OLG Munich applies German Legal Services Act in favour of claim vehicle

Last week, the Higher Regional Court (OLG) of Munich rendered a preliminary decision regarding the German Legal Services Act. This law prescribes rules for the way to provide legal services and therefore the discussion in Germany is whether and how claim vehicles are covered by this act. In its preliminary decision, the OLG applies the law narrower than the District Court (Landgericht) Munich did previously in this case. As the OLG Munich is important for cartel damages cases, this might set a precedent for other claim vehicles in Germany.

What was the case? The claim vehicle Financialright claim started proceedings in Germany on behalf of 70,000 aggrieved parties of the truck cartel to recover a total of around €500 million in damages from MAN, Daimler, Iveco and Volvo/Renault. These truck manufacturers, together with DAF, had been fined in 2016 for violating competition rules in the period of 1997 to 2011.

The Munich Regional Court declared Financialright Claims partly inadmissible and its claims unfounded. It considered that the agreements with its underlying parties would not comply with the Legal Services Act and the claim was insufficiently determined.

The OLG Munich came to a different conclusion in its preliminary decision. At the beginning of the appeal hearing, president Müller stated that he considered the assignment of claims to be legally valid. The court also found that the claim was not insufficiently determined. The OLG Munich therefore provisionally referred the case back to the lower Munich court. The Munich court will now have to consider the claims (again). Financialright Claim may then have another opportunity to file the agreements with its underlying parties with the court.

bureau Brandeis is assisting claim vehicles in several cartel damages proceedings relating to the trucks cartel in The Netherlands. Please do not hesitate to contact Sophie van Everdingen should you have any questions.

Landmark case in the UK: standard third party funding agreements in collective actions appear to be unenforceable

On 26 July 2023, the UK Supreme Court rendered a landmark decision on third party funding agreements in collective actions proceedings. This case concerned follow-on damages proceedings in the renowned truck cartel case. In this decision, the Supreme Court qualified the (standard) funding agreements that the claimants use as “damages-based agreements” (“DBAs”), which is a type of contingency fee arrangement in UK law for ‘representatives and those providing other services in relation to the making of the claim’.  The Supreme Court now decided that funders offer such services and therefore should follow DBA regulations.

Under UK law, DBAs are regulated, especially in cases before the Competition Appeal Tribunal (“CAT”). Claim vehicles are not allowed to use DBAs at all in opt-out proceedings (where a claim vehicle starts proceedings on behalf of a defined group, but group members may opt-out) and they can only use them when they comply with a specific regulatory regime in opt-in proceedings (proceedings that parties should actively join). By qualifying standard third party funding agreements as DBAs, the agreements cannot be used to fund opt-out proceedings and should be changed in order to comply with the regime for opt-in proceedings.


Effect on the current funding practice in the UK

This decision therefore has far-reaching effects for all current and future cartel damages proceedings in the UK. At this moment, 31 collective action cases are pending before the CAT. Most, if not all, of these cases are funded by a third-party funder using such agreements. Claimants and funders of these cases should now reconsider their funding agreements. They might have to renegotiate the funding agreements or even find new ways to fund class action litigation.

The impact of this decision is therefore enormous, as funders face difficulties in recouping their investment after a settlement or an award. That might lead to difficulties for claimants to find funding for their cases. That is acknowledged by the Supreme Court, but it does not change the decision. Lord Sales notes that the Court has been informed that “the likely consequence in practice would be that most third party litigation funding agreements would (…) be unenforceable as the law currently stands”. However, the fact that claimants and funders were under the impression that such agreements did not fall within the definition of a DBA when they concluded these agreements “would not justify the court in changing or distorting the meaning of ‘claims management service’”.

As for the current collective action proceedings, it cannot be ruled out that some opportunistic claimants at the end of proceedings with enough money in the bank will try to conclude the case without paying their funders. UK class action proceedings can cost up to several million pounds, which is normally paid by these funders in advance, so that can save a lot of money.

On the other hand, we need to add some nuance. Since proceedings are so expensive, it is unlikely that the current practice of third party funding will stop at all. However, if the UK parliament will not change the law – and funders are probably lobbying for that already – it might be more difficult to invest in such cases and it is well possible that funders shift their focus to more funder-friendly countries, such as the Netherlands.


What are the Dutch rules?


