On June 14 2019, the Supreme Court of the Netherlands (‘the Supreme Court’) referred three questions considering the interpretation of article 7 (2) of the Brussels I-bis regulation, regarding the Erfolgsort, to the Court of Justice of the European Union (‘CJEU’) for a preliminary ruling. In international private law, the Erfolgsort is a connecting factor for assuming jurisdiction in the case of a cross-border tort. This ruling constitutes a new episode in the litigations following the Deepwater Horizon disaster.
A little over nine years ago, at approximately 9:45 PM on 20 April 2010, a fire at the drilling rig ‘Deepwater Horizon’ caused the largest oil spill in the history of the petroleum industry in the Gulf of Mexico. At the moment of the fire that eventually resulted in the 87-day long oil spill from the well, the Deepwater Horizon was leased by BP. This disaster is considered to be one of the largest environmental disasters in American history. Amongst those affected by the oil spill are the owners of shares in BP. The Association of Stockholders (‘the VEB’) filed a class action on behalf of all shareholders who, in the period between January 16, 2007 and June 25, 2010, bought, held or sold ordinary shares of BP P.L.C. (‘BP’) via an investment account with a bank that had its registered office in the Netherlands. The VEB claims that, as a result of BP’s misleading or false representations and information leading up to and concerning the fire and consequential oil spill, the stock price dropped by almost 50% causing a total of 47 billion pounds damage.
In April 2015 the VEB sued BP on behalf of the Dutch investors before the District Court in Amsterdam. This is the only proceeding initiated by investors in Europe in the aftermath of the Deepwater Horizon disaster. However, both the Amsterdam District Court and the Court of Appeal in Amsterdam ruled that they lacked jurisdiction, pursuant to article 7 (2) of the Brussels I-bis regulation. In essence, the Court of Appeal found that the occurrence of purely financial damage to an investment account held in the Netherlands was not in itself a sufficient connecting factor for jurisdiction of Dutch courts. In considering this, the Court of Appeal ruled that the fact that BP focused on a worldwide investment audience, including Dutch investors, and that the VEB represented the interest of a large number of investors who were resident in the Netherlands, was insufficient.
The VEB challenged this ruling in cassation before the Dutch Supreme Court. In summary, the VEB argued inter alia that (i) the occurrence of purely financial damage to an investment account in the Netherlands was a sufficient connecting factor for the jurisdiction of Dutch courts, and (ii) that it was of relevance that the claim was filed as a collective action on the basis of article 3:305a DCC.
In considering this cassation appeal, the Supreme Court discussed three cases of the CJEU that were of relevance in this matter. In the Kolassa-case it was ruled that the Erfolgsort was located at the place where the investor suffered damage and that jurisdiction could be assumed, inter alia, when damage occurred directly to a bank account of that applicant in the domicile of that applicant and with the specific circumstance of a branch of a bank established in that jurisdiction. Secondly, in the Universal Music-case, the former was further elaborated in the sense that the place where the bank account in which there was direct financial loss was held, could not, without additional circumstances, provide sufficient connection for jurisdiction on the basis of the Erfolgsort. Lastly, in the Löber-case, the CJEU repeated the Universal Music-case rule and decided that in that instance also the specific circumstances added to the assumption of jurisdiction.
Taking this preceding case law into consideration, the Supreme Court continued to set out the assertions of the parties and elaborated on why it deemed it necessary to refer questions for a preliminary ruling, as suggested by Advocate General Vlas. The Supreme Court asked the CJEU whether article 7 (2) Brussels I-bis regulation should be interpreted as meaning that the direct occurrence of purely financial damage to an investment account held in the Netherlands as a result of investment decisions made under the influence of widely distributed but incorrect, incomplete or misleading information from an international listed company, provides a sufficient starting point for assuming international jurisdiction of Dutch courts. If this is not the case, the Supreme Court asked whether (and which) additional circumstances would be required, and whether the answer to the first question would be different if the claim was filed on the basis of article 3:305a DCC. In addition, in the case that jurisdiction may be assumed in a 3:305a DCC action, the Supreme Court asked whether there is jurisdiction for all individual claims that participate in this collective action, or whether jurisdiction of Dutch courts is determined on the basis of the investor’s place of residence or the location of the bank where the investment account is held, or possibly on some other point of reference.
Both the VEB as BP are now granted six weeks to comment on these questions, before the Supreme Court addresses the CJEU. Even though it will probably take another year before the CJEU answers these preliminary questions, it provides for an interesting dot on the horizon of private international law. Furthermore, this should give you enough time to watch Peter Berg’s ‘Deepwater Horizon’ to acquaint yourselves with the spectacular merits of this case.