‘Collective claims’ regarding securities have long been brought in the Netherlands and it is often considered the European home of securities class actions. The Dutch courts have presided over key cases, the results of which have presented an example to the rest of the world of how cases can be processed in alternative locations following the result of the 2010 Morrison v National Australia Bank ruling.
‘Collective claims’ regarding securities have long been brought in the Netherlands and it is often considered the European home of securities class actions. The Dutch courts have presided over key cases, the results of which have presented an example to the rest of the world of how cases can be processed in alternative locations following the result of the 2010 Morrison v National Australia Bank ruling.
The Morrison versus National Australia Bank ruling resulted in the US Supreme Court banning f-cubed actions from taking place within the US. This has meant that a non-US shareholder, suing a non-US company, whose stock was purchased on a non-US exchange, can no longer bring their case in the US courts. Legislatures across the world have rapidly been developing legislation in response and the Netherlands arguably remains the most experienced and visible jurisdiction.
To give an overview of the Dutch system, multiple ‘injured parties’ who wish to bind their related grievances and proceed with a claim against a ‘responsible party’ can do so under Article 3:305a of the Dutch Civil Code. Injured Parties must, however, establish an association or foundation to represent their interests in one single claim. This is because Dutch law requires the question of whether, and to what extent a party suffered damage, to be answered on an individual basis.
Once the liability of the ‘responsible party’ is established, the individual injured parties must then bring their settlement claim. A joint petition to declare the settlement agreement collectively binding under the Dutch Act on Collective Settlement of Mass Damages Claims (Wet Collectieve Afwikkeling Massaschade/WCAM) can, and is often filed to the Amsterdam Court of Appeals. The possibility to opt out of the settlement agreement within a certain period of time (at least six months) is then sent to the injured parties. A settlement decision can only then be appealed to the Dutch Supreme Court on the joint request of the responsible party and the association or foundation. In the settlement agreement, the responsible party does not necessarily have to accept liability for the damage suffered.
Thus far, the Dutch courts have passed multiple notable final decisions regarding securities including the following: Converium Holding AG (2012), World Online International NV (2010), Vedior (2009), Royal Dutch Shell PLC (2009), and Dexia Bank Nederland NV (2007). It was originally assumed that the WCAM would only be used to settle disputes with a close connection to the Dutch jurisdiction, however, of these cases, both the Shell and Converium cases have had substantial international scope and highlighted the Netherlands as a centre for the processing of class actions.
The Shell and Converium cases concerned financial losses suffered by shareholders, which were allegedly caused by misleading statements by the respective companies during a certain period. The settlements were declared reasonable and binding under the WCAM. In the Shell case, one of the entities involved was Dutch, and the other was English. The majority of the shareholders who bought or sold Shell shares during the relevant period were not residing in the Netherlands. Similarly, in Converium, both entities involved were Swiss, and Dutch class members only totalled approximately 200 of 12,000 shareholders. Both cases are an example of the globalisation of securities class actions and demonstrate the ability of a forward thinking legislature to process securities class actions.
As securities class actions globalise, all investors and trustees must remain vigilant and monitor global opportunities to participate in class actions to reclaim rightful returns. All parties should acknowledge the cross-border opportunities presented by legislatures such as the Netherlands to reclaim damages to which they are legally entitled. Keeping track of international opportunities and the claims process can be daunting, however there are now specialist service providers that can automate the complex process of class action participation across international legislatures.
