Claims

General climate

Describe the nature and extent of securities litigation in your jurisdiction.

Securities litigation in Ireland can take the form of common law claims in contract or tort or claims for the enforcement of specific statutory rights of action by investors. The incidence of securities litigation in Ireland has recently increased owing in part to the effects of the global financial crisis.

Available claims

What are the types of securities claim available to investors?

The following types of claims are available in Ireland:

  • Common law: at common law investors can claim for breach of contract, misrepresentation, negligence, negligent misstatement and fraud or deceit.
  • Statutory claim for misstatements or omissions in a prospectus: under section 1349 of the Companies Act 2014 (the 2014 Act), an investor may seek compensation for losses incurred in respect of securities acquired on the faith of prospectuses containing untrue statements or that have omitted information required to be contained in the prospectus under EU law. Persons who may be liable under this provision include: the issuer who has issued the prospectus; the offeror of securities to which the prospectus relates; any person who has sought to have the securities admitted to trading and any guarantor of the issue; a director of the issuer; a promoter of the issuer; and an expert who has given his or her consent (if such consent is required) to the inclusion in the prospectus of a statement purporting to be made by him or her.
  • Statutory claim for breach of Irish market abuse law: under section 1369 of the 2014 Act, an investor may seek compensation for losses incurred as a result of breaches of Irish Market Abuse law, including insider dealing, unlawful disclosure of inside information and market manipulation relating to various categories of financial instruments. These include financial instruments admitted to trading on (or in respect of which a request for admission has been made) a regulated market such as the Irish Stock Exchange’s Main Securities Market (MSM) and a multilateral trading facility such as the Irish Stock Exchange’s Enterprise Securities Market and Global Enterprise Market (GEM).
  • Section 44 of the Central Bank (Supervision and Enforcement) Act 2013 provides that a failure by a regulated financial service provider to comply with any obligation under certain designated financial services legislation is actionable by any customer of the regulated financial service provider who suffers loss or damage as a result of such failure. Section 44 allows a plaintiff to recover losses simply by demonstrating that there has been a breach of an obligation under the legislation causing loss or damage. The financial services legislation covered by this section includes, for instance, the Markets in Financial Instruments (MiFID) Regulations 2007 (as amended) and the Undertakings for Collective Investment in Transferable Securities (UCITS) Regulations 2011 (as amended). The inclusion of this legislation within the scope of section 44 allows for claims by investors against entities that provide investments services such as investment companies and credit institutions (MiFID) and trustees or depositaries (UCITS).
  • Under section 610 of the 2014 Act, civil liability may be imposed for fraudulent or reckless trading on the part of the officers of a company on its winding up or examinership.
  • Under section 1147 of the 2014 Act, directors and experts may be liable to shareholders for losses incurred as a result of the inclusion of untrue statements in specified documents concerning a merger, with an equivalent provision in relation to division of PLCs under section 1169.
Offerings versus secondary-market purchases

How do claims arising out of securities offerings differ from those based on secondary-market purchases of securities?

The principal difference is the absence of a contractual relationship between a secondary market purchaser and the initial issuer of the securities. Consequently, breach of contract and contractual misrepresentation claims against the original issuer of the securities are not available to secondary-market purchasers. Secondary-market purchasers may also face difficulties in the pursuit of claims in common law negligence against the initial issuer of the securities due to the requirement to establish the existence of a duty of care on the part of the issuer, although the success of such claims is likely to depend on the particular facts.

A claim for misstatements in and omissions from a prospectus pursuant to section 1349 of the 2014 Act may be maintained against an offeror of securities by a purchaser on a secondary market.

Public versus private securities

Are there differences in the claims available for publicly traded securities and for privately issued securities?

Privately issued securities do not involve any requirement to publish a prospectus and consequently claims arising from misstatements in or omissions from a prospectus do not arise in respect of such securities.

The common law claims listed in question 2 are available to investors in privately issued securities.

Primary elements of claim

What are the elements of the main types of securities claim?

Breach of contract

A plaintiff must establish that a term of the contract for the purchase of the securities was breached by the defendant and that the plaintiff has suffered loss as a result.

Misrepresentation

A plaintiff must prove: (i) that there was a false representation of fact innocently made; (ii) that the plaintiff was induced to enter into the contract by reason thereof; and (iii) that the plaintiff suffered loss as a result.