Under Dutch law, there are only rules on financing opt-out cases, which aim to protect damaged parties (often consumers) that cannot instruct the claim vehicle representing them. These damaged parties are possibly not even aware of the case. These rules, however, do not apply to opt-in cases, for example when claimants litigate on the basis of assignments. This was confirmed in one of the trucks cases in July 2022. The Dutch Court of Amsterdam ruled that the opt-out regulations are not applicable to opt-in proceedings started by claim vehicles, as they claim on behalf of professional parties that made a free choice to join the proceedings and who may instruct the claim vehicle. They don’t need the legal protection that is provided for the opt-out cases.


Contact


For questions or comments, please contact Sophie van Everdingen.

Update on the transposition of the EU Directive on representative actions for consumers into Dutch law

At the beginning of the year, we published an article with regard to the ‘Directive on representative actions for the protection of the collective interests of consumers’. This Directive aims to ensure that Member States put in place at least one effective and efficient collective redress procedure that allows ‘qualified entities’ to bring representative actions to protect the collective interests of consumers.


Qualified entities are representative organizations (in particular consumer organisations) or public bodies which have been designated as a ‘qualified entity’ by a Member State. To be designated as a qualified entity, a representative organization must meet the criteria as laid down in the Directive. The qualified entities are written down on a list held by the European Commission. Inclusion on this list serves as proof that a representative organization is qualified to bring a case before a court in another Member State.


The Netherlands already has an effective system of collective redress with the Act on Redress of Mass Damages in Collective Action (“WAMCA”). As we predicted in our previous article, the preliminary draft of the proposed transposition of the Directive in the Netherlands showed that the WAMCA will only need slight amendments. This draft was presented by the Minister for Legal Protection on May 1, 2021. In this blog we will highlight a few of the proposed amendments from the preliminary draft.


Informed consumers


Representative organizations must provide information, in particular on their website, about ongoing representative actions (Article 13(1, 2) Directive). With this information, consumers are able to make a better informed decision about whether they wish to participate in a representative action and to take the necessary steps in a timely manner.


The WAMCA already obliges representative organizations to publish information on their website about the status of pending proceedings (Article 3:305a(2)(d) DCC). The Directive adds the requirement that representative organizations need to publish information about the results of any pending actions (Article 13(1)(c) Directive). The draft incorporates this requirement in Article 3:305a(2)(d) DCC).


Conflict of interest restrictions


A substantial number of collective actions are funded by commercial third parties. Third party litigation funding enables consumers to obtain redress when they do not have the financial means to do so. The good news is that funding by third parties is not excluded by the Directive. The Directive, however, does impose restrictions to avoid conflicts of interest between a funder and the representative organization (Article 10(2)(b) Directive). For example, Member States must ensure that class actions cannot be brought against a defendant that is a competitor of the funder or against a defendant on whom the funder is dependent. This restriction is now included in Article 3:305a(2)(c) DCC.


Cross-border actions before the Dutch Court


If a qualified entity in another Member State brings a case before the Dutch court, the court is not allowed to review all WAMCA requirements of Article 3:305a DCC. The court is only allowed to review the requirements that relate to the claim and the specific procedure (Article 6 Directive). The court can for example still assess whether the statutory purpose of the representative organization allows it to institute a specific collective action (Article 6(3) Directive). The court is also allowed to test whether the qualified entity has sufficient means to bear the costs of initiating a specific collective action (Article 10 Directive). These requirements for a specific collective action cannot be assessed in advance. At the time of the designation of the representative organization as ‘qualified entity’ by another Member State, it may not be clear which specific actions will be initiated. The draft proposes to amend Article 3:305c DCC to reflect the foregoing.


Cross-border actions in another Member State


A Dutch qualified entity can also bring an action in another Member State. For a representative organization to be designated as a qualified entity for the purpose of bringing cross-border representative actions, that entity must comply with the following criteria of the Directive (Article 4(3) Directive):

  1. it can demonstrate 12 months of actual public activity in the protection of consumer interests prior to its request for designation;
  2. it is not the subject of insolvency proceedings and is not declared insolvent;
  3. it makes publicly available certain information, in particular on its website;
  4. it is a legal person that is constituted in accordance with the national law of its Member State;
  5. it has a legitimate interest in consumer protections according to its articles;
  6. it has a non-profit-making character; and
  7. it is independent and not influenced by persons other than consumers.
    The first three requirements were not (all) included in the WAMCA. For this situation Article 3:305e DCC is introduced. Article 3:305e DCC adds these three requirements from the Directive.
    Firstly, the representative organization must prove that it has been publicly active in the area of protection of consumer interests for 12 months (Article 4(3)(a) Directive, Article 3:305e(2)(a) DCC). The Minister of Legal Protection explicitly states this requirement is not applicable with regard to domestic actions. This means that representative organizations that have been set up especially for the purpose of a specific action (ad hoc entities) are still permitted in domestic actions in the Netherlands. This is positive news as ad hoc entities make an effective contribution to access the right to collective actions for consumers.
    Secondly, an additional requirement is placed on the representative organization to not be the subject of insolvency proceedings and not to be declared insolvent (Article 4(3)(d) Directive, Article 3:305e(2)(b) DCC).
    Thirdly, information about the sources of the funding of a representative organization in general must be made publically available (Article 4(3)(e) Directive, Article 3:305e(2)(c) DCC). For example, the standard annual contribution that is paid to a representative organization by its members that is separate from a specific collective action, or a government subsidy. The WAMCA already included other information that needed to be publicly available on the website of the representative organization in line with the Directive (Article 3:305a(2) DCC).

