Litigation funding in class actions under the WAMCA

The role of litigation funding in collective actions

The Settling of Large-scale Losses or Damage (Class Actions) Act (the "WAMCA”) offers injured parties the opportunity to jointly recover damages through a collective claim. These collective claims may be financed by the representative organisation itself that brings the claim. In practice, however, foundations and associations often do not have sufficient resources of their own. Funding from the membership – for example, through individual contributions upon registration or membership fees – often does not generate sufficient funds to cover the costs of large-scale WAMCA proceedings. Furthermore, Dutch lawyers are, in principle, not permitted to work entirely on a success fee basis, which further limits the options for covering the costs of WAMCA proceedings.

In Third Party Litigation Funding ("TPLF"), an external party finances the proceedings, not the representative organisation or the injured parties themselves. In return, the funder is entitled to a share of the final proceeds of the proceedings. On the one hand, this increases access to the court: parties can (pre-)finance proceedings that the representative organisations would otherwise be unable to afford. On the other hand, there are risks involved. An excessive availability of funding options can lead to excessive litigation and to situations in which injured parties can scarcely benefit from the outcome of a collective claim. The litigation funder’s primary objective will be to maximise profit, which does not always align with the interests of the injured parties. That is why the legislator also considers it important to maintain a balance between ensuring access to the court and preventing an undesirable culture of litigation.

Legal requirements: sufficient resources and control

Under the WAMCA, funding and control are considered substantive admissibility requirements. The Act formulates this as follows: “the representative organisation must have sufficient resources to bear the costs of bringing a legal action, with the legal entity retaining sufficient control over the legal action.^" If a representative organisation does not meet the stipulated requirements, this will in principle result in the case being declared inadmissible. However, case law shows that in some cases judges are prepared to give the representative organisation the opportunity to meet the legal requirements after all, and therefore to allow it to amend the funding agreement if the funding agreement does not immediately comply.

The legal requirements regarding funding are partly based on the European Directive on Representative Actions for the Protection of Collective Interests, which sets out the European legal framework under which consumers can collectively defend their rights through representative organisations. Where proceedings fall within the scope of this Directive, it follows – and from its implementation in Dutch law – that, amongst other things, a litigation funder may not finance a collective action against a competitor or against a party on which the funder is dependent.

Assessment of the court of the financing structure

In general, the court must assess whether the representative organisation has sufficient financial resources to conduct the proceedings. This is  to prevent, for example, an organisation that loses the case from being unable to pay the other party’s legal costs, or lawyers from withdrawing due to unpaid invoices. In addition, the court will assess whether the legal entity has sufficient control over the legal proceedings.

The court assesses the funding of its own motion, that is to say: even without a request from either party. The assessment is of a marginal nature. It is sufficient for the representative organisation to demonstrate that, at the time of the assessment, it has or can obtain sufficient funds to conduct the proceedings. If necessary, the court may request access to the organisation’s books, possibly through a third party appointed by the court. The court may also deem it necessary for the representative organisation to submit the funding agreement to the court..

Access to the funding agreement

This was the ruling of the Amsterdam District Court in proceedings between the representative organisations SDEJ and Car Claim on the one hand, and Mercedes and its (business) partners on the other, that SDEJ and Car Claim were required to submit their funding agreements with their litigation funder in full – including annexes, with the exception of those relating to their relationship with their lawyer – and without any passages redacted, to the court, whilst simultaneously confirming that this constituted the disclosure of all agreements with the funders. Copies of these agreements had to be provided to Mercedes and the partners, whereby SDEJ and Car Claim were permitted to redact only the budget available to each of them. Other commercially sensitive information was not to be redacted, as it had not been explained why its disclosure would prejudice their position.

In proceedings between representative organisations and, among others, Google et al., the Amsterdam District Court ruled that it saw grounds for ordering the disclosure of the funding agreement with the litigation funder. In this context, the parties were given the opportunity to comment on various matters. For instance, the representative organisations were required to state (with reasons) whether they were prepared to share this agreement in full with both the court and the opposing party (Google et al.), or whether they would invoke a legal provision to prevent (parts of) a document from being included in the case file, for example on grounds of confidentiality. Google et al. were then given the opportunity to respond to this. The court would then determine whether the funding agreements would be included in the file for both parties to inspect, or whether only the court would be permitted to view the contents. The court ultimately ruled that the claimants were required to submit the funding agreement with their litigation funder to the court and to Google et al. (with the budget redacted).