Negligence

A plaintiff must prove that: (i) a duty of care was owed to the plaintiff by the defendant; (ii) a breach of that duty of care occurred; and (iii) the plaintiff suffered loss as a result.

Negligent misstatement

A plaintiff must prove that: (i) a false representation of fact was negligently made; (ii) a duty of care was owed by the defendant; (iii) the plaintiff relied on the misstatement; and (iv) the plaintiff suffered loss as a result.

Fraud or deceit

A plaintiff must prove that: (i) a false representation of fact was made knowingly, or without belief in its truth, or recklessly, careless whether it was true or false; (ii) it was relied on by the plaintiff; and (iii) the plaintiff suffered loss as a result.

Statutory claims

Civil liability for misstatements in a prospectus (section 1349 of the 2014 Act)

A plaintiff must establish that he or she purchased securities on the faith of a prospectus and suffered loss by virtue of misstatements or the omission of information required to be contained in the prospectus.

Civil Liability for breaches of Irish market abuse law (section 1369 of the 2014 Act)

Insider dealing

A plaintiff must establish that the defendant has engaged or attempted to engage in insider dealing, recommended or induced another person to engage in insider dealing or unlawfully disclosed inside information.

Market manipulation

In order to establish civil liability for market manipulation under section 1369 of the 2014 Act, a plaintiff must simply establish that the defendant has contravened the provisions of article 15 of the Market Abuse Regulation, which prohibits market manipulation.

Materiality

What is the standard for determining whether the offering documents or other statements by defendants are actionable?

In claims under section 1349 of the 2014 Act the plaintiff must only establish a misstatement in or omission from a prospectus and under 1369 a breach of Irish market abuse law.

In a misrepresentation claim it must be established that the representee in fact relied upon the misrepresentation (McCaughey v IBRC [2013] IESC 17).

Scienter

What is the standard for determining whether a defendant has a culpable state of mind?

Section 1349 of the 2014 Act does not require proof of a culpable state of mind, but a defendant can rely on the defences referred to in question 12.

A claim under section 1369 of the 2014 Act does not require proof of a culpable state of mind.

A claim for deceit or fraudulent misrepresentation requires proof that the defendant knowingly or recklessly made the representation.

A claim for innocent or negligent misrepresentation does not require proof of the representor’s state of mind.

Neither a contractual claim nor a claim in negligence requires a culpable state of mind.

Reliance

Is proof of reliance required, and are there any presumptions of reliance available to assist plaintiffs?

An action under section 1349 of the 2014 Act requires proof of reliance. All misrepresentation claims also require proof of reliance.

Proof of reliance is not required for actions in respect of insider trading or market manipulation under section 1369 of the 2014 Act.

Causation

Is proof of causation required? How is causation established?

Causation is required to be established in relation to each of the statutory and common law claims referred to in question 5.

In claims for fraudulent misrepresentation, where the plaintiff establishes that he or she has suffered loss by making a payment induced by the misrepresentation, the burden shifts to the defendant to establish that the plaintiff has not suffered a loss.

Other elements of claim

What elements present special issues in the securities litigation context?

The rules of civil procedure that operate in Irish courts do not provide for class actions. Also, third-party funding of litigation is not normally permitted in Ireland, though there are exceptions. Where there are many plaintiffs whose claims arise from the same circumstances, a procedure is sometimes adopted whereby one case is heard first as a representative action and is then followed by the other cases on the basis that the remaining plaintiffs either agree to be bound by the result of the representative case or alternatively that the result of the representative case, while not binding on the parties, will be of particular precedential value in determining particular issues common to many of the remaining cases.

Limitation period

What is the relevant limitation period? When does it begin to run? Can it be extended or shortened?

In the case of a claim for misstatements in or omissions from a prospectus under section 1349 of the 2014 Act, no time limit is specified in the Act, but it is likely a six-year limitation period applies.

In a claim for a breach of Irish market abuse law the relevant limitation period is two years from the contravention concerned.

For any common law claim in contract or in tort, the relevant limitation period is six years from the date the cause of action accrues. In contractual claims the cause of action accrues when a breach of the contract occurs and in tort claims when the loss or damage is suffered.

In Gallagher v ACC Bank [2012] IESC 35, the Irish Supreme Court held that where a plaintiff invested in a bond that resulted in an immediate loss, time began to run from the date of investment (even though the loss could not be fully quantified). Where a plaintiff claims that he or she was sold a wholly unsuitable product then the plaintiff is deemed to have suffered loss on the date of the investment by reason of the unsuitability of the product even if the plaintiff has not suffered any specific financial loss.

