January 17 2006
The Collective Settlement of Mass Damage Claims Act entered into force on July 27 2005. Its purpose is to encourage and facilitate the settlement of multiple claims for compensation in connection with the same damage at an early stage. The act is incorporated into the Civil Code and the Code of Civil Procedure.
The Amsterdam Court of Appeal has the power to certify a settlement agreement between the party (or parties) responsible for the damage and an organization (in the form of an association or foundation) representing the interests of the injured parties. After certification, the agreement will be binding on all injured parties, unless they opt out.
The act assumes that there is a settlement agreement between the responsible party or parties and the organization, but does not deal with the conclusion of that agreement.
Pursuant to the act, the settlement agreement must at least contain the following information:
A request for certification of the settlement agreement must be filed jointly by all the parties to the settlement agreement. Interested parties (eg, injured parties and other organizations that are not party to the settlement agreement) may file a defence.
The court of appeal will, on its own initiative, assess whether the settlement agreement meets certain criteria - most importantly, the reasonableness of the agreed compensation. The court will also assess whether the organization is sufficiently representative.
Once the settlement agreement is certified by the court, all injured parties will be bound by it as if they were parties. The decision will be deposited at the court's registry, where it will be available for inspection and where copies may be obtained. All known injured parties will be sent a copy of the decision by mail. The decision will also be published in at least one national newspaper.
An injured party that does not want to be bound by the settlement agreement
can opt out within a specified period (at least three months) following publication
of the decision to certify.
Injured parties that could not have been aware of the damage at the time of publication will not be bound by the settlement agreement if they opt out after becoming aware of the damage. The responsible party may inform the injured party of the certification in writing and set a period of at least six months during which the injured party must decide whether it will opt out.
The responsible party (or parties) is entitled to cancel the settlement agreement if too many injured parties opt out.
The court decision can be appealed only by the petitioners jointly. Other interested parties that appeared in the proceedings cannot lodge an appeal. Injured parties that do not want to be bound by the certified settlement agreement can avoid this only by opting out.
The act gives both defendants and plaintiffs an important tool in order to reach an early settlement. In some cases, a settlement would not be possible without the act.
Until the act came into force, a foundation or association representing a group of injured parties could bring a group action pursuant to Article 3:305a of the Civil Code. However, no monetary compensation could be claimed in such proceedings. An organization could demand a declaratory judgment establishing, for example, the commission of a tort or breach of contract by the defendant. Subsequently, each individual injured party had to initiate proceedings against the responsible party to obtain monetary compensation. Although the commission of a tort or breach of contract was established in general, the individual injured party still had to show that the other requirements for an award of damages were met (eg, that it had suffered actual damage as a result of the tortious act or breach of contract). Settlements were possible only on an individual basis.
ILO provides online commentaries as specialist Legal Newsletters. Written in collaboration with over 500 of the world's leading experts and covering more than 100 jurisdictions, it delivers individually requested information via email to an influential global audience of law firm partners and international corporate counsel. Please click here to register for the service.
The materials contained on this website are for general information purposes only and are subject to the disclaimer.
ILO is a premium online legal update service for major companies and law firms worldwide. In-house corporate counsel and other users of legal services, as well as law firm partners, qualify for a free subscription. Register at www.iloinfo.com.