NETHERLANDS: An Introduction to Dispute Resolution

This overview aims to highlight some of the key developments in dispute resolution in the Netherlands over the past year, 2023, and a selection of expected developments in 2024.

Over the past years, the dispute resolution landscape in the Netherlands was affected by Covid-19. 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. Even if the pandemic is now over, the Dutch courts still frequently facilitate the possibility to participate to court hearings via a video-connection, particularly in cases involving a multitude of parties, such as collective actions. Despite these technological developments, there are still delays and backlogs in court proceedings, specifically in appeal proceedings, which is due to structural personnel shortages at the courts.

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. Since inception a lot of WHOA proceedings have been held. In the past year we have seen application of the WHOA to international group of companies in parallel to US Chapter 11 or English law Scheme of Arrangement.

In recent years, 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. 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 organisations that may initiate cross-border collective actions in other EU member states.

Furthermore, over the past years, we have 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. Shell appealed the decision. In the appeal proceedings a foundation has tried in vain to join and to intervene in the proceedings in support of Shell. In 2024, we expect to see a continued increase in climate change and ESG related proceedings. In another representative action initiated by Greenpeace against the Dutch State in relation to nitrogen emissions, the request to be joined of a foundation looking after the interests of the agricultural sector was successful. This means that from now on the climate sceptical sound will be heard in the courtroom alongside the climate activist one.

A major expected development in the landscape of dispute resolution in the Netherlands, is the draft bill that is currently being considered by the legislator to modernise 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 harmonising 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 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 regarding 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 of IP-cases). The new legislation should make it easier to obtain evidence before starting court proceedings on the merits. In 2023 amendments have been proposed in order to remove the obligation to disclose evidence at the beginning of the procedure, as it is doubted by the petitioner whether this obligation increases the efficiency of proceedings. The draft bill and amendments are still being discussed in 2024. It is not yet clear when the bill will enter into effect.

Another key legislative proposal relevant for shareholders disputes 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. The legislative proposal has been submitted in November 2023 and is currently being considered by the legislator.