Where the cause of action is based on fraud, or the right of action is concealed by fraud, the period of limitation does not begin to run until the plaintiff has discovered the fraud or could with reasonable diligence have discovered it.

Defence, remedies and pleading

Defences

What defences present special issues in the securities litigation context?

In relation to misstatements in and omissions from a prospectus, section 1350 of the 2014 Act provides various defences to the categories of persons (outlined in question 2) who may be held liable under section 1349. These defences may be broadly characterised as follows: (i) a withdrawal of consent to the issue of the prospectus; (ii) no knowledge of or consent to the issue of the prospectus; or (iii) reasonable belief in the truth of statements in the prospectus.

In respect of claims for misrepresentation in contract law defendants may be able rely on the defence of waiver where there exist non-reliance or ‘no representation’ clauses in the contract between the parties.

Remedies

What remedies are available? What is the measure of damages?

In a claim under section 1349 of the 2014 Act, a plaintiff is entitled to be recompensed for losses incurred as a result of those misstatements or omissions.

In a claim for market abuse pursuant to section 1369 of the 2014 Act, the wrongdoer is liable:

  • to compensate any other party to the transaction who sustained losses for the difference between the price at which the financial instruments were acquired or disposed of and the price at which they would have been likely to have been acquired or disposed of if the relevant information had been available to the plaintiff at the time the transaction occurred; and
  • to account to the company that issued the financial instrument concerned for any profit accruing to the person from acquiring or disposing of the instrument.

In tort claims, including claims for negligent misstatement, damages will be awarded to restore the plaintiff to the position he or she was in before the commission of the tort, subject to the requirement that the damage be foreseeable.

In contract claims damages are intended to place the plaintiff in the position he or she would have been in had the contract been performed. In a case of misrepresentation, the contract may be rescinded in order to return the parties to their original position unless this is not possible, or a third party is prejudiced. In a claim for negligent misrepresentation damages are based on loss (including consequential loss) following from the misrepresentation.

In fraud or deceit, the defendant is bound to make reparation for all the damage flowing directly from the transaction. Although such damage need not have been foreseeable, it must have been directly caused by the transaction.

Punitive or exemplary damages may exceptionally be awarded where a court considers that it is appropriate to punish a defendant and to express the court’s disapproval in respect of the nature of the wrong that has been committed or the manner of its commission.

Pleading requirements

What is required to plead the claim adequately and proceed past the initial pleading?

It is necessary to set out the facts relied upon to establish the relevant statutory or common law causes of action previously referred to and to identify the remedies sought.

Claims for fraud or deceit and breach of trust must be fully particularised.

If a plaintiff intends to rely on expert evidence, the statement of claim must disclose that intention or proposal and identify the field of expertise and the matters on which expert evidence will be offered.

Procedural defence mechanisms

What are the procedural mechanisms available to defendants to defeat, dispose of or narrow claims at an early stage of proceedings? What requirements must be satisfied to obtain each form of pretrial resolution?

The following procedures are available to defendants to defeat, dispose of or narrow claims at an early stage of proceedings.

Security for costs

An application can be made for security for costs where there is a bona fide defence and a plaintiff resides outside the EU and where a corporate plaintiff will be unable to pay the costs. The amount of security is addressed in question 26.

Application to dismiss for failure to disclose a cause of action

An application can be brought to dismiss the plaintiff’s claim if the facts pleaded by the plaintiff in the statement of claim do not on their face disclose a cause of action.

Lodgements and Calderbank letters

A defendant can pay into court a sum of money in satisfaction of the plaintiff’s claim. If the plaintiff does not accept the sum of money and is ultimately awarded less than that sum following the determination of the proceedings the defendant will usually be entitled to the costs of the proceedings from the date on which the lodgement was made (Reaney v Interlink [2018] IESC 13).

If a plaintiff seeks a remedy other than damages a defendant may send a Calderbank letter to the plaintiff, which is a letter containing a without prejudice (save as to costs) offer to settle the proceedings, but that may be relied upon by the defendant in an application for costs if the offer is not accepted and the plaintiff receives less than the sum offered.

