On March 14, 2016, Ageas (formerly, Fortis Bank) and several foundations representing the Fortis shareholders announced a EUR 1.204 billion settlement of shareholder claims and they are now seeking to declare the settlement legally binding on all shareholders under the 2005 Dutch Act on Collective Settlement of Mass Claims (the WCAM).1 Recently, the settlement was brought before the Amsterdam Court of Appeal to be declared legally binding upon all shareholders. The case currently pending before the Amsterdam Court of Appeal will further demonstrate whether the Netherlands is a feasible forum for class wide resolution of transnational disputes and can provide a feasible alternative to cases that can no longer be resolved in the United States, or practically anywhere else in the world.
The Ageas settlement marks a milestone in the shareholder litigation initiated against Fortis in Belgium, the Netherlands, and other countries in the aftermath of the 2007-2008 financial collapse.2 Since the 2010 U.S. Supreme Court decision in Morrison v. National Australia Bank3, it has become much more difficult to resolve such global securities actions under federal securities laws in the United States. As a result, non-American purchasers of securities in Fortis, a Belgian company, in non-American transactions may not be able to pursue their claims in the United States. These investors may increasingly look for alternatives, with one such possibility being WCAM.
The 2005 WCAM addresses mass tort claims and was first used in a medical product liability case concerning the DES synthetic estrogen hormone and alleged connected birth defects.4 WCAM has been applied to a series of cases, and more and more international cases. In short, WCAM provides for a settlement of class members’ claims on an opt-out basis, whereas most other non-American collective redress mechanisms, such as the English Group Litigation Order, are opt-in mechanisms.5 The parties to the settlement file a petition to the Amsterdam Court of Appeal that has exclusive jurisdiction to approve the settlement and declare it legally binding on the group members.
Because the Dutch legislature explicitly focused on US class actions while enacting WCAM in 2005, it shares certain features of US class actions, such as the opt-out mechanism, and several conditions concerning the ‘certification’ of the classes that must be satisfied. However, with WCAM, the Amsterdam Court of Appeal merely marginally judges the settlements to be fit to be declared legally binding. Further, there are key differences between the Dutch WCAM and US settlement class actions. First, the parties can only settle their claims under the WCAM; the Act cannot be used to litigate. Second, the party that represents the interest of the class members must be a foundation; it cannot be a private individual plaintiff. Third, the represented persons can still opt out after objections have been filed and after the court has approved the settlement.
WCAM was used for international settlements in two global securities settlements, one in 2009 concerning Royal Dutch Shell6, an English corporation with headquarters in the Netherlands and listed in the United States, the United Kingdom, and the Netherlands, and the other in 2012 concerning former Converium Holding AG and its parent, Swiss companies. Both settlements concerned a large number of non-Dutch shareholders. In fact, in the Converium cases7 only a small percentage of the class members were Dutch nationals. A key issue in those international settlements under WCAM concerned private international law. The EU Brussels I-bis Regulation8 provides adjudicative jurisdiction to the Dutch courts as soon as the “defendant”9 is incorporated in the Netherlands and the rendered judgments under WCAM should be recognized by other Member States’ courts thereafter.
A Dutch foundation can be incorporated easily on an ad hoc basis to represent foreign claimants. The Amsterdam Court of Appeal assumes jurisdiction relatively easily as demonstrated in the Converium case: the court upheld jurisdiction as to non-EU/EVEX class members because the Dutch foundation was a party to the settlement. Moreover, it is not required that each petitioner be representative for all persons involved. Besides, the Amsterdam court of appeal explicitly held that (i) the Netherlands is the only national legal system in the EU that authorizes opt-out collective settlements, (ii) it would be very difficult for the non-U.S. shareholders who were excluded from the U.S. settlement to get compensation outside the United States, and it was improbable that they would get compensation in the United States, and (iii) the non-US shareholders could opt out and start individual proceedings if they did not want to be legally bound by the WCAM settlement. And finally, the WCAM cases are to be recognized and enforced across the EU.10 GT will continue to monitor the Ageas WCAM procedure closely and provide updates as appropriate.