In an interim ruling of 12 November 2010, the Amsterdam Court of Appeal assumed jurisdiction to declare an international collective settlement binding in a case where none of the potentially liable parties and only some of the potential claimants are domiciled in the Netherlands. Referring to the recent US Supreme Court opinion in Morrison v. National Australia Bank, which limited the scope of securities class actions brought in the US on behalf of non-US claimants who purchased shares from non-US defendants on non-US exchanges, the Amsterdam Court of Appeal indicated its awareness of the need for global resolutions of international securities class actions, such as where a collective settlement approved by a Dutch court complements a US settlement for US claimants.
In two earlier rulings, the Court of Appeal had approved collective settlements with an international scope while assuming jurisdiction on the basis of article 6(1) of the Brussels I Regulation and article 6(1) of the Lugano Convention. These decisions related to an Anglo-Dutch company (Shell) and a Dutch company (Vedior) that had offered compensation for losses allegedly suffered by shareholders. In its most recent ruling, the Court of Appeal based its jurisdiction on articles 6(1) and 5(1) of the Brussels I Regulation and articles 6(1) and 5(1) of the Lugano Convention, finding that the place of performance of the settlement agreement is the Netherlands. The companies involved in this settlement are Converium Holding AG, a Swiss reinsurance company, and Zürich Financial Services Ltd. Until its IPO in 2001, Converium Holding AG was a wholly-owned subsidiary of Zürich Financial Services Ltd.
However, the Court of Appeal's ruling is provisional; interested parties may still advance a different view on the jurisdiction issue during the fairness hearing. If the court reaffirms its decision on jurisdiction and also declares the settlement agreement final, this decision will bind all eligible purchasers of the relevant company's securities who, after having been given notice, do not exercise their right to opt out. However, it remains undecided whether, assuming the settlement agreement is declared final, a court in any of the other EU member states or in Switzerland, Iceland or Norway would indeed recognise such a decision pursuant to the Brussels I Regulation or Lugano Convention and give it preclusive effect. More details about the ruling can be found here.
The Netherlands is the only European country where a collective settlement of mass claims can be declared binding on an entire class on an “opt out” basis. Under the Dutch Collective Settlement of Mass Damage Claims Act, this has been possible since the summer of 2005. Once the Court of Appeal approves the settlement and the opt-out period has expired, all claimants who have not exercised their opt-out right are bound by the settlement. The Dutch business community supported the legislation. In contrast, collective actions for monetary damages are not allowed in the Netherlands, although collective actions for other forms of relief have been allowed since 1994.