Trial of a preliminary issue or modular trial

Either party can bring an application seeking to have an issue of law that arises in a particular case determined prior to the trial. To succeed in such an application, it is necessary to establish that there is a net issue of law arising, which may if the facts are assumed in the plaintiff’s favour determine the case. Exceptionally, a modular trial may be ordered in a complex or lengthy case, if the determination of a particular issue will determine the case or significantly shorten the trial.

Mediation

Either party can apply to the court to invite the parties to use an alternative dispute resolution (ADR) process such as mediation, to resolve the dispute. While the court cannot force the parties to embark on mediation, there may be cost implications for a party that refuses to participate in an ADR process as the court has specific power to take such a refusal into account when determining costs applications.

Application to dismiss for want of prosecution

Where a plaintiff has issued a claim, but fails to meet the time limits stipulated by the rules of court a defendant may apply for the dismissal of the claim, although such applications are usually not granted in the absence of repeated non-compliance and prejudice.

Liability

Secondary liability

Are the principles of secondary, vicarious or ‘controlling person’ liability recognised in your jurisdiction?

These principles are recognised in Irish law.

Claims against directors

What are the special issues in your jurisdiction with respect to securities claims against directors?

The law on directors’ duties is primarily concerned with the duties owed by a director to the company itself rather than to shareholders or third parties. However, there may be circumstances in which a director may owe fiduciary duties to shareholders. Although there exists little judicial guidance on the nature of the duty that may be owed by directors to shareholders, if a director has assumed a particular obligation to a shareholder and that obligation has not been discharged, it may be possible for a plaintiff to establish that a director owed fiduciary duties to him or her.

The statutory remedies under section 1349 of the 2014 Act are available against directors of the issuer of the prospectus. The statutory defences referred to in question 12 are available to directors. Section 1351 provides for restrictions on liability in respect of non-equity securities.

Claims against underwriters

What are the special issues in your jurisdiction with respect to securities claims against underwriters?

Under section 1348, an underwriter is not deemed to be a promoter or a person who has authorised the issue of the prospectus and is therefore excluded from liability under section 1349 of the 2014 Act.

The range of common law claims in tort and contract for negligence, negligent misstatement, fraud, breach of contract and misrepresentation may be available against underwriters arising out of any representations made by underwriters of an issue of shares.

Claims against auditors

What are the special issues in your jurisdiction with respect to securities claims against auditors?

The duties owed by the auditor of the company are owed to the company. While third parties such as shareholders will not normally be entitled to rely on the contract between the auditor and the company, it may be possible to establish that the auditor owed a duty of care to a third party where it is claimed that reliance on inaccurate information negligently presented by the auditor led to economic loss. In order to establish such a claim for negligent misstatement a plaintiff would be required to prove that the loss was reasonably foreseeable and that there was a sufficient degree of proximity between the statutory auditor and the plaintiff and that it was reasonable to impose a duty of care. Statutory auditors may include a disclaimer in their report that indicates that the report is made solely to the company’s members. Such a clause may be effective to exclude liability to third parties depending on the circumstances of the case.

An auditor who has given his or her consent to the inclusion of a statement made by him or her in a prospectus may also be liable under section 1349 of the 2014 Act for loss and damage arising from any untrue statement purporting to be made by him or her as an expert in the prospectus to persons who have acquired any securities on the faith of the prospectus. This is subject to the defences that are available under section 1350, referred to in question 12.

It is not possible for a company to exclude the liability of an auditor or to indemnify an auditor against any liability to third parties (whether by way of a provision in the constitution of the company or by contract) for negligence, default, breach of duty or breach of trust that he or she may be guilty of in relation to the company. Any provision that attempts to exclude such liability will be void, by virtue of section 235 of the 2014 Act.

Collective proceedings

Availability

In what circumstances does your jurisdiction allow collective proceedings?

The rules of civil procedure do not provide for class actions. At the discretion of the court the ad hoc procedure described in question 10 can be applied to deal with multiple plaintiff claims.

Opt-in/opt-out

In collective proceedings, are claims opt-in or opt-out?

The ad hoc procedure described in question 10 is opt-in.

Damages

Can damages be determined on a class-wide basis, or must damages be assessed individually?

Damages must be assessed individually.

Court involvement

What is the involvement of the court in collective proceedings?

There are no collective proceedings as such apart from the ad hoc procedures described in question 10.

Regulator and third-party involvement

What role do regulators, professional bodies, and other third parties play in collective proceedings?

