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Market trends and climate

Market trends and climate

What is the general state of the securities markets in your jurisdiction, including any notable trends and recent transactions?

PwC Luxembourg 2017 trend figures reveal the following:

  • Bonds and other transferable securities increased from €27.95 billion in 2015 to €29.04 billion in 2016.
  • Eight out of 10 banks could increase their portfolio of bonds and other transferable securities by €1.4 billion, resulting in an overall increase of 3.9%.
  • This growth is primarily attributable to KBL European Private Bankers SA (up €0.7 billion). The bank strengthened its bond portfolio and reduced the volume of its interbank transactions.
  • Compagnie de Banque Privée Quilvest SA also significantly increased its portfolio by €144.7 million (+31.9%), having invested €100 million in undertakings for the collective investment of transferable securities.

The largest percentage increase was at Société Nationale de Crédit et d’Investissement (+€0.1 billion; +98.5%) due to its participation in the capital increase of ArcelorMittal SA amounting to €95 million in order to maintain the percentage held.

Regulatory framework and enforcement


What is the primary legislation governing the offer and trade of securities in your jurisdiction (both primary and secondary markets)?

At present, the main legislation governing the offer and trade of securities is the Law of 10 July 2005 implementing EU Directive 2003/71/EC on the prospectus to be published when securities are offered to the public or admitted to trading and amending EU Directive 2001/34/EC. However, this directive has been repealed by EU Regulation 2017/1129 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market and repealing EU Directive 2003/71. According to Article 49 of EU Regulation 2017/1129, which introduces different application dates for certain provisions, the regulation will apply fully from 21 July 2019 and must be read together with the European Securities and Markets Authority questions and answers, updated pursuant to the new regulation, in addition to the local framework currently set forth in the Luxembourg Financial Services Authority (CSSF) Circulars 15/632 and 16/635, and the related CSSF Q&A, which will likely be adapted once the 2017 regulation becomes fully applicable.

Other legislations governing the trading of securities on regulated markets are the Transparency Law 2008 and the Grand-ducal Regulation 2008, implementing the EU Transparency Directive (2013/50/EU) amending EU Directive 2004/109/EC on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market. The Transparency Law governs the obligations of the issuer (and related third parties) resulting from the listing and admission to trading on the regulated markets of the issuer's securities. These are mainly the obligations of reporting to the CSSF and disseminating the regulated information.

Finally, the EU Market Abuse Regulation (596/2014) and repealing EU Directives 2003/6/EC, 2003/124/EC, 2003/125/EC and 2004/72/EC aim to prohibit unlawful behaviour (eg, insider dealing, market abuse and market manipulation) when intending to trade or trading securities on regulated markets. The Law of 23 December 2016 was voted for in Luxembourg to complete the EU Market Abuse Regulation.

The following domestic laws have also been adopted with regard to the offer and trade of securities in order to comply with EU policies:

  • EU Regulation of 21 December 2017 relating to the fees to be levied by the CSSF;
  • the Law of 10 May 2016 transposing:

o EU Directive 2014/91/EU on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities in regard to depositary functions, remuneration policies and sanctions; and

o EU Directive 2013/50/EU on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market;

  • the Law of 6 April 2013 on dematerialised securities;
  • the Law of 21 December 2012 on family office activities; and
  • the Law of 3 July 2012 transposing EU Directive 2010/73/EU on the prospectus to be published when securities are offered to the public or admitted to trading. 

Regulatory authorities and enforcement trends

Which authorities regulate the securities markets in your jurisdiction and what is the extent of their enforcement powers?

The CSSF is the national prudential supervisor regulating the securities markets. The CSSF aims to supervise and regulate the financial markets and the operators of regulated markets authorised in Luxembourg. The CSSF also monitors compliance with the rules governing access to and the functioning of the markets that these parties operate.

As part of its mission to supervise securities markets, the CSSF controls all financial information published by issuers of securities in order to ensure the compliance of financial information with applicable accounting standards.