Representative organisations are not required to submit their funding agreements in all cases. In the proceedings between BCW and Allergan et al. (concerning breast implants), the Amsterdam District Court ruled that BCW had already sufficiently demonstrated that it possessed the necessary expertise and experience to conduct such proceedings, that it had a sound governance structure, and that its board was independent of the litigation funder. Furthermore, control over the litigation and settlement strategy lay exclusively with BCW itself, so that, according to the court, the interests of the injured parties were sufficiently safeguarded. In that light, the court did not consider it necessary to obtain access to the funding agreement.

Relevant factors for the assessment of the court of the financing structure

The central question that arises is whether the funding agreement does not stand in the way of the careful representation of the interests of the injured parties. In making that assessment, all the circumstances of the case are decisive. Relevant factors include:

1. whether the representative organisation or the litigation funder has been awarded ‘disproportionate or excessive compensation’;
2. whether the independence and autonomy of the representative organisation are sufficiently ensured in the contract;
3. whether the representative organisation alone determines the litigation and settlement strategy;
4. the extent to which the litigation funder can exert (decisive) influence over the court documents to be submitted; and
5. whether the lawyers are demonstrably independent of the litigation funder and act exclusively on the instructions of the board of the representative organisation.

With regard to the first factor, we note the following. A recurring issue is what constitutes reasonable compensation for the litigation funder. Various factors play a role in assessing this, including the nature and extent of the costs incurred, the purpose of the compensation, the risks taken, a comparison with customary market rates, the size of the settlement amount or the payment, the nature and extent of the damage suffered by individual injured parties, and whether the injured parties are consumers or businesses. The court will assess whether the litigation funder has been awarded disproportionate or excessive compensation. In addition to agreements relating to the reimbursement of (part of) the (litigation) costs incurred by the litigation funder, the parties may also agree on a success fee. Case law has on several occasions cited a range of approximately 10% to 25% of the damages as a success fee that is, in principle, acceptable for the litigation funder.

A question related to reasonable compensation is who ultimately bears the cost of the litigation funder's compensation: is it at the expense of the payment to the injured parties, or can it be borne by the defendant? There are legal grounds for the success fee to be borne by the defendant, although this issue has not yet been fully resolved in case law.

The other factors mentioned above relate to the question of who has control over the legal proceedings. For instance, the funding arrangement must not impede the careful representation of the interests of the injured parties by, for example, granting the funder full decision-making power over whether to accept a potential settlement proposal. If the foundation or association finances the proceedings entirely itself, the control requirement will rarely cause problems in practice. However, a conflict of interest may arise in TPLF cases, particularly where the members of the board or supervisory board are not demonstrably independent of the litigation funder.

When the court is reviewing the financing structure, the Claim Code, developed in the Netherlands in 2011, is also of significance. The Claim Code is a form of self-regulation, developed on the initiative of specialists in the field of collective actions, and may be used by the court as a guide to determine whether the interests of the injured parties are sufficiently safeguarded. In 2019, the Claim Code was revised and supplemented, in particular with provisions on external financing. The Claim Code includes rules on the composition, duties and compensation of the board and the duties and composition of a supervisory board, as well as rules on the non-profit representation of collective interests, independence and the avoidance of conflicts of interest.

Burden of proof 

The representative organisation must demonstrate and substantiate that the admissibility requirements of control and independence have been met. The defendant may challenge this, but may not do so merely by asserting that the organisation is ‘an instrument of the litigation funder'. The defendant is expected to provide sufficient concrete evidence to show that the independence of the representative organisation is genuinely at stake.

Example of an insufficiently independent representative organisation

The Court of Appeal in The Hague ruled that, amongst other things, the representative organisation was unable to act with sufficient independence from the parties providing the funding. According to the Court of Appeal, control did not lie sufficiently with the representative organisation and the injured parties, because commercial parties that (co-)financed the proceedings shared in the proceeds and thus have a financial interest of their own. Through the funding and service agreements, these parties had extensive rights to be informed and consulted, including on the litigation strategy and any settlements. In practice, they carry out virtually all the actual work and are the ‘driving forces’ behind the case, whilst the representative organisation itself primarily served as a legal vehicle.

Conclusion

External litigation funding is indispensable in many WAMCA cases to give parties effective access to the courts. On the other hand, such a funder also has its own commercial interests, which may conflict with the interests of the injured parties. The WAMCA therefore includes various safeguards designed to ensure a proper balance between access to the court and the protection of injured parties. In the next Insight, we will examine how collective actions under the WAMCA are actually settled.