Regulators, professional bodies and other third parties play no part in collective proceedings

However, a person, a partnership or a company (with a turnover of €3,000,000 or less) who is a customer of a regulated financial service provider (which includes, for instance, an investment company or credit institution providing investment services), can make a complaint to the Financial Services and Pensions Ombudsman, an independent officer who adjudicates complaints from consumers, relating to the provision of a financial service or the failure to provide a requested service. A group of persons can include limited companies. The Ombudsman can direct that compensation (limited to €500,000) be paid to such groups of persons and such directions may be enforced by the courts. A consumer is not entitled to make a complaint if the conduct complained of is or has been the subject of legal proceedings. If a consumer embarks upon a complaint to the Financial Services Ombudsman, he or she is not entitled to initiate litigation in relation to the subject of the complaint. However, there is a right of appeal to the court from a decision of the Financial Services Ombudsman.

The Central Bank of Ireland has the power to conduct an inquiry into suspected contraventions of designated financial services legislation (pursuant to section 33AO of the Central Bank Act 1942) and to impose a variety of sanctions including a direction that the financial services provider refund all or part of an amount of money charged or paid for the provision of a financial service.

The Central Bank of Ireland also has the power under section 43 of the Central Bank (Supervision and Enforcement Act 2013) to direct a financial services provider to make appropriate redress to customers where it is satisfied that there have been widespread or regular relevant defaults by a financial services provider. Such defaults include contraventions of a broad range of financial services legislation, including the MIFID Regulations 2017 and the UCITS Regulations 2011 (as amended). It is possible that actions taken by the Financial Services Ombudsman or the Central Bank in an individual case could have an impact on investors’ strategy or prospects in individual or collective actions.

Funding and costs

Claim funding

What options are available for plaintiffs to obtain funding for their claims?

The Irish Supreme Court has recently confirmed that third-party funding of litigation is not permitted in Ireland. In Persona Digital Telephony Limited and Sigma Wireless Networks Limited v Minister for Public Enterprise [2017] IESC 27, the court decided that the torts and crimes of maintenance and champerty, which respectively prohibit the giving of assistance by a party who has no interest in litigation to a party to that litigation and the receipt of a share of the litigation proceeds by the party giving assistance, have been retained in Ireland.

In the case of Thema International Fund PLC v HSBC Institutional Trust Services (Ireland) Limited and others [2011] IEHC 357 the Irish Commercial Court confirmed that if a third party has a legitimate interest in litigation, the funding of litigation by that third party is permissible. A shareholder or creditor of a company that is a party to litigation might be considered to fall within such a category. The Thema decision also makes it clear that an order for costs may be made against such a third party by the court.

It is not permissible for a party to assign a right to litigate to another party. In SPV Optimal Osus Ltd v HSBC Institutional Trust Services (Ireland) Ltd [2018] IESC 44, the Supreme Court decided that the assignment of a claim in relation to an investment in Bernard Madoff Investments was void and unenforceable and contrary to public policy as it was champertous and dismissed the claim. This judgment is under appeal to the Supreme Court.

After the event (ATE) insurance, which allows litigants to insure against the cost of paying their opponents legal costs if they are unsuccessful, is permissible in Ireland (Greenclean Waste Ltd v Leahy p/a Maurice Leahy & Co Solicitors (No. 2) [2014] IEHC 314).

Costs

Who is liable to pay costs in securities litigation? How are they calculated? Are there other procedural issues relevant to costs?

The normal rule that applies in Ireland is that costs follow the event meaning that they will be awarded to the successful party. Costs are awarded on a party-to-party basis, meaning that they will not cover all the costs of a successful plaintiff. They should cover approximately 50 to 75 per cent of those costs. If agreement cannot be reached on costs, the costs can be determined by an independent arbiter known as the taxing master. His or her decisions can be appealed to the court.

As explained in question 15, a defendant can, in certain circumstances, seek security for costs.

In the case of an individual plaintiff, the court will usually order that the plaintiff provide security for one-third of the plaintiff’s costs, but it may be a higher percentage in the case of a company (Coolbrook Developments Ltd v Lington Developments Ltd [2018] IEHC 634).

The making of a lodgement by a defendant may militate against the defendant’s prospects of success in an application for security for costs however. In Pagnell v OCE Ireland Ltd [2015] the Court of Appeal held that if a defendant makes a substantial lodgement (even if the lodgement is only a fraction of the claim) that this is an acknowledgment of the merits of a claim and that it would be inappropriate to make an order for security for costs in those circumstances.

