In 2011, CDC Project 14 SA ("CDC"), a subsidiary of CDC Cartel Damages Claims Holding SA ("CDC SA"), filed a claim against Shell Petroleum N.V. and several other parties ("Shell c.s.") relating to an alleged cartel infringement on the market for paraffin-wax. CDC claims compensation for losses allegedly suffered by purchasers of paraffin-wax, who had assigned their claims to CDC. The assignments were governed by German law on the basis of a choice of law by the parties to the assignments.
Shell c.s. argued that the assignments to CDC were void under the applicable German law. They referred to a judgment issued in 2013 by the Landesgericht Düsseldorf in the cement cartel case (See our January 2014 newsletter article). In that case, the Landesgericht had ruled that the assignments of damage claims to another subsidiary of CDC SA were void because the assignments were contrary to the German public morals ("gute Sitten"). The violation of the public morals consisted of CDC SA's subsidiary not being able to pay for litigation costs made by the defendants, should it come to an adverse cost order at a later stage of the proceedings, which would lead to an unjustified shift of the whole risk for the proceedings' costs to the defendants. In the Dutch proceedings, Shell c.s. relied on this reasoning to argue that the assignments in the paraffin-wax case were also void under the applicable German law.
On 17 December 2014, the District Court of The Hague dismissed the challenge of Shell c.s. to the validity of the assignments. The District Court agreed with Shell c.s. that the moment of the assignment is in principle decisive when assessing whether the assignments are contrary to the public morals. The financial position of CDC at the time of the assignment is as such a relevant element. However, the decisive element is whether at the time of the assignments it was "objectively foreseeable" that the assignee would not be able to meet a possible future adverse cost order. In the German case, the Landesgericht had taken into account the development of CDC SA's subsidiairy's financial position after the assignments, more specifically, the official statement that it was not able to pay the court fees and certain statements of its directors during court sessions. The Court ruled that Shell c.s. insufficiently substantiated its claims by submitting nothing more than CDC's annual accounts and referring to the judgment in Germany. Furthermore, the Court noted that the security for procedural costs provided by CDC by way of a deposit was a clear distinction from the German proceedings.
The Court concluded that Shell c.s. had failed to sufficiently substantiate why it was objectively foreseeable that CDC would not be able to meet a future adverse cost order. Therefore, the Court dismissed the challenge of Shell c.s. to the assignments.