Opt-in for foreign consumers


The Directive stipulates that Member States should provide for an opt-in mechanism, or an opt-out mechanism, or a combination of the two. Consumers domiciled in a Member State other than the Member State in which the collective action is brought, can however only be bound by the outcome of a collective action if they explicitly agree to it (opt-in). The present Article 1018f(5) DCCP formulates an exception to this opt-in rule. The Directive does not allow this exception (Article 9(3) Directive). The Minister of Legal Protection therefore proposed to amend Article 1018f(5) DCCP in line with the Directive.


We foresee some complications with this amendment and the opt-in mechanism. It could for instance be difficult to reach out to foreign consumers as it would take a lot of effort and investments from a representative organization to get into contact with these consumers and help them to join the collective action in a Member State other than the Member State in which they are domiciled. This could lead to the outcome that the group of foreign consumers is smaller than under an opt-out mechanism. With an opt-out model foreign consumers will be included in the procedure, unless they opt-out, so that the defendant is better confronted with the losses he has caused. An opt-out regime also reduces the barriers for consumers to participate in a collective action allowing them to receive compensation.


Contact


For questions or comments, please contact Michelle Krekels.

Litigation boutique bureau Brandeis opens Paris office with focus on antitrust litigation

bureau Brandeis / 26 Feb 2021

Today, bureau Brandeis launched its Paris office. Throughout the EU, collective actions are on the rise in many areas, in particular antitrust damages cases. bureau Brandeis has been active in this and other high stake areas of litigation for many years , with a clear preference for the challenger. It now joined forces with seasoned French antitrust litigators Marc Barennes, Sarah Subrémon, David Reingewirtz and Philippe Zeller to increase its access to the French market and expand its network of first-class economists, data collectors and litigation funders. The office of bureau Brandeis Paris is located in 4 rue de Penthièvre, 75008 Paris, in the heart of the Paris business arrondissement.

bureau Brandeis Paris is the first European plaintiff litigation boutique in France dedicated primarily to assisting companies, public entities and groups of individuals harmed by competition law infringements. Other fields of high stake litigation will be added in due course.

bureau Brandeis Paris founding members declared: “We are thrilled to set up this office together and work with our Amsterdam colleagues in getting justice and compensation for large groups of antitrust victims.”

Hans Bousie, partner of bureau Brandeis Amsterdam about this new venture: “Clients want these cases brought where is best for them, whether that is in Amsterdam or elsewhere. With the opening of bureau Brandeis Paris, we take a major step in developing our EU presence, with unique access to claims funding. We are thrilled that Marc, Sarah, David and Philippe open a bureau Brandeis office in Paris. We share the same values and work from the belief that litigation is a tool to obtain justice. Apart from that, they are the nicest French (wo)men you can imagine. We are looking forward to working with them in antitrust cases and in other areas of litigation in the future”.

bureau Brandeis was established in Amsterdam in 2014, as a boutique law firm, specialized in litigation, and has a preference for the challenger. bureau Brandeis is a law firm with an emphasis on litigation and in (international) arbitration. We act, often together with other law firms at home or abroad, for national and international companies and other organizations, with a preference for the challenger. We participate in the social debate.

Marc Barennes was a référendaire with the General Court of the European Union and an officer with the European Commission (DG Competition) for 15 years, after starting his antitrust career with a US law firm in Brussels and Paris. He also gained significant experience in private damages actions as a senior executive of an antitrust claims aggregator in the past two years.

Sarah Subrémon is a former Deputy Rapporteur General of the French Competition Authority and a former official with the European Commission (DG Competition) and the English Competition and Markets Authority, where she worked for more than 15 years. She started her career as an antitrust lawyer in Paris. She joins bureau Brandeis Paris from an antitrust claims aggregator where she was also a senior executive.

