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Procedure

i Tools for managing group litigationAssignment of claims

To effectively manage mass litigation, it might be appropriate to group all claims under the same claimant to simulate to some extent the effects of a representative action.

As in most jurisdictions, claims can be transferred in Luxembourg by means of an assignment according to Articles 1689 et seq. of the Luxembourg Civil Code. To be effective, it is necessary to either notify the assignment to the debtor or to have the debtor specifically agree to the assignment.

Assuming Luxembourg law applies to a given assignment, it would seem paramount to pay attention Article 1699 of the Civil Code, which provides that in case of an assignment of a litigious right against consideration, a debtor is allowed to exercise his or her right of withdrawal. Put simply, once a litigious right is transferred, a debtor is, in essence, entitled to extinguish the transferred claim by repaying the transfer price to the assignee with interests as of the date of the assignment. Such a right of withdrawal is contingent upon the right being litigious, meaning, according to Article 1700 of the Civil Code, that court proceedings have been commenced and that the right has been challenged on the merits.

Thus, to enable the assignee to mitigate the effects of the right of withdrawal, it would seem necessary to assign the claim before any legal proceedings are initiated against the debtor.

Article 1701 nevertheless provides that the right of withdrawal does not apply where (1) the assignee is a co-heir or co-owner, (2) the assignment is in payment of a claim owed to the assignee, or (3) if the litigious right is transferred to the possessor of an inheritance that is subject to the litigious right so transferred.

It would, in principle, be possible to constitute a special purpose vehicle to collect the various claims through different assignments and subsequently commence proceedings against the defendants.

The obvious advantage of assigning all claims to one single assignee is that the assignee is able to bring all claims in one single lawsuit against the defendants.

Joinder of related proceedings

If group claims are nevertheless brought individually, it would still be possible to have them consolidated into one single judgment and a single set of proceedings by applying for a joinder based on Article 206 of the New Code of Civil Proceedings.

According to case law, in the interest of the good administration of justice, two or more isolated proceedings can be joined by a court of law if they are related (connexes), have a strong affinity, are closely correlated or are so interdependent that there may be a risk of disparity should the claims be tried and judged separately.

However, cases pending before different kinds of courts, under different procedures or in different instances cannot in principle be joined. This applies, for example, to multiple claims brought separately before the commercial section of the civil courts either under the standard civil written procedure or the commercial oral procedure. Parties can, however, agree to adjourn the pleadings under the commercial oral procedure until the proceedings conducted under the standard written procedure reach the pleadings phase.

When faced with claims that are normally attributed to either the Justice of the Peace or the District Court because of the amounts in dispute, it is theoretically possible to try and join all claims together, provided the various claims are filed before the same Court. Article 18 of the New Code of Civil Procedure allows the parties to agree (either tacitly, or expressly through a signed joint declaration in Court) bring proceedings before the Justice of the Peace where the amount under dispute would normally attribute the case to the District Court. The District Court's jurisdiction in terms of value is considered to be of public order, but a lower value claim can exceptionally be brought before it in case it is related to a claim that falls under its own jurisdiction.

It should also be highlighted that class actions can to some extent be hypothetically simulated through the use of joinder proceedings in conjunction with a principal claim brought by a representative organisation (as discussed in Section I).

Test cases

Test cases are not provided for by law. In the event of mass claims, in order to save on time and expenses, test cases are used in practice with the consent of both the litigating parties and the courts to try one specific case and adjourn or suspend all other related claims pending the outcome of the elected test case.

Test cases have proven their effectiveness and have specifically been implemented during the Madoff scandal when custodian banks were sued massively in Luxembourg for restitution by the victims. However, formally speaking, res judicata rules do not apply from one case to another.