Netherlands

In this chapter of our Annual Insurance Review 2024, we look at the main developments in 2023 and expected issues in 2024 for Netherlands.

Key developments in 2023

Bankruptcies

 During and after the COVID-19 pandemic, a significant wave of bankruptcies was expected. However, this did not materialize as the number of bankruptcies has been historically low in recent years due to government compensation schemes and the option to defer tax obligations. Now that these compensation schemes have ended, overdue taxes need to be paid, and inflation, costs, and interest rates have skyrocketed, the rise in bankruptcies has now set in. We are witnessing these bankruptcies, and inherent directors’ and officers’ liability claims, primarily in the trade and construction sectors.

ESG, Climate Change Litigation and Forever Chemicals

After a group residents filed criminal charges against Tata Steel in 2021, the environmental concerns surrounding Tata Steel once again gained a lot of traction this year. In February 2023, the District Court of Amsterdam imposed two fines totalling €110,000 on Tata Steel for acting in violation with its environmental permits and the local environmental authority imposed several penalty payments and filed criminal charges against the company after it turned out that the equipment used to monitor the nitrogen emissions of its coke oven gas plants were not calibrated correctly.

Another ‘hot topic’ is PFAS. In September 2023, the District Court of Rotterdam has ruled that chemical concern Chemours (formerly DuPont) complied with its permit in the period up until July 1984, but is liable for the damage to the environment in the municipality of Dordrecht and its surroundings due to its PFAS emission between July 1984 and March 1998 as it withheld important information about the potentially hazardous emissions from the authorities. The damages are still to be determined.

Class Actions

In its fourth year, the new regime for class actions (the so-called WAMCA) – which is based on an opt-out system and allows for claiming damages – has led to around 80 cases, varying from actions against the State, ‘idealistic’ claims and damages claims. The first of this last type of cases have reached the final formal stages of the proceedings, with the Airbus decision addressing three major issues of admissibility. The courts of The Hague have (i) defined a minimum threshold for the number of class members, (ii) ruled that activities of the claim vehicles (i..e. Foundation) cannot be outsourced, and (iii) confirmed that a Foundation must be able to act independently from the litigation funder.

In another major development, the courts of Amsterdam have decided in the TikTok case that the reasonable remuneration of a litigation funder is limited to five times the amount actually invested. At the same time, this court ruled that claims for non-material damages related to a breach of data privacy cannot be brought collectively, thus dismissing the bulk of the claims against TikTok.

Cyber & IT

In the Netherlands significant cyber incidents remain to occur relatively frequently, including a high profile case involving the Royal Netherlands Football Association. That case re-ignited public debate around ransom payment. A trend in 2023 is that cyber-attacks, such as ransomware attacks, became more sophisticated and criminals more frequently threatened publication of the stolen and encrypted data in what is called ‘double extortion’.

We also see an increase in cases regarding liability following a cyber incident. In this emerging field of litigation the victim of a cyber incident brings an action against their IT-provider for damages related to the incident. The proceedings generally concern the interpretation of IT agreements and the IT-provider’s duty of care. The most important case in 2023 related to a cyber incident in the IT systems of a municipality. In this case, the court was reluctant to accept liability on the IT provider’s part, both in light of the contractual arrangements and the inadequate safety measures taken by the municipality itself.

What to expect in 2024

ESG, Climate Change Litigation and Forever Chemicals

In April 2024, hearings will take place in the appeal that Shell lodged against the 2021-ruling of the District Court of The Hague that Shell is obliged to reduce the CO2 emission of the group’s activities by 45% net at the end of 2030. Meanwhile, more than 1400 residents living near Tata Steel have announced a mass claim against the company citing problems of pollution, noise, poor air quality and smell. Greenpeace has announced that they will start proceedings against the State of the Netherlands in cooperation with (representatives of) the residents of Bonaire, if the Dutch government does not take measures to adequately protect Bonaire against the consequences of climate change.

As mentioned above, litigation regarding forever chemicals such as PFAS is also increasingly gaining attention. A mass complaint on behalf of roughly 3.000 residents has been filed with the State Prosecutor asking them to start criminal proceedings against the management of Chemours and the Dutch government has announced that it will bring a civil liability claim against the American company 3M for PFAS-pollution caused in the Dutch part of the Western Scheldt River by the nearby 3M factory in Belgium. 

Class Actions

In 2024, the first cases regarding the retroactive effect of the new regime will be heard in appeal. This will shed light on whether the strict approach taken by the courts of Amsterdam (i.e., making the application of the WAMCA dependent on when the first event occurred) will be confirmed as opposed to a dual, parallel application of the regimes for the relevant periods. The courts will also continue to grapple with data privacy cases in the admissibility phase as more have been brought in the second half of 2023 against major tech companies (such as Amazon, Google, Twitter and Meta). In addition, the first major class actions will enter the merits phase. Finally, it remains to be seen whether litigation funders may be less likely to fund cases given the limitations imposed in a few major decisions in the second half of 2023 (i.e., the Airbus and TikTok decisions).

Cyber & IT

The European Union is working on a number of legislative instruments that relate to cyber security and IT. One such piece of legislation, the NIS2 directive, must be adopted by EU member states by 17 October 2024. It imposes stricter security, notification, and enforcement rules on essential and important entities. Such entities include various digital infrastructure and ICT services. The NIS2 Directive also extends liability to ‘management bodies’ for the infringement of the obligation to take cybersecurity measures. We also expect a continuation of the trends we noted in the key developments section in terms of cyber liability cases and cyber incidents.

Revised Product Liability Directive

In 2022 the European Commission adopted a proposal to modernise the existing Product Liability Directive. The changes are expected to provide further protection for consumers. In this proposal, the definition of the term 'product' is updated to better reflect technological developments. In addition, more parties can be held liable for damages caused by a defective product. Due to the broader scope, insurers may be confronted with more and higher claims in the future. In October 2023 the European Parliament has determined its position. In 2024 the legislative process will continue.

Written by Veerle van Druenen, Christoph Jeloschek & Marit van der Pool.