The CSSF may enforce penalties against entities under its supervision in case of violation of the applicable financial sector regulations.

In particular, the CSSF can issue administrative fines under Article 25 of the Transparency Law since the law’s entry into force on 10 May 2016.

Have there been any notable public enforcement trends, including any key recent actions?

Recently, the CSSF has imposed several administrative penalties on credit institutions and finance professionals for failing to comply with their professional obligations in relation to the anti-money laundering requirements set forth in the Law of 12 November 2004 on the fight against money laundering and the financing of terrorism.

Further, according to the information on securities markets penalties published by the CSSF, many securities issuers were penalised for failing to comply with the obligation to publish a notification of major holdings within the required timeframe under Article 11(6) of the Transparency Law or to publish their financial report within the required timeframe. Pursuant to Articles 8 and 9 of the Transparency Law, if a person acquires or disposes of a shareholding in a company, following which the proportion of voting rights held by such person reaches, exceeds or falls below one of the thresholds listed in Article 8, the person must simultaneously notify the company and the CSSF of the proportion of voting rights that they hold as a result of the event.


Court system

How is the court system structured in your jurisdiction? Are there any specialist courts with jurisdiction over securities-related actions?

In Luxembourg, civil disputes are adjudicated by the civil and criminal branch of the judiciary system, which is divided into:

  • the lower judiciary courts;
  • the district courts; and
  • the Superior Court of Justice, comprising the Court of Appeal and the Supreme Court.

The district courts sit in criminal, civil and commercial matters for:

  • all cases not specifically attributed by law to any other court; and
  • claims exceeding €10,000 or for which the amount cannot be determined.

There are no specialised courts with jurisdiction over securities-related actions. Therefore, the district courts are the competent courts in such actions.

District court decisions are subject to appeal before the Court of Appeal.

Court of Appeal decisions may be challenged before the Supreme Court, which rules only on the correct application of the law.


What rules govern court procedure? Are there any provisions specific to securities cases?

The rules governing civil procedure are laid out in the Civil Procedure Code.

There are no specific provisions governing securities disputes.


What rules and procedures govern the appeal process?

The appeal process is governed by Article 571 onwards of the Civil Procedure Code.

The Court of Appeal re-examines cases previously judged in a court of first instance in civil, commercial, social and criminal matters.

Luxembourg law provides the following time limits to file an appeal:

  • for residents of the Grand Duchy of Luxembourg, 40 days from the date of notifying the party in person or via a written notification sent to the party’s domicile address; and
  • for parties living outside the Grand Duchy of Luxembourg, the appeal term is increased by 15, 25 or 35 days, depending on where the appellant resides.

Parties must be represented by a lawyer admitted to the Luxembourg Bar.

Parties will exchange arguments following a written procedure (exchange of briefs).

When both parties determine that the case has been sufficiently discussed, the instruction phase is closed and a date for pleadings before the Court of Appeal is scheduled.

The Court of Appeal decision may be referred to the Supreme Court.

Recent case law and litigation trends

Have there been any notable recent cases involving private securities claims or trends in private securities litigation?

There are several cases currently pending before the Luxembourg courts. These are linked to two major securities-related litigations involving:

  • insolvency cases connected to the Espirito Santo Group (one of the largest Portuguese retail banks, holding numerous companies with registered offices in Luxembourg and whose insolvency procedure was opened in 2014), involving a number of securities-related issues; and
  • the Madoff's Ponzi scheme (2009-2010) – one of the largest investment funds frauds in Europe.

Court approach to securities cases

Would you consider your jurisdiction to be a more claimant-friendly or defendant-friendly forum for securities litigation?

Luxembourg has a balanced jurisdiction with a business-friendly approach, without preference for claimants or defendants.

Cross-border litigation

How do the courts in your jurisdiction address cross-border securities litigation?

There are no specific treatments for cross-border securities litigation in Luxembourg.


