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Collective settlements

I. Introduction

In contrast with a pro-active group action tool for collective redress, collective settlement mechanisms naturally require the parties to acquiesce to the result reached. A collective settlement of an opt-out nature thereby allows for parties to achieve finality in respect of the dispute in question, thereby providing legal certainty to all the parties concerned. For the infringing party, the concept of complete finality to a dispute can be a valuable commodity.

Collective settlement procedures have attracted attention due to the success of the Dutch WCAM legislation(Wet collectieve afwikkeling massaschade 2005). Reforms to introduce similar mechanisms have occurred in other European countries.

II. Dutch WCAM Collective settlement mechanism legislation

Collective settlement legislation was introduced into Dutch law in 2005 and provides for the court approval of collective settlements whereby claimants and one or more infringing parties can apply to court to declare the settlement fair and binding even on non-parties to the agreement on an opt-out basis. Further details may be found on the Dutch pages.

Six collective settlements have been approved by the Amsterdam Court of Appeal under the collective settlement legislation in the cases of DES, Dexia, Vie d'Or, Shell, Vedior and Converium cases, and other cases are ongoing.

Of particular interest is the metamorphosis of this procedure to become an international tool of settling mass claims. At the outset, the Dutch mechanism was a procedure created to deal with the complex domestic case of the DES pharmaceutical claims. However, an international dimension gradually developed. Some foreign parties were involved in the Dexia, Vie d'Or and Vedior settlements, but it was only after the Shell and Converium that the collective settlement procedure has taken on a global perspective. In the recent Converium settlement, the Amsterdam Court in its final ruling of 17 January 2012 confirmed its provisional judgment that the mechanism can be used to implement consensual, class-wide resolutions even if the alleged wrongdoer is not a Dutch citizen or resident.

III. Reforms in other Member States

The success of the Dutch mechanism has prompted law reform proposals along similar lines (such as in Belgium). In the United Kingdom, the Consumer Rights Bill which is currently proceeding through the Parliamentary process, includes a proposed opt-out Collective Settlement procedure in the competition law sphere, whereby the alleged infringer and representatives of those who have suffered loss may jointly apply to the Court to approve the settlement of a dispute.

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