In 2016, we informed you about the 28 September 2016 decision of the lower court of Amsterdam in the case of the VEB (the Dutch association for retail shareholders, Vereniging van Effectenbezitters) versus British Petroleum P.L.C. (“BP”). The lower court dismissed the VEB’s claim due to lack of jurisdiction in the Netherlands.
On 7 November 2017 the Court of Appeal confirmed the lower court’s earlier decision and dismissed the VEB’s claim once again on appeal.
Background of the case
In April 2015 the Dutch Association for Retail Shareholders “VEB” filed an action against BP at the district court of Amsterdam. The action related to information disclosed before and after the oil spill in the Gulf of Mexico in April 2010. It was aimed at receiving a judgement on BP’s liability towards all investors who had invested in BP shares through a Dutch financial intermediary or account in the period between January 2007 and June 2010.
BP argued primarily that a Dutch court did not have jurisdiction, basing this on the EU Regulation of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (the “EU Regulation”).
On 28 September 2016 the district court of Amsterdam dismissed the VEB’s claim due to lack of jurisdiction in the Netherlands.
Judgement of the court of Appeal of Amsterdam
On appeal the VEB reiterated that, since the proceedings against BP purely focus on financial losses suffered by shareholders, the location of the securities account of such shareholders should be the determining factor for the issue of jurisdiction. Like in the proceedings before the lower court, the VEB relied on the European Court of Justice’s Kolassa- and Universal Music decisions* to substantiate their claims.
The Court of Appeal however confirmed the District Court’s decision. It agreed with the District Court that the location of a securities account, in the given circumstances, is too arbitrary and can by itself not lead to the attribution of jurisdiction. BP has shareholders with securities accounts located all over the world. The location of the securities accounts therefore do not create a close connection between the claim and the Dutch jurisdiction. According to the Court of Appeal, it is only possible to attribute jurisdiction based on the location of a securities account, if there are additional special circumstances that can justify that the Dutch courts should have jurisdiction. Such special circumstances were not present in this case, however.
Implications of the judgement
After the District Court’s decision on 28 September 2016, the Court of Appeal has now confirmed that investors cannot file an action in the Netherlands against a foreign defendant solely based on the argument that (some of) the plaintiffs have securities accounts in the Netherlands. The decision impacts Dutch claim foundations and associations especially negatively, as in the past they have often been used as a vehicle to litigate in the Netherlands against a foreign entity. As mentioned before, the VEB for example has already launched a similar action against Volkswagen in the Netherlands. Several experts already anticipate that the VEB claim against Volkswagen will likely suffer the same fate as the BP action.
Deminor, as always, advises clients to be careful before deciding to join claim foundations and associations in the Netherlands and/or wait until these claim foundations and associations obtain a decision, which an investor could benefit from. While we do not believe that using claim foundations and associations to file an action in the Netherlands against a foreign defendant would never work, investors should ask themselves whether there is sufficient justification to deviate from the main rule when it comes to suing in Europe, which is to sue in the defendant’s home country.
* Kolassa, C 375/13, EU:C:2015:37
Universal Music, C-12/15, EU:C:2016:449
Written on March 9, 2018 by
Joeri Klein
Responsible for the Dutch market. Co-responsible for group-wide investment recovery cases. Head of research for Dutch collective proceedings and settlements.
