Collective Redress in the Benelux Area: Recent Developments
Abstract
Abstract
This paper summarises the current legal situation in respect of collective redress in the Benelux area and gives a status update of the debate in each of the respective countries.
The Benelux is the economic union of Belgium, the Netherlands and Luxembourg. These three countries have established a form of intergovernmental cooperation that is probably the oldest economic treaty organization existing in Europe today. It first appeared in the form of a customs union, established in 1946, and was the embryonic predecessor of the customs union that later became the EU.
Today, more than ever, the economies of Belgium, the Netherlands and Luxembourg are closely connected amongst each other and to the rest of the European Union. Their legal systems are all three equally indebted to the common French tradition that spread over the continent during the Napoleonic era, but they have evolved in different directions. Since long, the Netherlands have been shifting more and more in the direction of the German tradition, with some occasional influences from the Nordic tradition as well. Belgium, comprising a Dutch-speaking majority and a substantial French-speaking minority, has remained closer to France, although its lawmakers often draw inspiration from experiences in the Netherlands as well. The law of Luxembourg is very similar to that of Belgium, but the specific role of its banking sector has led to the adoption of certain German, Swiss and, to a limited extent, Anglo-American elements. These facts, as well as the central location in the heart of Western Europe and the presence of the European Institutions on its territory, make the Benelux a very representative case study for an analysis of the debate in respect of collective redress on the European continent.
The situation is quite different in each of the three countries.
In Belgium, a number of legal provisions allow for some degree of collective action in specific matters, but most are only open to certain organizations and the large majority is limited to injunctive relief. A true class action is not yet available. This not to say that Belgium has not witnessed any mass claims for damages yet. On the contrary, in the last five years there have been quite a few. Three of them have been securities cases following the demise of major companies: the Nasdaq-quoted tech company Lernout & Hauspie, Lehman Brothers and the largest Belgian financial institution, Fortis. In each of these cases, the absence of a class action was more or less remedied by specialised organizations through the collection of proxies from the interested parties that suffered damage. This kind of collective litigation avant la lettre has proved helpful but remains unsatisfactory. In an effort to come up with a better solution, legislative proposals have been submitted that may lead to the introduction of a system closer to a true US style class action than in any other European country. The debate, however, is still open.
In the Netherlands, “representative actions” whereby certain organizations may file a claim in the interest of others, are more generally available than in Belgium but are also limited to injunctive relief. As in Belgium, compiling claims in a collective effort is under Dutch law only possible through a proxy from each individual party. However, since 2005, there does exist a unique system of class settlements. It allows a representative organization in cases of mass damages to negotiate a settlement whereby damages are settled on the basis of various categories and to subsequently request the court to declare the settlement binding on all parties affected, except for those who opt out explicitly. The procedure has already been applied successfully in various securities cases. Recent jurisprudence has paved the way for application to transnational cases.
In the Grand Duchy of Luxembourg, finally, there are no means for collective redress except for some specific mechanisms in consumer law. However, Luxembourg has shown support for the introduction of a class action mechanism on the European level. The question is what impact such a development would have on the case load of Luxembourg courts, assuming that the significant presence of the financial sector in the country may lead to an influx of claims in Luxembourg.
The analysis of the Benelux situation reveals a number of issues which are characteristic for the discussion in many other countries. The introduction of a full-blown class action raises questions about its compatibility with local tradition and with fundamental principles of due process, as well as about the logistic implications for a civil justice system and the risk of forum shopping. There is fear for what observers perceive as “the excesses of the US system”, and uncertainty about the effects on the legal profession. Financial aspects, such as the issues of costs, funding and the distribution of proceeds are also puzzling experts. The author concludes that there is a need for further study and coordination, preferably on a transnational level provided there is sufficient attention for the singularities of each national system.