The Dutch Act on Collective Settlements (Wet collectieve afwikkeling massaschade or “Wcam”) was introduced in 2005 and revised in 2013. It offers the possibility to get a declaration that a settlement is binding on the entire class (as defined in the settlement agreement), much like a U.S. class settlement. Despite its existence for over a decade, there are hardly any precedents on it from the Supreme Court. The reason for that is probably that only the original applicants for a declaration may file an appeal with the Supreme Court. In case the declaration is given, they will not have any reason to pursue an appeal with the Supreme Court. The rationale for this asymmetric right of appeal is that interested parties (the members of the class) may opt-out if they do not like the settlement. They, therefore, lack an interest in appealing, because they can distance themselves from the settlement.
A few recent decisions of the Supreme Court shed light on the nature of the opt-out and show that the Supreme Court takes a rather strict approach to opt-out and the observance of formalities, make clear for which claims the Wcam may be used and set the standard for interpretation of the settlement agreement if a settlement was declared to bind the class. All three cases concern the so-called Duisenberg settlement. This settles claims from and against Dexia. Dexia sold investment products (so-called securities leases) on a large scale. Many consumers purchased shares with money borrowed from Dexia. When they saw the value of their investments drop, may where faced with a debt to Dexia that was not covered by the value of their securities. Litigation was abound. Dr. Duisenberg, a former finance minister and former president of the European Central Bank, mediated a settlement. The Amsterdam Court of Appeal declared this settlement binding. However, quite a number of consumers were not satisfied with the settlement and opted-out. This was not always done properly as three cases show in which the Supreme Court gave judgment on 9 December 2016.
In the first case (ECLI:NL:HR:2016:2822), the opt-out notice was not sent to the notary as was prescribed in the settlement agreement, but to Dexia itself. The Supreme Court found that this is not a valid opt-out notice. There needs to be absolute certainty that an opt-out was validly made. This means that the formalities for such a notice need to be observed religiously, although the Supreme Court leaves the possibility open that there may circumstances in which it is unacceptable under standards of reasonableness and fairness that the party who must pay takes the position that the opt out notice was not validly made. It is clear, however, that this must be reserved for exceptional cases.
The second case (ECLI:NL:HR:2016:2825) shows that the Wcam finds wide application. It cannot only be used to settle damage claims collectively, but also for the settlement of a whole variety of other claims, such as claims for annulment of a contract.
The third decision (ECLI:NL:HR:2016:2835) confirms that the settlement agreement that is declared binding must be construed in accordance with objective standards (which means that the wording of the clause in question, read in conjunction with the text of the rest of the agreement, is decisive). This is so, because the agreement is meant to determine the legal position of third parties that were not involved in its drafting.
- Opt-out notices need to be done strictly by the book;
- The Wcam can be used to settle all sorts of claims, not only damage claims; and
- The interpretation of the Wcam settlement agreement is a matter of its wording (so-called objective interpretation) without regard of underlying intentions of the original parties to it.