Causes of action

Which causes of action can be asserted by claimants in relation to the offer and trade of securities and which are most commonly asserted?

Commonly asserted causes of action before the Luxembourg courts include:

  • enforcement measures;
  • interim measures;
  • internal investigations carried out by boards of managers or directors, or audit committees;
  • ut singuli actions; and
  • actions for non-compliance with the obligation to provide information or a duty to warn.

In addition, the Luxembourg Financial Services Authority (CSSF) is competent to:

  • receive complaints from customers of credit institutions or finance professionals which are subject to the CSSF’s supervision; and
  • act as an intermediary in order to seek amicable settlements for such complaints.

The CSSF acts in its capacity as a dispute resolution body, pursuant to EU legislation relating to the out-of-court resolution of consumer disputes, which was transposed into Luxembourg national law and introduced into the Consumer Code in 2016.

Directors’ and officers’ liability

In what circumstances and to what extent can directors and officers be held liable for misrepresentations, omissions or other fraudulent conduct in relation to the offer and trade of securities?

In Luxembourg, a ‘director’ is a person (legal or physical) who manages, among other things, a Luxembourg public limited company, while a ‘manager’ is a person (legal or physical) who manages, among other things, a Luxembourg limited liability company. However, ‘director’ will be used here to refer to both parties, as Luxembourg law makes no distinction between the two in terms of liability.  

Management errors and infringement of the law in relation to the offer and trade of securities will, in principle, fall under the general regime governing directors’ liability.

Directors’ liability is a matter of public order, irrespective of whether it concerns their liability to a company or third parties; therefore, it cannot be derogated, by contract or otherwise. However, this approach is divided in Luxembourg legislation (see “Can liability be limited in any way?”).

Under Luxembourg law, directors can bare civil liability for a company’s actions. In addition, criminal and fiscal provisions may be applicable in some situations. Finally, a director can hold special liability in case of insolvency of a company.

In terms of civil liability, a director may be liable towards:

  • the company itself on the grounds of management negligence and errors;
  • third parties or the company in the event that they have suffered a loss due to the director's infringement of either the law or the company’s articles of association; and
  • the shareholders, provided that they have suffered specific damage, distinct from the damage suffered by the company.

Can liability be limited in any way?

In principle, directors' liability is a personal liability of public order which cannot be limited towards third parties or the company.

However, certain legislation states that – taking into consideration the contractual relation between a director and a company (a link based on a mandate) – a company may limit the responsibility of directors towards itself. Thus, it may be considered valid for a clause or contract to limit a director’s responsibility towards the company for mismanagement and errors. However, since there is no known case law in Luxembourg addressing this, it remains to be seen how the courts would consider a clause limiting the responsibility of a director during litigation proceedings.

Notwithstanding the above, a director’s responsibility for breach of law and a company’s articles of association cannot be limited under any circumstances, nor can instances of fault or grave and wilful misconduct.

Luxembourg law also expressly provides for the discharge to a director (or board of directors) by the annual general meeting (AGM) of shareholders on the occasion of approving annual accounts of a company. (This option is provided only for société anonyme.)

In practice, shareholders will often resolve to approve or ratify directors’ actions or decisions during the AGM, in order to limit the directors' responsibility. However, the validity of the discharge granted in circumstances other than approval of annual accounts by the AGM is less clear.

Secondary liability

In what circumstances and to what extent can secondary actors (eg, attorneys, auditors and underwriters) be held liable for misrepresentations, omissions or other fraudulent conduct in relation to the offer and trade of securities?

Secondary actors can be held liable in the context of their duties and undertakings. They may be held liable to the extent that they have participated in misrepresentations, omissions or other fraudulent conduct in relation to the offer and trade of securities.

Can liability be limited in any way?

In Luxembourg, case law and Article 1150 of the Civil Code have confirmed the validity of limitation of liability clauses.

The purpose of such clauses is to reduce or eliminate the liability of a contractor for non-performance or improper performance of its obligations.

