For the fourth time in a row our colleagues Peter van Kippersluis, Raimond Dufour and Ameer Muhammad provided the chapter on securities litigation in the Netherlands to Lexology GTDT, which is published this spring. The authors describe the ins and outs regarding securities litigation in the Netherlands by means of, amongst others, the general framework, claims and defences, liability, collective proceedings, funding and costs and alternative dispute resolution.
Extract of the article:
Describe the nature and extent of securities litigation in your jurisdiction.
In the Netherlands, securities litigation usually pertains to civil disputes between investors and issuers or vendors of securities. These proceedings occur frequently in the Netherlands and often involve non-Dutch parties. This is because:
- the cost of litigation in the Netherlands is significantly lower than in other jurisdictions, especially common law jurisdictions;
- parties have the opportunity to conduct the entire course of proceedings in English before the Netherlands Commercial Court;
- Dutch courts are relatively lenient in assuming international jurisdiction; and
- Dutch law provides for a class action and class settlement procedure – with the latter procedure giving parties to an out-of-court settlement the option to petition the court to declare their settlement generally binding on each
party that falls within the scope of the settlement agreement, which could also include parties that are domiciled in the United States or the Cayman Islands (erga omnes).
Securities litigation in the Netherlands can also involve administrative proceedings between the financial supervisory authorities and supervised entities on, for example, disclosure of inside information.
Courts and time frames
What experience do the courts in your jurisdiction have with securities litigation? Are there specialist courts for securities disputes? What is the typical time frame for securities litigation in your jurisdiction?
In administrative disputes between a financial supervisory authority (ie, the Dutch Authority for the Financial Markets or the Dutch Central Bank) and, for example, the issuer of securities, the district court of Rotterdam is the competent court in the first instance. The Trade and Industry Appeals Tribunal is the competent court in the second instance.
Regarding civil disputes, there is no formally designated specialist court that deals with all securities disputes in the Netherlands. Nonetheless, Dutch courts are experienced in securities litigation, especially the Amsterdam District Court. Aside from regular courts, the Financial Services Complaints Institute, which is an independent dispute committee, deals with disputes between small and medium enterprises (or consumers) and financial institutions (eg, banks, insurance companies, etc) pertaining to financial products and financial services.
As to time frames, more often than not, securities litigation in the Netherlands pertains to complex and international disputes in which a collective claimant initiates class action proceedings against multiple defendants (often Dutch and non-Dutch) for the benefit of a large class (often consisting of Dutch and non-Dutch members). The duration of these proceedings depends on how the court stages proceedings (eg, international jurisdiction, admissibility, applicable law, merits), whether each stage will have an oral hearing, and whether the court will allow for interim appeals (the latter is usually denied, however). Typically, on average, international securities disputes that are litigated in class action proceedings will take around five years to complete in the first instance.
Reproduced with permission from Law Business Research Ltd. This article was first published in Lexology GTDT – Securities Litigation. For further information, please visit: https://www.lexology.com/gtdt.