Is the Netherlands becoming a paradise for legal claims? The Hague plays a major role worldwide as the seat of the International Court of Justice, the International Criminal Court, and various war tribunals. But the Netherlands is also known for its fast and effective handling of civil cases, even where mass claims for damages are concerned, such as the one investors brought against Shell in 2004.

Winning damages is often difficult, even if you are joined by hundreds or even thousands of other claimants, whether you are suing because of health problems or financial losses. In recent years, the Netherlands has simplified its procedures substantially in these kinds of cases. And Justice Minister Ivo Opstelten has sent a bill to parliament to further improve the procedure. This should make it even more attractive to foreign parties to have their claims dealt with in the Netherlands.

Class actions
Up to now, large damages cases have been resolved through United States ‘class actions’ – court cases brought in the name of a large group of people. The procedures usually take a long time, partly because of the huge sums of money involved. In addition, foreigners have limited access to US courts in such cases.

For a couple of years now, parties in the Netherlands have been able to decide on damages themselves and have a court make the settlement legally binding. Claimants in such cases, who do not want to participate in a mass claim because they want to bring their own case, are given a certain amount of time to decide what to do.

Legal structure
Dutch legislation introduced in 2005 suits the legal culture of the Netherlands, explains Ianika Tzankova, professor of comparative mass litigation at the University of Tilburg.

“Dutch judges are highly qualified, they are independent, pragmatic and willing to think along with you. That’s all necessary when dealing with large complex cases such as mass claims. I think the legislation, which is now being improved, is a good reflection of Dutch qualities.”

The Association of Stockholders (VEB) also praises the willingness of judges to find ways of shortening procedures. Soon it will be possible to take legal issues which are holding up a settlement out of the case and put them separately before a judge, says VEB lawyer Paul Coenen. This prevents settlements from being rejected and the whole court case having to be repeated again.

“This isn't unique: there are other countries that have similar systems. But the Netherlands just seems to be able to successfully handle these procedures very quickly and effectively.” Even then, a settlement can take a few years.

Shell
Meanwhile, the VEB, which serves the interests of private investors, has been involved in six of these kinds of settlements. The best known is the 2004 Shell case. Shareholders from all over the world claimed damages for a drop in stock values, after the news broke that the oil company had been overestimating its oil reserves for many years. The settlement reached in Amsterdam had a huge influence on the class action which was brought before a court in the US.

In a similar case, which was more recently brought against the Swiss Insurance company Converium, only a limited number of Dutch investors were affected. Nevertheless, an Amsterdam court considered that it had jurisdiction to rule on the case. After the case, one newspaper reported that the Netherlands was becoming an international "claims paradise". But Mr Coenen and Professor Tzankova say that remains to be seen.

Envy
Legislation and procedures have to change because claims are becoming more and more extensive and global. “We are exploring the limits,” says Mr Coenen. But he cannot imagine Dutch judges ruling on cases where there are no Dutch parties. In addition, other countries are changing their legislation in line with the Dutch, so that large claims can be dealt with more efficiently.

Mr Coenen cites the German Telecom affair, which has been dragging on for ten years now. Thousands of individual clients are waiting for a verdict from a court in Frankfurt on their claims concerning the deception of investors. Germany does not yet have collective procedures. Mr Coenen: “Other countries look with envy at how we do things here.”

(nc/mw)