Changing the Causation Requirement: its Impact on Defendant Companies

The possible success for claimants of a (mass) tort claim against a defendant company often depends on the causation requirement in Article 6:162 or Article 6:74 Dutch Civil Code (hence: CC) being fulfilled or not. Traditionally, this was a useful legal instrument for defendants to have claims dismissed, thereby keeping the floodgates of liability shut. However, in our current globalizing world (multinational) companies are confronted with causation requirements that differ from country to country and even within countries, at least in the Netherlands, depending on the factual situation. In the Netherlands, as elsewhere (for a comparative overview: S. Steel, Proof of causation in tort law, Cambridge University Press 2015), the traditional requirement of condicio sine qua non (CSQN) to establish liability has been relaxed to a large degree, either from a substantive and/or from a procedural (evidential) angle, with case law making exceptions to the rule on a case by case basis, without there being a generally applicable justification that firmly underpins these exceptions. Since there is as yet no ‘one-size-fits-all EU causation’ either, a company that has its business in multiple European countries is faced with different types of causation requirements per country and within a country. This means that the causation requirement has lost a great deal of its attractiveness for i.e. businesses over the years. The aim of this Blogpost is to highlight the possible consequences of the lack of a general justification for many of the individual changes (i.e. relaxations) in the causation requirement that facilitate the establishment of liability under Dutch tort law in our modern day and age. 

To start off, the general system of causation in the Netherlands consists of two stages. First, to establish liability a CSQN between the alleged wrongful behaviour and damage should be proven (factual causality, but-for-test). In principle the plaintiff has the burden of proof, and needs to convince the defendant or judge that a CSQN exists to ‘a reasonable degree of certainty’. At the second stage it should be determined whether there is a sufficient causal connection between the damage and the circumstance(s) that caused the damage, and that as a consequence the damage could reasonably be attributed to the tortfeasor (Article 6:98 CC; legal or normative causality). Thus, also when factual causation between the wrongful act and the damage exists, this second stage can limit liability on the level of assessment of damage even more.. It is however the tortfeasor who should argue that there is an insufficient causal connection between the damage and the circumstances that caused the damage. Several factors are used to determine this, such as the foreseeability of the damage; the remoteness of the damage; the blameworthiness of the damaging event; whether the harm was inflicted in the course of a business undertaking or by a private party; the nature of the norm infringed; and the nature of the damage caused. Although legal causality aims at limiting liability, it is also used in several cases to justify exceptions to the bare minimum of CSQN.

So, this is how the Dutch legal system has been set up. In everyday practice however, many exceptions to these general rules exist. In fact, our previous research into this domain (for details and references: I. Giesen & R. Rijnhout, Changing the Causation Requirement and Its Impact on Companies Faced with Tort Claims, in: H. Koster et al. (Eds.), Essays on Private & Business Law, Eleven international publishing 2017, pp. 83-105) has taught us that under Dutch tort law several techniques have been developed and used in the last few decades to ‘escape’ the sometimes devastating effects of the ‘regular’ CSQN requirement for plaintiffs. After an analysis of the instances we found in case law and doctrinal works, we have grouped these techniques into four basic categories. These four main techniques to escape the usual (reading of the) CSQN requirement – and their legal consequences when it comes to compensation – are the following:

• Liability in full by way of reinterpreting (in fact: ‘downplaying’) the (ambit of the) regular CSQN requirement, that is: relaxing the standards by which one is to rule on the requirement being fulfilled or not;
• Liability in full by way of accepting an exception under the law of evidence, such as a (rebuttable) presumption or an actual reversal of the burden of proof in the strict sense of the term;
• Partial (or better: proportional) liability by way of accepting the concept of proportional liability as such and/or the theory of the loss of a chance;
• Partial liability, and thus compensation, by reinterpreting the causation element by in fact changing the concept of damage as such (the theory of the loss of a chance, damage to integrity).

Our analysis has also taught us that the justification for the use of one of the four escape routes found is not always a prominent feature of the case at hand, notable exceptions in case law (such as the Dutch DES case, NJ 1994/286) excluded. Much comes down to just handing down the new rule in question (example: loss of a chance; the ‘reversal rule’) and/or actually limiting its usage, to notions of fairness (example: the ‘reversal rule’) and to very strict interpretations of the route chosen in the preliminary stages (example: proportional liability) while it is foreseeable that these routes will soon be tested in a different setting anyhow (as has indeed happened). Differences in the treatment (use with or without reluctance) of seemingly comparable instruments have not been explained either.

We are of course judging the Dutch civil courts rather harshly here, and measuring them up against a very high standard indeed. However, since the justifications for alternative action are readily available, as can be seen, for example, from the use thereof in some of the case law (e.g. the World Online case, NJ 2014/201), we think that the courts could and should have done (somewhat) more in this regard than they have generally done so far. Why? Because really explaining the justification for an accepted exception, formulating its rationale, also clarifies and limits the ambit and scope of the exception. Any new fact pattern that does not then fit that rationale is excluded, whereas anything that does fit is included. Consequently, this will profoundly ease the use of the causation exceptions for future courts, for practitioners preparing novel cases and for society at large.

The current ‘justification deficit’ has left the (proof of) causation element within Dutch tort law surrounded with (still too) many uncertainties. This has important negative consequences, for instance for defendant companies facing tort actions. As a company lawyer faced with a tort claim against one’s company, it is nowadays almost impossible to advise the CEO or the Board on the chances of success when going to court or on the terms and amounts of an agreeable settlement. For example, the general burden of proof rule would usually provide some (maybe even a great deal of) comfort from a defence lawyer’s perspective, given the difficulties that the causation requirement normally poses, but this perspective is nowadays blurred by all the possible exceptions that might be invoked (and their still relatively unknown interaction). The same is happening in other instances where causation is of essence for a claim. This is even more the case since totally new alternatives might also come to light in the case at hand. The ensuing uncertainty is only added to since each of these mechanisms/alternatives/exceptions has its own set of conditions for applicability and most often still a relatively unknown or underdeveloped area of application. That state of underdevelopment is furthermore not yet addressed by a strong (set of) justification(s) for certain rules, which is a pity since such a justification could act as an alternative way to provide some certainty as to where the law stands and/or is actually going.

This leaves a lot to be desired. What companies in fact need is legal certainty. If a company knows that liability will be incurred in certain situations, the budget needed to deal with those claims can be set aside for that purpose. Though if no one knows what to expect from those claims, nobody knows how to prioritize budgets anymore. The result is to either leave valuable resources unused or to end up with a financial gap at the end of the fiscal year. Furthermore, this unpredictability might also lead to higher legal costs (more advice will be needed from more expensive external experts, cases going to trial where this was not self-evident, and so on) and thus a smaller return on investments.

Of course, the easy solution to all of this flows directly from the problem analysis itself. That is that courts from now on, and if possible retroactively for the exceptions already developed, use the reasoning in their case law to explicitly phrase the rationale of and the justification(s) for the alternative route chosen, and that they do so in an open manner and in plain language. The examples of how to do this are already out there (e.g. the case of Fortis/Bourgonje, NJ 2011/251) and the most important substantive justification is as such already known (i.e. negligence is already proven and not fixing the causation requirement would make the actual enforcement of the duty of care next to impossible). Now, if the case at hand warrants an individual equitable solution that is not to be generalized – which might have been the reason for the lack of a justification in the first place – that is stated as well by the court, honestly. If no exceptions are in order, the reasoning will also reflect this, at least to some extent. That will then allow others to better judge on new fact patterns in the future and thus serves society at large as well.

Ivo Giesen & Rianka Rijnhout