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Collective redress in Europe: Collective redress in Europe: where nowwhere now??

BIICL, London, 15 November BIICL, London, 15 November 20072007

Professor Ianika TzankovaAmsterdam / Tilburg

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Threats and opportunities of

US-style class action litigationThe US-European interaction

US class actions: uncertainty

• US courts may grant/deny certification;• Multinationals have to struggle on multiple fronts: in US and in Europe;• Plaintiffs are not necessarily better off

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Opportunities

• (opt out) Collective settlement

• Creates certainty/finality (“global (EU) peace”) for defendants

• Allows a tailor made settlement for plaintiffs/expeditious recovery

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Collective redress in Europe: Collective redress in Europe: where nowwhere now??

BIICL, London, 15 November 2007BIICL, London, 15 November 2007

Stijn FrankenAmsterdam

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How do Dutch “class actions” work?

Who can file?

• Foundation or association

• Acting for the interest of other persons

• In accordance with the objects as described in the articles of association

• Organization can be generic investor’s or consumer’s organization or special purpose vehicle

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• No individual lead plaintiff acting for the class

• Foundation / organization brings claim in its own name

• Representative collective action rather than US styled class action

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Other requirements

• Preliminary settlement talks

• Claim must seek to serve the protection of similar interests of other persons

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What claims?

• Performance of contract• Dissolution of contract by the court• Claim arising from undue payment• Performance of obligation to undo • Injunctive relief • Opposition against split-off of legal entity

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No claim for damages in money!

Instead:claim for a declaratory judgment that defendant acted wrongfully against class members

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Scope of the judgment

• Only binding between the plaintiff’s organization and the defendant, not binding on the class members themselves

• Thus: individual class members can still sue

• Settlement requires active adherence by individual class members (opt-in)

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Collective Settlement of Mass Claims Act 2005 (CSMCA)

Origin:

• Dutch DES hormone case• Inspired by US practice of global settlement

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Objectives of CSMCA

• Providing general statutory framework for…….

• …..court certification of collective settlement agreement for mass claims, resulting in……

• ….. The agreement being binding on all class members…

• … unless opt-out option is exercised

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3 cases currently pending:

• DES-hormone• Dexia Bank Nederland re securities leasing

(investment product enabling retail investors to buy listed stock with borrowed money)

• Shell reserves recategorization settlement

CSMCA in action

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Settlement agreement

• Between plaintiff’s organization and defendant

• Agreement should describe:– class and subclasses– number of class members– amounts of compensation– eligibility for compensation– Method of determining compensation amount– Method of obtaining payment

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Requirements for court certification

• Compensation amount should be reasonable

• Defendant’s obligations must be sufficiently guaranteed

• Sufficient representation of the class by plaintiff’s organization

• Number of class members must be sufficient to warrant certification

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Reasonable compensation

Court to take into account:• Nature, cause and amount of loss• Simplicity and expediency of the

payment method• Asset base of defendant• Nature of the legal relationship

between defendant and class members

• Availability of insurance

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Certification procedure

• Joint request• Exclusive jurisdiction Amsterdam court

of appeal• 1st notification• Individual class members and other

organizations can file objections• Hearing• Court order on certification• 2nd notification

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Opt-out period

• Class members: at least 3 months upon court order becoming final

• Defendant: no longer than six months after expiry of class member’s opt-out period

• Defendant opt-out only if stipulated in agreement

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Effects of certification

Class members become:• Parties to the settlement

agreement• Entitled to receive payment of

compensation amount

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Issues

• Tension with article 6 ECHR and article 1, 1st protocol ECHR

• Extraterritorial effect

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What’s in it for…..

• Defendants: welcome tool to reach opt-out settlement, avoiding protracted litigation

• Plaintiffs: collective tool to obtain monetary damages in an indirect way