Aside from the Redress of Mass Damages in a Class Action Act (WAMCA), we also have the Collective Settlement of Mass Damages Act (WCAM) in the Netherlands.

Under the WCAM, which came into force in 2005, a settlement reached between a representative entity and a defendant can also be declared binding on injured parties who had not joined the representative entity in the class action.

When the settlement is declared binding (by the Amsterdam Court of Appeal, which has exclusive jurisdiction), the settlement will also apply to this class of injured parties, unless they have exercised their opt-out option. Class members can therefore receive damages without having to pursue often lengthy and costly litigation.

Attorneys Collective Settlement of Mass Damages Act

Collective Settlement of Mass Damages Act
FAQ

The WCAM

What is the purpose of the Collective Settlement of Mass Damages Act (WCAM)?

It aims to facilitate a collective settlement of mass damages. Pursuant to the Act, the parties can set forth the settlement they have reached in an agreement and ask the court to declare it binding on all injured parties of that class.

The advantage of the Act for class members is that they do not have to separately pursue protracted litigation to be awarded damages. They receive damages simply by demonstrating that they belong to a class that has been awarded damages in the agreement. The damages awarded are then distributed equally among the class members.

Under the Act, the defendant has the advantage of not getting embroiled in a host of individual litigations, which will give it the opportunity to estimate and settle the damages within a defined period of time.

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How can the parties ensure that the settlement is declared binding?

After the (class) representative entity (for the definition of 'representative entity,' please refer to our website page on class actions in the Netherlands) and the defendant have reached a settlement, they will set forth the financial terms in an settlement agreement. Thereafter, they may jointly ask the Amsterdam Court of Appeal to declare the settlement agreement binding on all individuals to whom it applies.

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How can class members find out about the request for and the granting of the binding declaration?

The representative entity will provide by ordinary mail to all known class members a convocation for the hearing in which the decision on the binding declaration will be made. In addition, an announcement of the convocation will be published in one or more newspapers. The convocation in the newspapers is also intended to notify representative entities of the hearing. The court may also order that the announcement and convocation take place by other means, for example through publication on a website designated by the court. The convocation will give class members and representative entities the opportunity to put forward a defense or exercise their opt-out option if they wish to do so.

If the request for a binding declaration is granted, the judgment and the settlement agreement will be made available for inspection by the class members. The court will also decide how the judgment may be inspected or a copy may be obtained by the class members. As with the convocation, the court may order that the announcement of the binding declaration and the inspection of the agreement take place in a different manner. After the binding declaration is rendered irrevocable, it will be published in newspapers.

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What conditions apply to the binding declaration?

The law describes the matters that must be covered in the settlement agreement before it can be declared binding. In summary, these are a description of the class of injured parties, an indication of the size of that class, the amount of damages, the conditions under which the damages can be awarded, and the names and addresses of the class members known to the (class) representative. In addition, the court will assess whether:

  • the amount of the damages is reasonable;
  • it is sufficiently certain that the agreement can be fulfilled vis-à-vis the class members;
  • independent dispute resolution (other than court adjudication) is provided for;
  • the interests of the class members are sufficiently protected under the agreement; and
  • the representative entity representing the class members is sufficiently representative.

If these conditions are satisfied, the agreement can be declared binding.

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What is the effect of the binding declaration?

After the request for a binding declaration has been irrevocably granted, the agreement has the effect of a settlement agreement to which every class member entitled to damages is a party. As a result, class members who were not involved in the negotiation and drafting of the agreement can also retain rights from it, unless they have exercised their opt-out option.

Back to top
What is the purpose of the Collective Settlement of Mass Damages Act (WCAM)?

It aims to facilitate a collective settlement of mass damages. Pursuant to the Act, the parties can set forth the settlement they have reached in an agreement and ask the court to declare it binding on all injured parties of that class.

The advantage of the Act for class members is that they do not have to separately pursue protracted litigation to be awarded damages. They receive damages simply by demonstrating that they belong to a class that has been awarded damages in the agreement. The damages awarded are then distributed equally among the class members.

Under the Act, the defendant has the advantage of not getting embroiled in a host of individual litigations, which will give it the opportunity to estimate and settle the damages within a defined period of time.

Back to top
How can the parties ensure that the settlement is declared binding?

After the (class) representative entity (for the definition of 'representative entity,' please refer to our website page on class actions in the Netherlands) and the defendant have reached a settlement, they will set forth the financial terms in an settlement agreement. Thereafter, they may jointly ask the Amsterdam Court of Appeal to declare the settlement agreement binding on all individuals to whom it applies.

Back to top
How can class members find out about the request for and the granting of the binding declaration?

The representative entity will provide by ordinary mail to all known class members a convocation for the hearing in which the decision on the binding declaration will be made. In addition, an announcement of the convocation will be published in one or more newspapers. The convocation in the newspapers is also intended to notify representative entities of the hearing. The court may also order that the announcement and convocation take place by other means, for example through publication on a website designated by the court. The convocation will give class members and representative entities the opportunity to put forward a defense or exercise their opt-out option if they wish to do so.

If the request for a binding declaration is granted, the judgment and the settlement agreement will be made available for inspection by the class members. The court will also decide how the judgment may be inspected or a copy may be obtained by the class members. As with the convocation, the court may order that the announcement of the binding declaration and the inspection of the agreement take place in a different manner. After the binding declaration is rendered irrevocable, it will be published in newspapers.

Back to top
What conditions apply to the binding declaration?

The law describes the matters that must be covered in the settlement agreement before it can be declared binding. In summary, these are a description of the class of injured parties, an indication of the size of that class, the amount of damages, the conditions under which the damages can be awarded, and the names and addresses of the class members known to the (class) representative. In addition, the court will assess whether:

  • the amount of the damages is reasonable;
  • it is sufficiently certain that the agreement can be fulfilled vis-à-vis the class members;
  • independent dispute resolution (other than court adjudication) is provided for;
  • the interests of the class members are sufficiently protected under the agreement; and
  • the representative entity representing the class members is sufficiently representative.

If these conditions are satisfied, the agreement can be declared binding.

Back to top
What is the effect of the binding declaration?

After the request for a binding declaration has been irrevocably granted, the agreement has the effect of a settlement agreement to which every class member entitled to damages is a party. As a result, class members who were not involved in the negotiation and drafting of the agreement can also retain rights from it, unless they have exercised their opt-out option.

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