Dutch Mass Claims Litigation – Has the WAMCA failed to deliver its promise to high-risk litigation funders or is it yet too soon to tell?

The Netherlands have historically been at the forefront of developments in collective redress. Since 2020 the country has seen a remarkable growth in mass class actions as in that year the Act for the Settlement of Mass Damages in Collective Actions (Wet afwikkeling massaschade in collectieve acties or “WAMCA’’) came into force.

The first substantive judgment for a mass damages claim under the “WAMCA” regime was rendered on 9 October 2024 (Stichting Nuon-Claim v Vattenfall). Eagerly awaited by the Dutch legal community and taking more than 4,5 years to deliver, it was anticipated as a landmark case that would open the doors to many other mass claims. The court, however, denied the plaintiff’s claims against energy giant Vattenfall for allegedly misrepresenting the amount and existence of certain costs and fees. 

In this article we consider what this judgment may mean for those involved in mass claims actions, as well as the potential downsides of the WAMCA procedure. Do these mean that the WAMCA is not as attractive for third-party litigation funders as previously thought or is that still too soon to tell? And if litigation funders get out of the game, will that mean the end of the Netherlands' position as a frontrunner in mass claim litigation?

The Vattenfall-case

First, a few words on the long-awaited Vattenfall ruling. This case pivoted around a claim by small business customers united in the foundation Stichting Nuon-Claim against energy supplier Vattenfall (formerly Nuon) for allegedly charging certain fees without providing an actual service or product in return, and without sufficient contractual basis. The foundation argued that these charged fees were therefore illegitimate and excessive. The group represented by the foundation included medium-sized businesses, small businesses and non-profit organisations that had all contracted with Vattenfall for a specific small grid-connection contract.

The District Court of Amsterdam dismissed all claims on substantive grounds. It held that Vattenfall did not conceal essential information and that the fees were outlined sufficiently clearly in the information provided prior to concluding the contract. As such, the customers could have chosen to reject Vattenfall’s offer and contract with another energy supplier if they did not want to accept the fees. Instead, they accepted Vattenfall’s offer, and the customers are therefore also held to pay the fees they accepted, according to the court, who dismissed all claims and found for the defendant Vattenfall.

Although round one is now over, the Stichting may appeal the judgement within three months to try and obtain a different outcome. It is yet unknown whether the Stichting will do so. Following the judgement, the Stichting stated its disappointment and announced it would carefully consider its next steps in the coming months, including appeal, but they have yet to announce a decision. 

WAMCA

The WAMCA has not only simplified initiating mass claims based on breach of contract or tort, but also offers a comprehensive collective compensation scheme for potential large claimant groups, with nuanced opt-in and opt-out features. This has also attracted many third-party litigation funders seeking to benefit from the enhanced claim-appetite triggered by the initiation of the WAMCA, and resulted in the Netherlands becoming an attractive forum for both mass consumer claims wherein the claimants claim monetary or non-monetary damages (particularly in Technology and Communications, often with a data protection angle), but also for more idealistic claims (for example strategic human rights litigation). 

The WAMCA is therefore considered amongst the most highly sophisticated collective redress regimes within the EU, that even after the enactment of the RAD stands out from other EU regimes. This is mostly due to the design of the WAMCA, it offers efficient adjudication of claims involving large groups of claimants by ensuring that all stakeholders are bound by the outcome of a single judicial procedure, instead of each plaintiff having to start individual proceedings. This is mainly achieved through the ‘opt-out’ mechanism for Netherlands-based class members and the system of ‘special interest groups’. 

This system has several advantages. The opt-out mechanism increases the likelihood of finality: the vast majority of claimants are unlikely to opt out. This, in turn, significantly reduces the likelihood of a flood of cases being brought by late adoptors. In other words, the WAMCA is designed to achieve as much finality as possible around a particular type of claim against a particular defendant. This not only reduces the pressure on the judicial system, but also limits the ongoing uncertainty for defendants, who will effectively know where they stand once the legal proceedings initiated by some of the first movers have been concluded. It also concentrates the litigation between claimants and defendants in a single court case, allowing claimants to pool their resources and effectively reduce the overall cost of litigation. 

In addition to providing a single point of contact for the defendant and the courts, the special interest groups also provide for a central fundraising vehicle that can raise capital necessary to cover the significant costs of litigation; costs that individual claimants might otherwise not be able to afford. This promise of efficient, collective redress has attracted many litigation funders who advance the costs for the litigation in exchange for a percentage of the recovery (if any), who find the notion of efficient adjudication for large groups of claimants an attractive proposition.

Issues that may arise

Since 2020, no less than 96 claims have been registered, so on its face, the WAMCA appears to be a resounding success. However, the admissibility checks and balances built into the WAMCA by the Dutch legislator to guarantee sufficient representativity and due process, also provide ample opportunity for defendants to raise formal preliminary challenges. This often causes significant delays. Consequently, it can take a long time for a case to leave this admissibility phase and to enter the phase wherein the actual adjudication and arguing of the case on its merits take place.

Although the WAMCA promises judicial efficiency, it can therefore take a long time (sometimes several years) for a case to enter the substantive phase, let alone for an actual judgment on the merits to be reached. A prime example of the lengthy nature of class actions can be seen in one of the ‘Dieselgate’-cases, which was initiated in 2020 but has yet to enter the substantive phase. On 13 August 2024, the court issued a preliminary ruling that dealt only with procedural issues. This highlights the protracted timeline that can potentially characterise such complex legal matters, leaving claimants in a state of uncertainty as they await a final decision. Of course, delays inherent to the procedural checks and balances can be advantageous to companies that find themselves embroiled in claims that they believe to be unjustified and frivolous, or in potentially dangerous claims that, once awarded, will have a serious impact on their business and reputation.  

