In its recent Converium case the Amsterdam Court of Appeal rendered an important decision on the collective redress of international mass damages. The Converium case is an example of the important role the Dutch Collective Settlement Act (Wet Collectieve Afwikkeling Massaschade) plays in the collective redress of international mass damages post Morrison (Supreme Court of the United States, Morrison et al. v. National Australia Bank Ltd. et al., No. 08-1191) and makes the Dutch Collective Settlement Act an attractive complement (or equivalent) to US class actions and class settlements.

Converium case
The Amsterdam Court of Appeal recently rendered an important decision on the collective redress of international mass damages “the Converium case”. It proves the important role the Dutch Collective Settlement Act (Wet Collectieve Afwikkeling Massaschade) plays in the collective redress of international mass damages post Morrison (Supreme Court of the United States, Morrison et al. v. National Australia Bank Ltd. et al., No. 08-1191)

The Converium case concerns a Swiss re-insurance company, Converium, of which common shares were listed on the SWX Swiss Exchange and American Depository Shares on the New York Stock Exchange. The market price of Converium’s shares declined substantially after the Company announced reserve increases between 2002 and 2004. These announcements led to securities class actions in the United States. In line with the US Supreme Court’s decision in the Morrison case the United States District Court for the Southern District of New York declared it lacked jurisdiction to hear the claims of the non-US investors. The US securities class action were ultimately settled and approved by the District Court on 12 December 2008.

In July 2010 two Dutch representative organizations entered into separate settlement agreements with Converium for the benefit of all non-US investors. Subsequently, based on the Dutch Collective Settlement Act a petition was filed with the Amsterdam Court of Appeal to have the settlement agreements declared binding. In its provisional ruling, the Amsterdam Court citing the Morrison case indicated its awareness of the need for global resolutions of international securities class actions and assumed jurisdiction to hear the petition whilst there was no, or only a very tenuous, link with the Netherlands.

Dutch Collective Settlements Act
The Dutch Collective Settlements Act offers a facility for having an international collective settlement agreement concluded between one or more organizations representing a group of injured persons to whom damage was allegedly caused and one or more allegedly liable parties declared binding by a the Amsterdam Court of Appeal for the entire group of injured person. No other European Court is able to declare such an collective settlement binding.

The Dutch Collective Settlement Act works on an ‘opt out’ basis. If the Court declares the collective settlement agreement binding, it binds all persons covered by its terms, except for those who have indicated that they do not wish to be bound by the settlement agreement. A binding declaration of a collective settlement (and the legal effects thereof) should in principle be recognized in other member states of the European Union.

For more information please contact Sidney Berendsen, Jack Berk

Although this information was composed with the greatest possible diligence, Loyens & Loeff N.V. cannot accept any liability for consequences arising from the use of this information without its cooperation.