1. District Court of The Hague 26 November 2025, ECLI:NL:RBDHA:2025:22546, para. 4.7. 
2. M. Goorts & T. Mimpen, Procesrechtelijke aspecten van de Wet afwikkeling massaschade in collectieve actie (WAMCA), Zutphen: Uitgeverij Paris 2024, p. 98. 
3. Parliamentary Papers II 2016–2017, 34 608, no. 3, p. 11. 
4. M. Goorts & T. Mimpen, Procesrechtelijke aspecten van de Wet afwikkeling massaschade in collectieve actie (WAMCA), Zutphen: Uitgeverij Paris 2024, p. 97.
5. Parliamentary Papers II 2016–2017, 34 608, no. 3, p. 11. 
6. M. Goorts & T. Mimpen, Procesrechtelijke aspecten van de Wet afwikkeling massaschade in collectieve actie (WAMCA), Zutphen: Uitgeverij Paris 2024, p. 98.
7. Article 3:305a of the Dutch Civil Code. 
8. See, for example, District Court of Amsterdam 10 January 2024, ECLI:NL:RBAMS:2024:83, para. 2.2 et seq.  
9. Directive (EU) 2020/1828 of the European Parliament and of the Council of 25 November 2020 on representative actions for the protection of the collective interests of consumers and repealing Directive 2009/22/EC.
10. This prohibition is laid down in Article 3:305a(2)(f) of the Dutch Civil Code. Jongbloed in: GS Vermogensrecht, art. 3:305a BW, aant. 24.
11. Jongbloed in: GS Vermogensrecht, art. 3:305a BW, aant. 21.1.
12. J.W. Leedekerken & E.A.J. Schoenmakers, 'Het veranderde speelveld voor procesfinanciering, MvV 2023, afl. 6, p. 228. . 
13. District Court of Amsterdam 15 October 2025, ECLI:NL:RBAMS:2025:7489, para. 7.3. 
14. SDEJ stands for Stichting Diesel Emissions Justice. 
15. District Court of Amsterdam 7 June 2023, ECLI:NL:RBAMS:2023:8485, paras. 2.8–2.9. 
16. District Court of Amsterdam 10 July 2024, ECLI:NL:RBAMS:2024:4102, para. 2.3. 
17. District Court of Amsterdam 18 September 2024, ECLI:NL:RBAMS:2024:6160 (case management decision). 
18. District Court of Amsterdam 14 February 2024, ECLI:NL:RBAMS:2024:745, para. 5.79 et seq. 
19. M. Goorts & T. Mimpen, Procesrechtelijke aspecten van de Wet afwikkeling massaschade in collectieve actie (WAMCA), Zutphen: Uitgeverij Paris 2024, p. 102.
20. M. Goorts & T. Mimpen, Procesrechtelijke aspecten van de Wet afwikkeling massaschade in collectieve actie (WAMCA), Zutphen: Uitgeverij Paris 2024, p. 103.
21. The success fee is the fee paid to the financier in the event of a successful outcome (settlement or damages). The success fee can take various forms, depending on the terms agreed by the financier (zie B.V. Rozema, 'Financiering van collectieve acties: wie draait op voor de succesvergoeding van de financier?', NTBR 2023/25). 
22. District Court of Amsterdam 11 January 2024, ECLI:NL:RBAMS:2024:745, para. 5.85. District Court of Midden-Nederland 3 January 2025, ECLI:NL:RBMNE:2025:10, para. 3.72. 
23. B.V. Rozema, 'Financiering van collectieve acties: wie draait op voor de succesvergoeding van de financier?', NTBR 2023/25.
24. Parliamentary Papers II 2017/18 34608, no. 3, p. 11–12. Parliamentary Papers II 2017/18 34608, no. 6, p. 25.
25. M. Goorts & T. Mimpen, Procesrechtelijke aspecten van de Wet afwikkeling massaschade in collectieve actie (WAMCA), Zutphen: Uitgeverij Paris 2024, p. 108–109.
26. Court of Appeal, The Hague, 23 December 2025, ECLI:NL:GHDHA:2025:2738, paras. 6.58–6.59. 
27. M. Goorts & T. Mimpen, Procesrechtelijke aspecten van de Wet afwikkeling massaschade in collectieve actie (WAMCA), Zutphen: Uitgeverij Paris 2024, p. 109.
28. Court of Appeal of The Hague 23 December 2025, ECLI:NL:GHDHA:2025:2738, para. 6.71 et seq.