Investment funds and structured finance

Interests in investment funds

Are there special issues in your jurisdiction with respect to interests in investment funds? What claims are available to investors in a fund against the fund and its directors, and against an investment manager or adviser?

The main types of fund structure in Ireland include unit trusts, common contractual funds, investment companies and Irish collective asset management vehicles. These may be established as UCITS and alternative investment funds.

There are two markets on which funds can have their shares listed on the ISE: the MSM, which is a regulated market as defined under MiFID and the GEM, which is an exchange-regulated market and Multilateral Trading Facility (MTF) as defined under MiFID.

Legislation enacted in recent years provides for a range of claims by investors for losses incurred by investment funds both against directors in the case of certain funds and against third-party trustees or depositaries. These include actions under the UCITS Regulations 2011, under the Investment Funds Companies and Miscellaneous Provisions Act 2005 (as amended) and under the Irish Collective Asset Management Vehicles Act 2015 (as amended).

However, individual investors in a fund (as distinct from the fund itself) are not entitled to claim against third parties for losses sustained by the fund due to the common law rule against reflective loss, which provides that a shareholder in a company cannot recover losses that are merely reflective of the company’s loss. In Alico Life International Ltd v Thema International Fund Plc and HSBC Institutional Trust Services [2016] IEHC 363, the High Court found that the trustee or depositary of the fund operated by Thema was not liable to the plaintiffs who were individual investors in Thema both because of the rule against reflective loss and because the plaintiffs as individual investors did not have a remedy against the trustee under the UCITS Regulations.

The claims listed in question 5 may also be available to plaintiffs who have sustained losses in investment funds.

Structured finance vehicles

Are there special issues in your country in the structured finance context?

Special purpose vehicles (SPVs) are commonly used in Ireland for structured finance transactions. SPVS are established in Ireland under section 110 of the Taxes Consolidation Act 1997, which permits qualifying Irish resident SPVs to engage in an extensive range of financial and leasing transactions in a tax neutral manner. Section 110 applies to companies involved in the holding or management of a broad range of ‘qualifying assets’, the market value of which is not less than €10 million. A qualifying asset consists of any financial asset or any interest in a financial asset, commodities or plant and machinery. Financial assets include: shares, gilts, bonds, foreign currencies and all kinds of futures, options, currency and interest rate swaps and similar instruments including commodity futures and commodity options, invoices, all types of receivables, obligations evidencing debt (including loans and deposits), leases and loan and lease portfolios, acceptance credits and all other documents of title relating to the movement of goods, bills of exchange, commercial paper, promissory notes and all other kinds of negotiable or transferable instruments, carbon offsets and contracts for insurance and contracts for reinsurance.

Securities issued by an Irish SPV may, once the prospectus has been approved by the Irish Central Bank, be accepted throughout the EU for public offers and admission to trading on regulated markets under the EU Prospectus Directive.

The claims and remedies available to structured finance trustees, investors and financial guarantee insurers are the same as those outlined in questions 5 and 13. While section 1349 of the 2014 Act applies to prospectuses that concern SPVs, such liability is restricted by section 1351 of the 2014 to the offeror or the person who has sought the admission of the securities to trading on a regulated market or the guarantor, unless the prospectus provides otherwise or that person is convicted of a criminal offence under Irish prospectus law.

Cross-border issues

Foreign claimants and securities

What are the requirements for foreign residents or for holders of securities purchased in other jurisdictions to bring a successful claim in your jurisdiction?

There are no special standing rules. Once the Irish courts have jurisdiction they will entertain claims from any person with a right of action. Unless it is chosen by the parties as the governing law, Irish law is presumed not to have extra-territorial effect (Chemical Bank v McCormack 1983 ILRM 350).

Foreign defendants and issuers

What are the requirements for investors to bring a successful claim in your jurisdiction against foreign defendants or issuers of securities traded on a foreign exchange?

Jurisdiction can be established under the Brussels I Regulation (Council Regulation 121/4/2012 (recast)) or the Lugano Convention. Where they do not apply the Irish court will give effect to a choice of jurisdiction clause. It will also grant leave to serve out of the jurisdiction in certain cases pursuant to Order 11, Rule 1 of the Rules of the Superior Courts. Leave, for example, is granted where the claim is brought in respect of a contract made within the jurisdiction or is made through an agent trading or residing within the jurisdiction, or is governed by Irish law or where the tort is committed within the jurisdiction or any person out of the jurisdiction is a necessary or proper party to an action properly brought against some other person duly served within the jurisdiction.