However, a limitation of liability clause is ineffective:

  • in case of fault or grave or wilful misconduct; or
  • if it limits the core obligation of the debtor.

The clause cannot in its substance permit the debtor to not execute its contractual obligations.

Under Luxembourg consumer law, the limitation of liability clause may be considered unfair if it creates a significant contractual imbalance between the professional and the consumer.

Eligible claimants

Who may file securities claims? Are there any restrictions on foreign claimants? Who are the most common claimants (eg, pension funds, institutional investors)?

As a general rule, claims holders are eligible to file claims. Complications can arise from claims held by a financial institution or via a commissioner agreement in the name of a third party. In such cases, a financial institution may be the eligible party to file the claim.

There are no particular restrictions on foreign claimants; however, non-EU claimants can be requested to post a deposit as a security for potential damages following an unsuccessful legal action .

There is no identified category of most common claimants.

Pleading and evidentiary standards

What pleading and evidentiary standards apply to securities claims, including with regard to:

(a) Proof of reliance on the relevant misrepresentation, omission or other fraudulent conduct?

Proof of reliance on the relevant misrepresentation, omission or other fraudulent conduct must be brought by the claimant. The claimant must also prove that the relevant misrepresentation, omission or other fraudulent conduct was decisive.

(b) Proof of loss causation?

The party which has suffered the loss bears the burden of proof of loss causation. This party must prove the causal relationship between the fraudulent conduct or misconduct and the suffered damage.

The damage must result directly from the misconduct.

(c) Materiality requirements?


(d) Scienter requirements?

Fraudulent intent is generally relevant only in cases of criminal offence.

In order for an action to constitute fraudulent intent, two conditions must be cumulatively met. The party must:

  • have known or have been aware that it was violating an applicable regulation; and
  • have acted intentionally.

(e) Any other requirements, standards or considerations?



What pre-trial disclosure/discovery mechanisms are available to support claims, if any?

Luxembourg does not follow discovery processes. Parties bear the burden of supporting their own claims.

Proceedings in Luxembourg are governed by the adversarial principle, which the judge must observe and enforce under any circumstances (Article 65 of the Civil Procedure Code).

Before the trial and during the proceedings, lawyers must disclose to their opponents all of the evidence that they intend to rely on.

A party may request the judge to order the other party to disclose a specific and determined document if, in the opinion of the requesting party, it is decisive for the dispute. The judge may accept or refuse such a request depending on the circumstances.

What rules and standards govern non-disclosure of documents on the grounds of professional privilege or other confidentiality considerations?

The violation of professional secrecy is a criminal offence under Article 458 of the Criminal Code, which provides the general regime for professional secrecy.

Banking secrecy, as a type of professional secrecy, is further governed by Article 41 of the Law of 5 April 1993 on the financial sector, as amended. Article 41 provides the scope of banking secrecy by stating that directors, members of the governing and supervisory boards, managers, employees and other persons employed by credit institutions and other financial sector professions are required to maintain secrecy regarding the information entrusted to them in the course of their professional business.

Article 41 was substantially amended by the new law voted in by the Luxembourg Chamber of Deputies on 6 February 2018. The aim of the amended law is to facilitate outsourcing by providing, subject to certain conditions, an explicit exception to the professional secrecy obligations for all intragroup outsourcing arrangements.

Lawyers also benefit from professional secrecy and any communications between lawyers or between lawyers and their clients are by default protected by professional secrecy. 

Interim relief

What interim measures are available to claimants in securities cases?

There are no specific provisions governing interim measures issued by the courts in cases relating to securities disputes.

However, under the Civil Procedure Code, interim measures are available:

  • in case of emergency and if there is no serious challenge;
  • to prevent imminent damage; and
  • to stop a manifestly unlawful act.

A judge sitting in interim proceedings cannot review the merits of the case and is entitled to issue an immediately enforceable order.

Statute of limitations

What is the statute of limitations for filing claims?

The standard time limit is set forth in Article 2262 of the Civil Code, which enacts a 30-year general law prescription.

