Fortis's Settlement: A Comparative Case Study of Securities Class Action Mechanisms in Europe and the United States

By Declève, Quentin | Business Law International, January 2017 | Go to article overview

Fortis's Settlement: A Comparative Case Study of Securities Class Action Mechanisms in Europe and the United States


Declève, Quentin, Business Law International


Introduction

On 14 March 2016, Ageas - a Belgian insurance company formed out of the rump of collapsed financial group Fortis - announced a settlement proposal (under the Dutch mass claims settlement procedure) with respect to all civil legal proceedings initiated by various shareholders' organisations following the events that led to the fall of the company during the 2008 global financial crisis.

This settlement - according to which Ageas agreed to pay €1.2bn to its former shareholders - is the most recent (but certainly not the last) development in the emergence of European jurisdictions (the Netherlands in particular) as gateways for the litigation and settlement of international securities mass claims.

Historically, the US had always been fertile soil for collective actions. In 2010, however, the US Supreme Court in Morrison v National Australia Bank1 significantly restricted the US courts' jurisdiction over securities 'F-cubed' claims (ie, claims brought in the US by foreign investors, trading foreign securities, on foreign exchanges).

Morrison v National Australia Bank limited the extraterritorial reach of US federal securities law, finding that the anti-fraud provisions of section 10(b) of the Securities Exchange Act of 1934 and rule 10b-5 did not extend to securities transactions outside the US. The US Supreme Court ruled that section 10(b) of the Securities Exchange Act of 1934 only applied to fraudulent acts or omissions in connection with the purchase or sale of securities listed on a US stock exchange and the purchase or sale of any other security in the US. The US Supreme Court therefore rejected over four decades of case law embracing the well-established 'conduct and effects' tests pursuant to which a double test had to be fulfilled in order to pursue a securities case in the US. Under this test, the plaintiffhad to show that:

1. the alleged fraudulent conduct had been 'conceived' and 'executed' in the US (the 'conduct test'); and

2. the fraudulent conduct had a 'sufficiently serious effect' in the US to warrant assertion of jurisdiction (the 'effects test').2

The decision of the US Supreme Court in Morrison v National Australia Bank resulted in the fact that '[w]hereas before Morrison there was always the possibility that U.S. law might also apply to some transactions outside the United States, after Morrison transacting parties [could] be confident that U.S. law will not apply in private suits provided their transactions are definitely outside the United States'.3

An indirect consequence of the Supreme Court decision in Morrison and of the curtailment of the reach of US securities laws was the expansion of other jurisdictions 'to compete with U.S. securities law by providing their own combination of legal rules, private rights of action, and government enforcement mechanisms'.4

The European jurisdictions have been at the front line of this potential forum competition with the US. Those jurisdictions indeed offered the perfect alternative forum as:

1. 'a judgment obtained against a defendant in one EU Member State [could] be enforced anywhere in the European Union'5 (by virtue of the Brussels I Regulation6 and the Brussels Recast Regulation7); and

2. class actions mechanisms had started to be adopted in European countries.

In light of the Fortis/Ageas case, this article therefore aims at examining and illustrating the rise of European jurisdictions as alternative fora for mass claims proceedings.

We will start our analysis by examining the basic features and differences between US class actions, on one hand, and European collective redress mechanisms, on the other hand. The Fortis case will help us illustrate those differences in the third section of the article. Finally, we will conclude our analysis with possible future developments and ways forward concerning collective redress mechanisms in Europe.

Basic features of US class actions and European collective redress mechanisms

Class action suits are legal devices that allow an individual or a small group of individuals to proceed in court 'on behalf of a much larger, unnamed group of individuals who share common claims'. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited article

Fortis's Settlement: A Comparative Case Study of Securities Class Action Mechanisms in Europe and the United States
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
Items saved from this article
  • Highlights & Notes
  • Citations
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Search by... Author
    Show... All Results Primary Sources Peer-reviewed

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.