Class actions in the Netherlands, or collective actions, have become an increasingly important tool for individuals and organizations seeking to address large-scale legal issues. In contrast to many other jurisdictions, Dutch law only recently allowed for class actions in the form of “representative actions”, particularly in areas like consumer protection and environmental law. These legal actions allow multiple plaintiffs to join forces and bring a single case against a defendant, typically for issues that affect a broad group, such as product defects or environmental damage. A landmark development in this field was the 2021 ruling in the Shell case, where the Dutch organization ‘Milieudefensie’ and other organizations, along with over 17,000 individuals, sued Shell for its role in climate change. This morning, the Court of Appeal of The Hague overturned the judgment of the District Court of The Hague.
Class actions in the Netherlands
Under ‘Article 3:305a of the Dutch Civil Code’ (BW), legal entities such as foundations or associations with full legal capacity can initiate collective actions to protect the interests of a specific group with common interests. This legal framework is frequently used by organizations like consumer rights groups, environmental NGOs, or unions to bring claims on behalf of a broad class of affected individuals without requiring each member to individually join the lawsuit. Since the implementation of the ‘Collective Damages Claims Settlement Act’ (WAMCA) in 2020, such collective actions can also include claims for financial compensation, greatly enhancing the practicality of this instrument for mass claims.
The judgment of the District Court of The Hague in the Shell case (2021)[1]
In its 2021 ruling, the District Court of The Hague determined that Shell was at risk of breaching its emissions reduction obligations due to several key factors:
- Lack of Binding Targets: the court found that Shell’s climate policy and goals were largely based on intentions and ambitions without legally binding commitments. There were no enforceable measures in place to ensure significant emissions reductions, particularly concerning scope 3 emissions (emissions from end-users of Shell’s products).
- Dependence on Fossil Fuels: Shell remained heavily reliant on oil and gas production, with insufficient steps taken to transition towards sustainable energy. The court concluded that Shell had not made adequate efforts to restructure its business model in line with decarbonization goals.
- Limited Action on scope 3 emissions: despite scope 3 emissions representing the largest share of Shell’s total CO₂ footprint, Shell placed the responsibility for reducing these emissions on consumers, rather than taking direct responsibility. The court ruled that Shell itself had a duty of care to address these indirect emissions.
- Insufficient Long-Term Measures: the court noted that Shell’s actions were focused on short-term goals, with no concrete, long-term strategies in place to achieve the required reductions. This lack of a robust long-term plan undermined the likelihood of achieving the 45% reduction target by 2030.
As a result, the court concluded that Shell was likely to fail in meeting its reduction obligations and emphasized the potential human rights impacts of the company’s failure to reduce emissions in line with climate targets. Consequently, Shell was ordered to reduce its CO₂ emissions by 45% by 2030 compared to 2019 levels, in accordance with the Paris Agreement climate goals.
The judgment of the Court of Appeal in the Shell Case on Appeal (2024)[2]
The Court of Appeal in The Hague disagreed with the District Court and based its judgment in the case against Shell on the following key pillars:
- The first pillar establishes that protection against climate change is a human right, implying that Shell owes a duty of care to society.
- Secondly, the Court stressed that while climate regulation primarily rests with the legislature, this does not absolve companies like Shell from their own responsibility to take precautionary measures, even in the absence of specific regulations.
- Additionally, since the District Court’s judgment in 2021, European regulations on greenhouse gas emissions have increased, which allows the judiciary to impose emission reduction obligations even without a fixed percentage like 45%.
- The fourth pillar notes Shell’s substantial investments in future oil and gas fields, but points out that the current claim does not seek to prohibit Shell from continuing these investments.
- In the fifth pillar, the Court of Appeal examines the various emission scopes: for scope 1 and 2 (direct emissions), there is no imminent breach, as Shell has already achieved significant reductions (31%).
- Regarding scope 3 (indirect emissions), the sixth pillar explains that Shell must implement suitable measures, based on generally accepted unwritten principles, to meet the commitments under the Paris Agreement. Shell’s customers are not a true reflection of its global product and customer base. Therefore, such a global percentage cannot be applied to an individual company.
- Finally, the Court’s conclusion affirms that Shell remains responsible for reducing scope 3 emissions, but that this obligation cannot justify granting the requested claims due to scientific uncertainties and variation across sectors and countries. According to the Court of Appeal, the 45% target is insufficiently substantiated, and it remains unclear whether this is an effective method for combating climate change. It is unclear whether it is justifiable to impose such obligations on Shell, as other companies would likely step in to fill that gap. Fossil fuels will most likely continue to reach the end user irrespective of these measures.
Shell’s appeal in the climate lawsuit has been successful, as the Hague Court of Appeal ruled in its favor. The impact of the Shell case on future climate lawsuits remains uncertain. While the decision in this case may influence how emissions reduction targets are approached in similar cases, it is still unclear whether this ruling will set a precedent for other climate-related legal actions.
With the judgment of the Court of Appeal, the ruling of the District Court has been overturned. There is currently a lot happening in the Netherlands regarding class actions. We are always willing to think along and feel free to contact Ashley Geerts for questions relating to class actions.
[1] https://uitspraken.rechtspraak.nl/details?id=ECLI:NL:RBDHA:2021:5339.
[2] https://uitspraken.rechtspraak.nl/details?id=ECLI:NL:GHDHA:2024:2100
