NUON-Claim v. Vattenfall: Pivotal or dud for collective actions in the Netherlands?

Written by Jos Hoevenaars (Erasmus College Rotterdam) & Eduardo Silva de Freitas (Erasmus College Rotterdam), members of the Vici challenge Inexpensive Entry to Justice, financed by the Dutch Analysis Council (NWO), www.euciviljustice.eu.

On 9 October, the District Court docket of Amsterdam issued its last judgment in a collective motion in opposition to power provider Vattenfall. This judgment was eagerly awaited as it’s the very first judgment in a mass harm declare beneath the Dutch WAMCA process. The brand new framework for collective redress, which turned relevant on 1 January 2020 (see additionally our earlier blogpost), has obtained lots of consideration in worldwide scholarship and by European legislators and coverage makers on account of its many inventions and making it simpler for shoppers and small companies to litigate in opposition to massive corporations. Probably the most notable change within the Dutch act in comparison with the outdated collective motion regime is the chance to request an award for damages, making such proceedings engaging for business litigation funders. A current report commissioned by the Dutch Ministry of Justice and Safety (printed in an English e book right here) discovered that the majority collective actions looking for damages introduced beneath the WAMCA have a world dimension, and that every one of those claims for damages are introduced with the assistance of third occasion litigation funding (TPLF).

Since this judgment is the primary of its variety beneath the Dutch WAMCA, with a declare worth of 400 million euros, it has gained lots of (media) consideration. This blogpost offers an replace on this most up-to-date judgment and discusses its influence on the present mass claims panorama and TPLF within the Netherlands.

 The Case

 The declare of Stichting NUON Declare, the declare basis (‘the muse’) established to symbolize a bunch of SMEs who’re or have been shoppers of power firm Vattenfall, pertains to alleged extreme power prices imposed on particular clients. The inspiration alleged that power provider NUON, which has since been acquired by Vattenfall, illegitimately charged a compensation for electrical capability to its enterprise clients and that no precise service or product was offered in change for this so-called kW cost. Moreover, many different related clients didn’t should pay the kW cost. The inspiration alleged that this illegitimate cost resulted in payments that have been on common 80% greater than these of competing power suppliers, in some instances leading to tens of 1000’s of euros in extreme annual charges.

In brief, the principle query on this case is whether or not Vattenfall (previously NUON) was allowed to cost enterprise clients a price based mostly on contracted capability as an electrical energy provider. Vattenfall had charged these prices to enterprise clients with a ‘small bulk client connection’ (greater than 3 × 80 Ampère) on the electrical energy grid because the liberalisation of the Dutch electrical energy market in 2002. These included medium-sized enterprises, small enterprises and non-profit establishments. In keeping with the muse, Vattenfall was not allowed to cost these prices as a result of there was no service or product in return for the kilowatt (kW) price charged. The inspiration due to this fact initiated collective proceedings in opposition to Vattenfall. The inspiration based mostly its declare on Article 6:194 Dutch Civil Code (DCC), which incorporates a prohibition in opposition to acquisition fraud inside Dutch personal regulation.

The WAMCA and litigation finance

A primary judgment in a mass harm case has been eagerly awaited because it might present for a pivotal second by which claimants can be awarded a multimillion euro declare and the business funder would reap the advantages of its funding. The WAMCA has sparked steady debate as a result of regime’s perceived claimant-friendly design, its attractiveness for worldwide business litigation funders and its alleged threat of fostering an ‘American-style’ declare tradition. The opt-out system, few restrictions on third-party funding, and the supposed threat of litigation abuse have been the goal of criticism by, most notably, the US Chamber of Commerce (see report right here). This criticism was met with requires a extra nuanced strategy (see earlier blogpost right here) and the fears of fostering a declare tradition have been dampened by the modest numbers of instances which have been introduced beneath the WAMCA to this point.

Amongst different discussions, the WAMCA has particularly gotten consideration as a result of function performed by business third occasion funders. (See our dialogue on third occasion litigation funding and the WAMCA on this earlier blogpost.) Within the case in opposition to Vattenfall too, there was some debate on the character of the financing settlement between the declare basis and worldwide funder Bench Stroll Guernsey PCC LTD. In an interim resolution rendered in October 2023, the courtroom reviewed such an settlement, which outlined the circumstances beneath which the funder would obtain a portion of any proceeds from the case. This included paying for authorized prices and taking a share of any damages awarded to the declare basis. It additionally detailed conditions the place further funding may need been required and the rights of the declare basis to handle the litigation and settlement discussions?.

