NETHERLANDS: An Introduction to Dispute Resolution

CHAMBERS EUROPE 2022: PRACTICE AREA OVERVIEW  

Netherlands: Dispute Resolution 

This overview aims to highlight some of the key developments in dispute resolution in the Netherlands over the past year, 2021, and a selection of expected developments in 2022.

Over the past year, COVID-19 continued to affect the dispute resolution landscape in the Netherlands. The restrictions and safety measures imposed in connection with COVID-19 have led to an increase in the amount of online and hybrid court hearings. Particularly in cases involving a multitude of parties, such as collective actions, the Dutch courts frequently facilitate the possibility to participate via a video-connection. Despite these technological developments, the imposed measures still resulted in delays and backlogs in court proceedings. As of 25 February 2022, most restrictions in connection with COVID-19 imposed by the government have been lifted.

On 1 January 2021, the Act on the confirmation of private restructuring plans (WHOA) entered into force. The WHOA entails a framework that allows debtors to restructure their debts outside formal insolvency proceedings. The first restructuring plan under the WHOA has been approved by one of the Dutch district courts in February 2021 and several other WHOA proceedings have since then followed.

In 2021, claimants and (foreign) litigation funders have increasingly made use of the possibility to seek collective redress on the basis of the Act on Redress of Mass Damages in Collective Action (WAMCA), which entered into force on 1 January 2020. Since the WAMCA entered into force, approximately 50 WAMCA proceedings have been initiated. The WAMCA has enabled representative entities to claim collective damages in the Netherlands. Previously, representative entities were only able to initiate proceedings to obtain a declaratory judgment and could not file a claim for damages.

On 1 May 2021 a draft bill was presented in order to transpose EU Directive 2020/1828 on Representative Actions for Consumers into Dutch law. It is expected that limited adaption will be required. This is mainly due to the fact that the WAMCA provides for an effective system of collective redress, largely in line with the EU Directive 2020/1828. As part of the implementation of this directive certain minor amendments will need to be made. Pursuant to the EU Directive 2020/1828 consumers domiciled in a Member State other than the Netherlands can only be bound by the outcome of a collective action brought in the Netherlands by way of an "opt-in" system, whereas the WAMCA currently also provides for a "opt-out" system. In addition, a list will have to be provided of representative organizations that may initiate cross-border collective actions in other EU member states.

Another act that entered into force in the past year is the Act on the Simplification of the Attachment-Exempt Threshold. This act entered into force on 1 January 2021 and provides for a new manner in which the funds of a natural person which cannot be covered by an attachment are calculated.

Over the past year, we have furthermore seen an increase in proceedings regarding climate change and ESG related matters. After a landmark Supreme Court decision was rendered against the Dutch state in 2020 in which the Dutch state was ordered to reduce greenhouse gas emissions, the Hague District Court, in a judgment dated 26 May 2021, ordered Shell to reduce CO2 emissions of the Shell group by net 45% in 2030 compared to the 2019 levels. In 2022, we expect to see a continued increase in climate change and ESG related proceedings.

A major expected development in the landscape of dispute resolution in the Netherlands is the draft bill that is currently being considered by the legislature in order to modernize and simplify the laws regarding the possibilities to obtain evidence within Dutch civil procedures (Simplification and Modernization of Evidence Act). This draft legislation is aimed at harmonizing the procedures in respect of different possibilities to obtain evidence in a pre-trial stage, including witness hearings, expert opinions and on-site inspections and disclosure of relevant documents. Also, more emphasis will be put on the disclosure of relevant information and documents at the beginning of the proceedings. This act aims to provide judges with the possibility to assume a more active role with regard to the gathering of information on the factual grounds of their positions. The bill also aims to provide a legal basis for pre-trial attachment for the purpose of preserving evidence (which already exists in respect to IP cases). The new legislation should make it easier to obtain evidence before starting court proceedings on the merits. It is not yet clear when the bill will enter into effect.

Another key legislative proposal is the proposal for the Act on the adjustment of the dispute resolution proceedings and clarification of admissibility requirements for inquiry proceedings. This draft legislation aims to improve the effectiveness of proceedings aimed at resolving shareholder disputes, by lowering the thresholds which need to be met in order to be able to claim a forced exit or a forced buy-out. In addition, the new act aims to clarify the conditions that are required to be met in order to be able to initiate inquiry proceedings, specifically for shareholder and depositary receipt holders of listed companies. This proposed draft legislation is still in the preparatory phase.

A noteworthy development in respect of alternative dispute resolution mechanisms is that the Netherlands Arbitration Institute (NAI) is expected to amend its rules. They are expected to, inter alia, include adjustments in the appointment process of arbitrators. It is expected that the new rules will be introduced in 2022.