The settlement phase during the WAMCA proceedings

Following the appointment of the exclusive representative in proceedings under the Settling of Large-scale Losses or Damage (Class Actions) Act (the “WAMCA proceedings”), the court sets a period within which the parties may reach a settlement.[1] The Act makes this mandatory, both for collective claims for damages and for claims relating to a general or ideological interest.[2] Promoting an amicable settlement between the parties is therefore a key principle of the WAMCA.[3]  The legislature has sought to make settlement more attractive by improving the quality of representative organisations through stricter admissibility requirements, coordinating proceedings by appointing (in principle) a single exclusive representative, and by creating greater finality, as the outcome of a procedure, including an approved settlement, is in principle binding on all injured parties who have not submitted an opt-out declaration.[4]

The settlement period constitutes a deliberate pause in the WAMCA proceedings. At that point, it is established which organisation will act as the exclusive representative, so that it is clear to the defendant with which party it can negotiate a settlement that is binding on the entire group that is injured.^[5]

In practice, however, not every court sets a settlement period, despite the mandatory nature of this provision. For instance, the District Court of The Hague ruled that setting a deadline would lead to unnecessary delay, as it was already clear in advance that the parties would not reach an amicable settlement.[6] Another reason for not setting a settlement period may arise where the defendant has not responded during the pre-trial period and has also failed to appear during the proceedings.[7] In addition, several courts have considered that the parties have not indicated a need for a settlement period or, conversely, have indicated that they have no such need, and have therefore not set a deadline.[8] The Amsterdam District Court went a step further and did not set a settlement deadline, without explicitly addressing this.[9]

To date, there are no known cases in which parties in WAMCA proceedings have submitted a settlement for the court’s approval.[10]  If no settlement is reached, the proceedings will continue in accordance with the rules of the summons proceedings. In that case, the court may order a further exchange of pleadings or schedule one or more oral hearings.[11]

The duration of the settlement period 

The law does not specify how long the settlement period must be. If a settlement is a realistic option, the period must be sufficiently long to allow this possibility to be properly explored.[12]

In practice, the duration of the period is largely determined by the attitude and positions of the parties.[13] Judges may give the parties the opportunity to express their views on the desired duration of the settlement period.^[14] For example, in a collective action brought by the FNV and CNV against XPO Supply Chain Netherlands III B.V., the parties agreed that a period of two months was desirable. In that case, the settlement period coincided with the period granted to injured parties to submit an opt-out or opt-in declaration.^[15] Courts often choose to have these periods run (almost) concurrently.[16]
 

Pursuant to Article 1018c(5) of the Dutch Code of Civil Procedure ("DCCP"), the defendant may, in the first instance, limit its defence to procedural matters relating to admissibility and is not required to put forward a substantive defence at the outset of the proceedings. In principle, the substantive hearing only commences after the settlement phase. In the judgment setting the settlement period, the court may also rule that, upon the expiry of that period, the defendant is granted a specific period – for example, six or twelve weeks – to submit a substantive defence, should the parties fail to reach an agreement.[18]

In addition, the court may first grant the exclusive representative a period to substantiate the grounds of the claim.[19] The exclusive representative then has, for example, the option of adopting grounds put forward by other, non-selected representative organisations in their writs of summons.[20] However, where the main hearing has already taken place, the court may rule that there is no longer any reason to give the parties the opportunity to substantiate their grounds or defence.[21]

The settlement agreement 

In line with the existing framework of the Settling of Large-scale Losses or Damage Act (“WCAM”), the WAMCA offers the possibility of settling mass claims collectively via a settlement agreement which, in principle, is binding on all injured parties.

The WCAM provides the possibility of having an agreement for the settlement of mass damage declared binding on the entire group of injured parties.[22] Such a settlement has the character of a settlement agreement which, once declared binding, applies not only to the parties to the agreement, but to all injured parties (except for injured parties who have submitted an opt-out declaration).[23] This system was adopted upon the introduction of the WAMCA. Parties may therefore submit a settlement agreement for approval to the court in WAMCA proceedings. Article 1018h DCCP aligns as closely as possible with the provisions applicable to WCAM settlements.[24]

The application for approval is submitted to the court before which the WAMCA proceedings are pending.[25] The parties may reach a settlement both during the WAMCA proceedings – for example, during the settlement phase – and after a judgment has been delivered.^[26] It is therefore also possible for a settlement to be submitted to a court before an exclusive representative has been appointed. If the parties reach a settlement pursuant to Article 1018h DCCP after the exclusive representative has been appointed, this settlement relates to the entire narrowly defined group of persons. It is then not possible to settle for only part of the group. This prohibition on partial settlements ensures that representatives do not focus exclusively on the interests of their own group of injured parties they directly represent, but also make efforts on behalf of the other injured parties.[27]

The approval of a collective settlement agreement for mass claims provides clarity for both the injured parties and the defendant(s). If the parties agree to a final discharge, the matter is thereby definitively settled. It is precisely for this reason that injured parties, as also described in the Insight regarding opt-in and opt-out options, have the option to choose not to be bound by the collective settlement agreement.[28]

The law imposes various minimum requirements on the agreement setting out the collective settlement. Among other things, it must specify the events to which the settlement agreement relates and the group of persons for whom the agreement has been drawn up.[29]

Once the applicant has filed a petition, the parties for whose benefit the agreement was concluded, other than the applicant, are entitled to file a statement of defence. The same option is available to a foundation or association with full legal capacity which, although not acting as a co-applicant, is committed, by virtue of its articles of association, to promoting the interests of the persons to whom the agreement relates.[30] If the court grants the application referred to in Article 1018h(1) DCCP, it shall approve the settlement agreement by order.[31]

In addition to the collective settlement described above, other forms of settlement may also be reached. For example, there is the possibility of an opt-in settlement, whereby the representative reaches a settlement on behalf of the persons it represents and whereby individual injured parties may opt in to be bound by the agreed settlement terms.[32]

If the parties are unable to reach an agreement, the WAMCA procedure will continue.