Maintaining a healthy legal and investment climate in the Netherlands is crucial for U.S. companies.  The Netherlands one of the largest recipients in Europe of foreign direct investment from the US, and the one of the countries in which U.S. companies invest the most in R&D.  The rise in collective actions in Dutch courts and the growth of litigation funding is a threat to the business environment in the Netherlands.

The Netherlands is one of the few countries in Europe with an existing opt-out collective redress system. The Dutch collective settlement procedure (WCAM) empowers the Amsterdam Court of Appeal to approve a settlement negotiated between a company and an association or private “claims foundation” representing a class of claimants, and declare it binding for the entire class.

The Dutch Parliament is currently considering legislation that would add on to the WCAM system and allow opt-out collective action litigation for damages in all fields of law.  Under the current proposal, collective actions could be brought before any court in the Netherlands.  In terms of international jurisdiction, the proposal allows for a class action to be brought in Dutch courts if 1) the majority of the class resides in the Netherlands; 2) the defendant resides in the Netherlands; or 3) the event or events on which the collective action is based took place in the Netherlands.

Interest in bringing large pan-European claims to the Netherlands has only grown in recent years; two rulings of the Amsterdam Court of Appeal have asserted the court’s jurisdiction over transnational class actions – even when the claimants, defendants and claims have little or no connection to the Netherlands.

Enacted in its current form, this bill will have a significant impact on the litigation climate in the Netherlands and arguably in the rest of Europe.

Third party litigation funding (TPLF) is also contributing to the rise of the Netherlands as a hub for European litigation. TPLF is readily available in the Netherlands and is commonly used in mass claims.  Big headline collective action cases, such as the European truck cartel case and the VW diesel case, were brought in the Netherlands and are backed by litigation funders.