8.6 Concluding remarks

One of the basic differences between regimes for collective redress is the goal it seeks to achieve: a regime aiming to manage similar claims so that the courts do not become overburdened, i.e. a court management facility, or one seeking to make viable claims that would not be worth bringing as individual claims.1 It is clear from the analysis in the different chapters that the legislator is almost entirely focused on the court management problems arising from mass damages.

A second distinction between collective action procedures is based on the fact whether it is an opt-in or an opt-out model. In the opt-in model, there is no possibility for a representative claimant to claim damages on behalf of a group that are allegedly victims of the defendant's behaviour, unless he is mandated on an individual basis. As a consequence, the binding effect of the court's judgment in the collective action is restricted to the parties involved in some manner with these court proceedings. Except for the rarely used representative action under English law, all other collective action procedures in which damages available under Dutch, French and German law can be claimed are based on the opt-in model.

A third important distinction is the extent to which, if at all, the rulings of the court regarding the common elements/issues have binding effect for the courts that subsequently adjudicate the individual damage claims. The Dutch collective action enacted in section 3:305a DCC provides the court the opportunity to rule upon the common elements/issues as requested by, for example, a representative investors association. Even though the declaratory judgment has no formal binding effect in the individual follow-up proceedings, the Dutch Supreme Court in its World Onfine-judgment ruled that, in principle, the courts addressed in the subsequent proceedings in which damages are claimed, should not deviate from the other court's ruling on the common elements/issues, unless the specific circumstances of the case before them so requires. Unlike the declaratory judgment by the Dutch court, the ruling in a model case proceeding by a German Higher Regional Court and the ruling in a test claim proceeding by an English court do have formal binding effect on the court proceedings pending for the duration of the model case and the test case proceeding respectively. The binding effect of judgments in these collective action proceedings will be elaborated upon in the next chapter.

Even though the investors association can request the court to give a declaratory judgment without any formal mandate from individual claimants, this two-stage procedure, i.e. declaratory judgment and subsequent individual proceedings in which damages are claimed, is an opt-in model of collective procedure, because the individual claimants cannot obtain damages, unless they individually file a damage claim in subsequent proceedings. For the same reason, the model case proceedings and test claim proceedings belong to the opt-in models of collective procedure: each individual investors need to file a claim before the German or English court respectively so as to obtain damages.

The French collective action provision in the Monetary and Financial Code is the most restricting in its options for collective redress. The individual investors need to provide the investors association with a mandate so as to enable this association to bring a claim in their name against the defendant(s). Furthermore, the court needs to address the circumstances of each individual claim without the possibility to make a binding ruling on the common elements or issues in all claims.

In the jurisdictions of this research, only the Dutch and English civil procedure rules allow investors to proceed collectively on an opt-out basis. As already mentioned in the previous subsection, only English law allows for a proper collective action in which damages can be claimed on an opt-out basis. However, due to the severely strict conditions, this collective procedure is unfit for resolving prospectus liability claims or other damages claims for corporate misinformation. Dutch law merely provides for a court procedure in which an agreed settlement can be declared binding on all individual members of the group unless they opt-out.

The general feature of an opt-out model is that individuals can be bound by a court ruling even though they did not make themselves known by filing a claim for damages or providing a mandate to an association to proceed in their name. The unknown individual who does not wish to be bound by the court ruling has to declare within a specified time span that he opts out from the settlement declared binding. If he does not opt-out within a specified period of time, he is, in principle, bound by the outcome of the proceedings between an investor or an investors association representing a specific class of victims and the defendant company.

The Dutch Collective Settlement of Mass Damage Act ("WCAM") provides representative investors associations and the defendants with the option to have, at their joint request, their settlement declared binding upon all investors as described in the settlement by the Amsterdam Court of Appeal. The parties to the settlement, i.e. the investors associations and the defendants, can be required, at the court's discretion, to send the court's ruling to the individuals belonging to the class bound by the settlement or at least make the court's ruling publicly known by e.g. advertisements in (financial) newspapers. The investors who do not wish to be bound have to send such a statement to the person responsible for the settlement's execution. The later person is designated by the court.

Unlike in Dutch law, the represented person in an English representative action is bound by the judgment or order given in the representative claim even if he does not wish to be bound. Unless the court otherwise directs, the judgment or order in the representative claim can only be enforced against the represented person, who is by definition not a party to the proceedings, with the court's pennission.2 The represented person can avoid the judgment's enforcement against him, if he claims for special facts or issues which are particular to his case such that he cannot be bound by the court's decision in the representative claim. The represented person needs to give evidence for his particular circumstances that are different from the represented class.3 Because of the fact that the individual is able to request the court to deny enforcement of the judgment against him only in cases of individual particular circumstances, I qualify the English representative claim as belonging to the opt-out models for collective action.

One of the major problems with the English representative action is its inherent ambiguity regarding the court's willingness to allow for an action for damages. Consumer and investor associations have been very reluctant to bring a representative action before the English courts, because of the wide discretion to quash the case.4