Ageas (the former Fortis) and several organizations representing Fortis shareholders announced yesterday a EUR 1.204 billion settlement of shareholder claims under the Dutch Act on Collective Settlement of Mass Claims (the “WCAM”). The proposed settlement, which is subject to approval by the Amsterdam Court of Appeal, marks the reemergence of the Netherlands as a potential forum for classwide resolution of transnational disputes that can no longer be resolved in the United States (or virtually anywhere else in the world).
The proposed settlement arises from shareholder litigation filed against Fortis in Belgium, the Netherlands, and elsewhere following the 2007/2008 financial collapse. Such global securities actions would traditionally have been filed and, perhaps, settled in the United States under the federal securities laws. However, in 2010, the U.S. Supreme Court held in Morrison v. National Australia Bank that the federal securities laws apply only to misstatements or omissions made in connection with the purchase or sale of (i) securities listed on a U.S. exchange and (ii) any other securities in U.S. transactions. Non-U.S. purchasers of securities of Fortis (a Belgian company) in non-U.S. transactions thus could not pursue their claims in the United States.
Enter the WCAM. The Netherlands enacted the WCAM in 2005 to address mass tort claims filed by Dutch DES victims, but the statute’s use has since been expanded through a series of increasingly international cases. The WCAM provides for settlement of class members’ claims on an opt-out basis – unlike most other non-U.S. procedural rules, which, if they allow classwide resolutions at all, generally do so only on an opt-in basis. The settling parties file a petition asking the Amsterdam Court of Appeal (which has exclusive jurisdiction over WCAM proceedings) to approve the proposed settlement and declare it binding on the class members, who are viewed as defendants in the petition proceeding.
The WCAM procedure is somewhat analogous to what U.S. lawyers know as settlement class actions, but with three key differences: (i) the statute cannot be used to litigate claims on a classwide basis, but only to settle them; (ii) the party representing the class members must be a foundation, not a private plaintiff or other injured party; and (iii) class members do not need to decide whether to opt out until after objections have been filed and the court has approved settlement. Thus, unlike in U.S. class actions, class members do not need to choose between objecting and opting out. They can stay in the class, object, and see what happens – and then opt out if they do not like the result.
The WCAM was initially used several times for matters tied to the Dutch legal system, but it assumed a truly international scope in two global securities settlements: one involving Royal Dutch Shell (an Anglo-Dutch company) in 2009 and another involving the former Converium Holding AG and its parent (both Swiss companies) in 2012. Both settlements involved significant numbers of non-Dutch shareholders. In fact, only about 3% of the class members in the Converium case were Dutch. But the Amsterdam Court of Appeal approved both settlements and upheld jurisdiction over the global classes.
- For Dutch class members, jurisdiction exists under article 4 of the European Union’s Brussels I Regulation (as amended effective January 2015), which provides that domiciliaries of a Member State can be sued in the courts of that state.
- For domiciliaries of other EU countries, two jurisdictional bases exist:
- Brussels I Regulation article 8(1) says that, in multi-defendant cases, domiciliaries of a Member State can be sued in a state where at least one defendant is domiciled if “[t]he claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings.” This provision theoretically means that, as long as at least one class member is Dutch, the non-Dutch EU class members may also be sued in the Netherlands because all class members are subject to same declaratory proceeding to bind them to the settlement and to limit the alleged wrongdoer’s liability.
- Brussels I Regulation article 7(1)(a) says that, for matters relating to a contract, a domiciliary of a Member State may be sued in another Member State if that other state is the place where the contract will be performed. A WCAM contract can be structured to be performed in the Netherlands.
- For domiciliaries of Lugano Convention countries such as Switzerland, the Lugano Convention has provisions similar to those of the Brussels I Regulation.
- For domiciliaries of other countries, article 6 of the Brussels I Regulation says that the Member State’s law applies. Article 107 of the Dutch Code of Civil Procedure allows jurisdiction over codefendants if sufficient connectivity exists between or among the claims – so article 107 is similar to article 8(1) of the Brussels I Regulation.
- The Converium court also upheld jurisdiction as to non-EU/EVEX class members for two other reasons: One or more petitioners – such as the foundation that was a party to the settlement – were domiciled in the Netherlands, and the matter was sufficiently connected to the Dutch legal order.
WCAM proceeding thus can be used for global settlements with relatively little connection to the Netherlands. The Converium decision expressly recognized that the Netherlands is the only national legal system in the EU that authorizes opt-out collective settlements; the court also observed that, after the Morrison decision, the international legal system needs a non-U.S. forum with jurisdiction to render a settlement binding on persons who cannot be included in U.S. class-action settlements.
We will watch the proposed Ageas settlement as it proceeds through the Amsterdam Court of Appeal.