly jurisdiction in Europe due to the low costs associated with initiating legal action, low adverse cost risks and the speed of the courts.

    But the recent, unprecedented proliferation in both claim vehicles and class action suits can be traced back to an overhaul of the country’s three-decades-old collective redress system in 2020. The changes were meant to make proceedings more effective and efficient and to encourage claimants and corporations to settle, once liability has been established.

    Previously, the standard operating procedure for claims vehicles was to take legal action to get a court to rule on the unlawfulness of a company’s actions. The representative organizations could not claim compensation themselves—only individuals could. Once a court had established liability, they would in a second phase try to obtain a collective settlement with the company.

    Under the new law, any representative organization can claim damages for an entire class of claimants on an opt-out basis.

    This has made the law a game-changer for data protection class action suits especially, where individual damages are usually very small, said Patrick Haas, a partner in AKD’s Rotterdam office. “It’s one of the few jurisdictions in Europe where such a case can be pursued in an economically viable way,” said Haas, adding that there had been a sharp increase in such cases since 2020.

    Though Portugal and the U.K. have some form of collective redress opt-out systems, they are more limited in scope. The U.K. only allows opt-out actions for competition law breaches before the country’s Competition Appeals Tribunal, while Portugal’s opt-out system is restricted to consumers.

    “What’s unique for the Dutch class action is that it’s broad; it’s for any type of claim and for any type of underlying claimant,” said Branda Katan, a partner in Stibbe’s Amsterdam office. “The persons [the claim vehicles] can be acting for can be consumers, institutional investors.”

    Money has been another big factor behind the Netherlands’ rise as a jurisdiction for the litigation and settlement of major class actions.

    In the past, she said, organizations wanting to bring consumer or investor claims would typically ask consumers to contribute funding to finance the legal proceedings against a company. “What you now see is that litigation funders have really discovered the Dutch markets and are financing claims,” Katan said.

    She said litigation funders’ new interest in the Netherlands had enabled a number of genuine, meritorious class actions to proceed. “But there are also investors who think, ‘Oh, there’s a chance here,’” she said. “And they’ll take the initiative to start the proceedings and find their damage sufferers as they go along, and that’s particularly true for U.S. plaintiff firms.”

    The third-party funders bankrolling some of the recently launched class lawsuits include major international players like Omni Bridgeway, Innsworth, Therium and the Jersey-incorporated newcomer BPGL Funding I Limited.

    The recent Google v. Lloyd case—seen as a major blow to data protection class actions in the U.K.—has only further whet funders’ appetite for the Netherlands. “You immediately [saw] a shift toward the Netherlands, where they say, ‘Well, if we can’t do the case in the U.K., let’s do it in the Netherlands,’” Haas said.

    Most foundations acting for claimants are, with a few exceptions, being advised by smaller local firms, who in turn are often assisted and sometimes also funded by U.S. firms that specialize in class actions. “[These are] U.S. firms that either come to the Netherlands or use a Dutch firm to bring the claims that they’ve researched and done a lot of work on already in the U.S.,” Wijnberg said.

    U.S. plaintiff firm Lieff Cabraser, for example, is assisting with a class action suit against Facebook; a foundation that has targeted Airbus has teamed up with securities law firm DRRT; and a claim vehicle that has taken aim at car manufacturers like Mercedes and Renault has enlisted the help of U.S. plaintiff law firm Hagens Berman.

    Rogier Meijer, a partner in Hausfeld’s Amsterdam office, said the U.S. claimant firm launched in the Netherlands in 2020 because it wanted to fill what he described as “the gap for a plaintiff-focused international law firm.” On Tuesday, the firm announced it would assist a local claim vehicle with two class action suits it has filed against Apple and Google over alleged anti-competitive behavior in their respective app stores. If successful, the combined damages could be as high as a billion euros, according to the firm’s estimates.

    “COVID notwithstanding, the last two years have shown that there indeed are a lot of opportunities in the Dutch market for plaintiff litigation,” Meijer said, adding that it had “huge potential.”

    “The developments in the coming years promise to be interesting with a new collective action regime and new players on the market.”­­

    Large law firms, both independent and international, typically work on the defendant side—their traditional client base. The increase in collective redress actions has already prompted some firms to beef up their litigation practices. Clifford Chance, for instance, recently poached Daan Lunsingh Scheurleer, a long-time partner, from independent rival NautaDutilh for its litigation practice.

    “Further growing the litigation practice globally and in Amsterdam has been a top priority for Clifford Chance in anticipation of the trend towards more class actions in the Netherlands, together with other trends such as increasing ESG related litigation,” said Dirk-Jan Duynstee, head of the firm’s litigation practice in Amsterdam.

    With many more class actions on the horizon, Houthoff’s Wijnberg said global law firms with clients active in the Netherlands would do well to familiarize themselves with the country’s collective redress system and to act quickly when trouble arises.

    “If you solve issues early on, they usually do not get to the stage of a class action. Because the whole fuel of a commercial class action is normally the funding,” she said. “Once there are claim vehicles that try to get as much bad publicity for you as they can, and [once they] have a funder on board, it will be much, much more expensive.”

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