The settlement additionally outlined the remedy of the litigation funder’s charges for various teams of claimants. The declare basis acknowledged that it might withhold 25% of the compensation from the category members, however in instances the place the litigation funder’s agreed proportion (8-12%) was decrease, it might not retain the distinction. This meant, for instance, that in case solely 12% was as a result of litigation funder, the extra 13% wouldn’t have been stored by the declare basis. This 25% withholding would have solely been related if the declare basis couldn’t declare compensation for all class members, limiting its illustration to a smaller group. The courtroom concluded that the reason offered by the declare basis on the reasonableness of the charges was ample. It emphasised that the uncertainty in regards to the last quantity of charges was acceptable as a result of it relied on elements just like the period of the proceedings.

The Judgment

In its judgment the District Court docket of Amsterdam dismisses all claims of Stichting NUON-claim in opposition to Vattenfall. It rejects the muse’s declare that Vattenfall hid important details about the kW compensation, because the compensation was simple to calculate based mostly on Vattenfall’s provide. Moreover, the reason, which was included within the provide and the power payments, made the value construction clear. In keeping with the courtroom, the purchasers have been due to this fact not misled. Vattenfall additionally made it clear that the grid operator prices an quantity for the transport of electrical energy and that this isn’t included within the value that Vattenfall prices these clients.

The inspiration additionally acknowledged that Vattenfall abused the inaction of a few of its clients after a brand new annual provide. The courtroom dominated that the kW clients within the liberalised market had the selection of which power provider they bought power from. They have been due to this fact free to barter the contract phrases and to modify to a different provider. On this scenario, a kW buyer can’t complain that they themselves didn’t do the comparative analysis, which different clients did do. Vattenfall has not exceeded another customary of care and there’s additionally no query of undue cost of the kW compensation.

The Amsterdam Court docket held that companies must have exercised larger warning. It’s affordable to count on that ‘common, observant companies’ will familiarize themselves with the power costs on provide and can take the initiative to know the data offered by suppliers. Moreover, the truth that a free market has been in place since 2002 implies that Vattenfall had no obligation in any way to tell its enterprise clients in regards to the existence of different clients with higher contract phrases and that contracts with out the kW cost would in all probability be cheaper. The purchasers themselves have been accountable for their selection of electrical energy provider. The courtroom additionally finds that it’s incorrect to state that no services or products is offered in return for the kW price. Electrical energy is offered, and together with normal price parts, akin to personnel prices, in a tariff construction is permissible.

 The Affect

For these anticipating this judgment to be the very first case by which a multimillion-euro harm declare can be awarded, and thus opening the door to many extra mass harm claims, the outcome could also be considerably of an anticlimax. Because the claimants haven’t been profitable and no damages have been awarded, the case doesn’t present a lot to go on for funders, mass declare attorneys and others following these developments with curiosity. On the similar time, the declare basis misplaced the case on substantive grounds, and nothing within the resolution suggests an impairment within the WAMCA’s capability to supply entry to justice for victims of mass harms.

From our perspective, there are two factors that might be worthy of reward from a procedural standpoint. The primary is that, even after deeming 92% of the claims unfounded beneath Article 6:194 DCC, the courtroom nonetheless refused Vattenfall’s declare that the remaining 8% can be too small of group to justify a ruling in a collective motion, prioritizing the uniformity of the defendant’s conduct as an alternative. This favours procedural expediency and ensures {that a} minority of sophistication members wouldn’t endure from an eventual dismissing of the declare in opposition to the remaining.

The second level is that the courtroom took the angle of the typical consumer to rule on the sufficiency of the data offered by Vattenfall. This favours the groupability of sophistication members in an summary style, in distinction to the tendency different courts have proven to excessively scrutinize the similarity of the category members’ conditions to think about them a bunch with acceptably related claims. In a ruling on EU client regulation earlier this yr, the CJEU favoured this strategy for collective actions in such space (see Case C-450/22 Caixabank).

That mentioned, this judgment reveals that the supposed claimant-friendly design of the WAMCA doesn’t assure success and should come as a disappointment to claimants and funders alike. Notably as nicely is the truth that this case took about 2,5 years from summons to judgement, which is a comparatively brief time for complicated class motion instances, as illustrated by the timelines of different instances that have been filed nicely earlier than this case and which have nonetheless some methods to go earlier than a judgment might be anticipated.

The query stays how funders will have a look at this outcome and if it has any influence on their willingness to maintain funding Dutch class actions. Given the end result of this case, with a unfavourable outcome for the claimants and a dismissal of all claims on substantive grounds, it appears each funders and ‘WAMCA-watchers’ should wait a bit longer for that first pivotal judgment.