However, the risk of such delays is making it more difficult to fund such cases in the future, as investors start to become more hesitant about the risk of being stuck in ‘procedural limbo’, which they may be unwilling or unable to afford if there is no foreseeable prospect for success in the short to medium term. Others have noted the difficulty of attracting litigation funders without the guarantee that ‘their’ special interest group becomes the appointed exclusive representative and is consequently in the driving seat for the litigation. 

Recently, several funders and boutique firms assisting claimants have stated that they will not launch new WAMCA-cases in the near future until the ‘business-model proves itself.’ A different outcome of the Vattenfall-case might have dissuaded any such doubts and created new momentum for the WAMCA. Businesses will therefore likely consider this first substantive WAMCA judgment as a good piece of news. 

Expected developments

However, we remain of the opinion that this hesitancy by funders is not entirely warranted and that the WAMCA still remains a sufficiently attractive opportunity for third-party litigation funders:

• The WAMCA is still quite ‘new’, which means that the book is still being written on certain procedural aspects such as admissibility. There were bound to be some teething problems and uncertainties, but the courts are becoming more and more experienced in dealing with the formal admissibility requirements. This is evidenced by the increasing number of published judgments by both lower and higher courts, shaping and providing more clarity on the admissibility requirements and allowing future claimants to better prepare themselves. This will allow for more efficient litigation in the future, which is also underlined by the Vattenfall case: the entire case in first instance proceedings was decided from start to finish in less than 2,5 years. This is quite fast, considering the mandatory standstill periods prescribed by the WAMCA.
  
  
• The Dutch government has also announced that it will accelerate its evaluation of the WAMCA, which was originally scheduled for 2025 but has been brought forward to the second half of 2024. This analysis will focus on the admissibility requirements and improvements that can be made in that respect. Although the outcome of this evaluation cannot be predicted with certainty, hopefully this will lead to relatively short-term adjustments to improve judicial efficiency. 
  
  
• Finally, the majority of cases that have not progressed beyond the procedural admissibility stage are complex cases with a large number of claimant's groups (which simply take longer), cases where it is difficult to properly define the constituency of the special interest groups, or cases where it is unclear if the nature of the claim lends itself to adjudication under the WAMCA (for example, if the group of claimants have mainly incurred immaterial damages that strongly differentiate between individuals). In other words, the more unclear it is who exactly the special interest groups represent or whether the claims are suitable for mass adjudication, the more opportunities a defendant has to raise admissibility defences and the more likely it is that the case will remain stuck in the admissibility phase for a long time. However, although potentially disadvantageous to claimants these checks and balances are necessary to avoid frivolous litigation and a claim culture that makes the Netherlands overly attractive to adventurous ‘ambulance chasers’ trying to warm the public to frivolous claims; a concern often heard in both the Dutch parliament and in legal literature.

A shift in the nature of cases

We nevertheless expect a shift in the type of cases being filed.  While the majority of the early cases listed in the central WAMCA register are so-called ‘ideological cases’ against the Dutch state or privacy-related consumer claims against large technology companies, we expect to see in the future a significant increase  in larger commercial claims with a high dispute value (> EUR 10 million), a clearly identifiable group of claimants, and clearly definable damages. The most recent cases entered in the WAMCA-register show early signs of this trend as these concern, for example:

• A claim by a group of investors against Stellantis for damages they allegedly suffered as a result of ‘Dieselgate’;
  
  
• a claim by the Dutch Branch Association for Florists against an online platform that enables online sales of flower to consumers, after which the platform outsources the delivery and sale to a locally contracted florist. The online platform unilaterally terminated its contracts with these local florists, who now claim to have suffered damages as a result;
  
  
• a claim by anti-counterfeiting organisation React against the Chinese e-commerce platform Sara Mart for allegedly infringing IP-rights held by React’s members by selling counterfeit products.  React is seeking, among other things, an order that Sara Mart pay damages to its members and an order that Sara Mart cease all sales that infringe the IP rights of its members.

In this respect, the Vattenfall-case sets a clear example. That case too involved a clearly defined group of claimants, with clearly definable damages and a potentially high return on investment, and was decided in less than two years. The claimants may have lost the first instance proceedings, but this is not due to the functionality of WAMCA that has proven to be an appropriate vehicle for handling such claims. 

The Vattenfall-case is also not indicative of how other pending cases will be decided, as this is too soon to tell. Only after a substantial number of cases have been concluded  will we be able to see a pattern in the way cases are dealt with on the merits: will the courts be reluctant to open the floodgates to a flood of frivolous claims, or will the courts rather become more claimant-friendly? Until now, Dutch tort law  remains a very mixed bag of cases that are dealt with on an individual case-by-case basis, taking into account open norms, previous Supreme Court caselaw and the particularities of each case and all parties.

The existing picture is  rather nuanced and does not seem to favour either group in general. It is therefore also too early to say to what extent the WAMCA remains an attractive proposition for third-party litigation funders. However, it is expected that the backlog in the WAMCA will soon be cleared and we will then hopefully be able to discern such a pattern. This will also no doubt be watched closely by third-party litigation funders. 

If you would like to discuss any of the topics raised in this article please reach out to the authors who are specialists in this field.

Thanks to Imane el Yakhloufi and Louise Lanzkron for their contributions to this article.