A shorter time limit of 10 years is applicable in commercial matters.



What defences are available to defendant issuers and broker-dealers?

There are no particular defences available for defendant issuers and broker-dealers in the context of securities litigations.

Preliminary actions

What preliminary procedural mechanisms are available to defendants to counter claims, if any (eg, motions to dismiss)?

Defendants may challenge the admissibility of a case at the beginning of proceedings, before entering into a discussion on the merits of the case.

Defendants can also issue counter claims which will be considered simultaneously with the claim.

Damages and costs


What rules and standards govern the calculation and award of damages?

Under Luxembourg law, damages are calculated based on the losses suffered by the victim and the profits made by the responsible party.

The calculation of damages depends on the matter in which the dispute arose. The party claiming damages bears the burden of proof to demonstrate the damage suffered.

Are damages capped?

Damages are not capped.

Are punitive damages allowed?

Punitive damages are not allowed under Luxembourg law. 

Other remedies

Are any other remedies available?

In some cases, a claimant may request another party to execute its obligations, potentially with a daily penalty. However, these remedies are not frequently awarded.

Penalty clauses are also enforceable under certain conditions.


Who bears the costs of proceedings? Can this burden be shifted in any way?

Each party bears its own costs, including lawyers’ fees.

Only external costs (service costs) and a minor portion of other costs are allocated to the prevailing party.

A losing party can also be ordered to pay a procedural indemnity aiming to partially compensate costs that are not covered otherwise (Article 240 of the Civil Procedure Code).

There are no court fees applicable in Luxembourg.

How are costs calculated? Does interest accrue on costs?

Costs are calculated in accordance with a specific regulation. Interest does not accrue on costs calculated on this basis.

What rules and procedures apply to the provision of security for costs?

A defendant cannot request the court to order the plaintiff to provide security for costs.

However, when the plaintiff is living or domiciled in a foreign country which is not a member of the European Union or the Council of Europe, or which has not signed a dedicated convention with Luxembourg, the defendant may request the court to order a deposit of a certain amount of money with the Caisse de Consignation at the Luxembourg State Treasury (Article 257 of the Civil Procedure Code). The value of this deposit is calculated following an assessment of the proceedings’ costs and the potential damages.

Class actions

Are class actions or any other collective proceedings available for securities claims in your jurisdiction? If so, what is the procedure for their formation and what benefits do they afford claimants? Are class actions formed on an opt-in or opt-out basis?

Class actions are not available in Luxembourg.

Litigation funding


Is public or third-party litigation funding available in your jurisdiction? If so, what rules, standards and procedures apply?

Third-party funding is possible in Luxembourg.

There are no particular legal or regulatory measures applicable to third-party financing. However, rules of professional conduct must be applied in all cases.


Is insurance available to cover the costs of litigation?

Specific insurance contracts can cover future legal costs and other fees.

Insurance can cover expenses and fees for all civil and commercial proceedings, as well as enquiries and expert appraisals relating to criminal defence. Such expenses include legal fees and judicial costs (eg, witnesses, expert appraisals and bailiffs).


Rules and procedure

What rules and procedures govern the settlement of securities litigation?

Article 70 of the Civil Procedure Code provides that one of the judge's objectives is to conciliate the parties.

If the parties reach an agreement, the settlement agreement will be recorded in the minutes signed by the judge and the parties (Article 2044 of the Civil Code).

This signed agreement will constitute an enforceable title.

The parties may reach an agreement at any time in the process, particularly when the outcome of the dispute is considerably difficult to predict.

There are no specific provisions governing the settlement of securities litigation.


How common are settlements in securities-related cases?

Settlements are frequent in securities disputes. Parties often wish to avoid lengthy and costly proceedings. Moreover, confidentiality and the non-public aspect of settlements make this solution especially attractive for parties that do not want their name to be associated with public litigation (this can be significant for companies whose shares are listed, as court disputes can easily influence share prices).