Multiple cross-border claims

How do courts in your jurisdiction deal with multiple securities claims in different jurisdictions?

Where proceedings involving the same cause of action and between the same parties are brought in the courts of different contracting states, any court other than the court first seised must of its own motion stay the proceedings until such time as the jurisdiction of the court first seised is established. Where the jurisdiction of the first court seised is established any other court must decline jurisdiction in favour of that court.

In cases where the Brussels I Regulation doesn’t apply, the Irish courts have the discretion to grant a stay on proceedings initiated in this jurisdiction on the basis that there is another more appropriate forum for the hearing of the action, which is usually assessed by determining the jurisdiction that the proceedings have the most real and substantial connection with.

Under the Hague Convention on Choice of Court Agreements, if the parties agree that the courts of a contracting state to the Convention have jurisdiction to determine disputes between them, the courts of that contracting state will have jurisdiction to decide disputes to which the agreement applies, and the courts of other contracting states must suspend or dismiss proceedings to which the agreement applies subject to certain limited exceptions.

Enforcement of foreign judgements

What are the requirements in your jurisdiction to enforce foreign-court judgments relating to securities transactions?

The Brussels I Regulation (recast) provides that a judgment given in a member state, which is enforceable in that member state, shall be enforceable in the other member states without any declaration of enforceability being required. An application for enforcement is made ex parte to the Master of the High Court based on affidavit evidence. The procedural rules governing an application for the enforcement of foreign judgments under the Brussels and Lugano Convention are the same as those that apply in respect of the Brussels I Regulation (recast).

Where a judgment is delivered by the courts of a state that is not a member state of the EU or a contracting state of either the Brussels or Lugano Convention, common law rules govern the question of enforceability of that judgment. The judgment that it is sought to enforce must be final and conclusive and must be for a definite sum. The plaintiff must also establish that the decision of the foreign court was by a court of competent jurisdiction. In accordance with the rules of private international law , an Irish court may deem a foreign court to be competent for the purposes of enforcement if the following criteria are met:

  • the defendant must have been present in the foreign country at the time of the service of the proceedings (in the case of a company this means that it conducts business at an address in the foreign country); or
  • if the defendant has submitted to the jurisdiction of the foreign court either by voluntarily appearing in the proceedings or if the defendant agreed to submit to the jurisdiction of the court or if the defendant was the claimant or counterclaimant in the foreign proceedings.

Alternative dispute resolution

Options, advantages and disadvantages

What alternatives to litigation are available in your jurisdiction to redress losses on securities transactions? What are the advantages and disadvantages of arbitration as compared with litigation in your jurisdiction in securities disputes?

Ireland is an international centre for arbitration and arbitration is governed by the Arbitration Act 2010, which gives statutory effect to the Model Law.

Mediation is a further alternative to litigation and is a process in which the parties to the dispute select a mutually acceptable independent third party, the mediator, who will assist them in arriving at an acceptable solution to the conflict or dispute. The mediator has no decision-making power but acts as a facilitator between the parties to assist them in reaching a voluntary settlement. Mediation rests entirely on the parties’ agreement and is not binding unless a settlement is reached. Mediation also offers flexibility to participants who may exercise more control over the process and the outcome. It may also result in a saving of costs, if successful.

UPDATE & TRENDS

Recent developments

What are the most significant recent legal developments in securities litigation in your jurisdiction? What are the current issues of note and trends relating to securities litigation in your jurisdiction? What issues do you foresee arising in the next few years?

From 21 July 2018, under the new Prospectus Regulation (Regulation(EU) 2017/1129), an offer of securities to the public with a total consideration in the EU of less than €1 million (calculated over a 12-month period) is exempt from the obligation to publish a prospectus. However, the Regulation allows member states to increase that threshold up to €8 million and Ireland has increased the threshold to €5 million under the Prospectus Directive (2003/71/EC) Amendment Regulations 2018.

The compensation which may be awarded by the Financial Services and Pensions Ombudsman has been increased from €250,000 to €500,000 under the Financial Services and Pensions Ombudsman (Compensation) Regulations 2018.