David Reingewirtz is an antitrust and commercial litigator. After practicing antitrust law in various well-known UK and US law firms in Paris, Brussels and Washington for 8 years, David was appointed Secrétaire de la Conférence du stage in 2008, a prestigious position for French litigators. He then co-joined an independent litigation boutique, specializing in antitrust, commercial and criminal disputes.

Philippe Zeller is an antitrust, regulatory and public litigator. After earning his Ph.D. in public law and lecturing in this field in various law schools, Philippe joined prestigious US and French law firms in Paris where he held Counsel and Partner positions. He specializes in litigating cases before the French independent administrative agencies and Courts.

bureau Brandeis climbs in Legal500-rankings

bureau Brandeis / 23 Apr 2020

In its latest publication Legal500, one of the most prestigious legal directories worldwide, has recognized the growing success of bureau Brandeis as one of the leading litigation boutique firms in the Netherlands.

bureau Brandeis comes in highly recommended for Dispute Resolution (Commercial Litigation), Privacy and data protection, Media & entertainment, Information Technology, Intellectual Property, Telecoms and EU & Competition

Of all Dutch litigation firms we are proud to have the highest number of recommended partners and senior counsels: Christiaan Alberdingk Thijm (Media, Telecoms, Intellectual Property and Information Technology),  Louis Berger (Commercial Litigation), Hans Bousie (EU Competition and Media/Entertainment), Bas Braeken (EU & Competition, Telecoms and Commercial Litigation), Frank Peters (Commercial Litigation), Machteld Robichon (Media/Entertainment, Telecoms and Information Technology), Jozua van der Beek (Commercial Litigation) and Vita Zwaan (Privacy and Data Protection).

We are especially excited to see a number of our young stars Caroline de Vries, Syb Terpstra, Sophie van Everdingen and Sam van Velze entering the rankings.

bureau Brandeis is grateful to its clients and partnering law firms for trusting us for their most important matters. Our success is their success.

Coronavirus-helpdesk bureau Brandeis

At times of need, bureau Brandeis is always there for its clients. That is why we have set up a special coronavirus helpdesk to answer any questions you may have.

The spread of the coronavirus affects all companies and industries. This has major
implications and raises all kinds of legal questions, such as:

  • What to do if your customer or client is on the verge of bankruptcy?
  • Is the agreement your company depends on enforceable (whether or not in preliminary relief proceedings by claiming performance of the contractual obligations)?
  • Conversely, what can you do if you want to defend yourself against a possible claim for performance that would put your company in dire straits?
  • Do I have to treat all my creditors equally, now that things are a little tighter financially?
  • Etc.

Many legal questions about the consequences of the coronavirus have already been answered (in Dutch) by bureau Brandeis in this blog post.

Those of you who do not speak Dutch and for other relevant questions, please contact Hans Bousie or Stefan Campmans at our corona helpdesk either by phone or email.

And if you have any questions that are not our area of expertise, such as tax or labour law, we are happy to refer you to colleagues with whom we work closely, so we can solve your problem together.

bureau Brandeis closely follows the developments concerning the coronavirus. In light of the Dutch government’s recommendation to work from home where possible, we have implemented a remote working plan for our attorneys and staff. The firm has an excellent IT infrastructure and we do not expect any delay in offering our services to you.

Meetings

Meetings are being rescheduled to telephone or video conference as much as possible. We have cancelled our in-house seminars and limited our external visits to Court appearances until the end of March. We will continue to monitor the directives of the authorities and will take additional measures when necessary.

Impact

The coronavirus has a big impact on the businesses of our clients. We are grateful that many of them have reached out for our guidance on the issue. Please do not hesitate to contact us should you require legal advice on the coronavirus or any other matter. We are committed to continue to assist our clients during these challenging times.

bureau Brandeis expands with new partner Bas Braeken

On 16 July (2019) Bas Braeken will be joining bureau Brandeis in Amsterdam as a partner. Bas is a recognised specialist in the field of (European) competition law and economic regulation in a variety of sectors, such as telecoms, media and fintech.


He is joining bureau Brandeis from Maverick, a company he helped found six years ago. Before that he was a long-time employee of Allen & Overy.
“Bas’s appointment fits in perfectly with our strategy of continuing to build on a broad litigation firm with a focus on complex cases,” says Louis Berger, one of the founders of bureau Brandeis. “Bas is an important piece of the puzzle that will give our ambition further shape. He enjoys an outstanding reputation in the field of European competition law, but also has specific sector knowledge of markets such as telecoms, media, mail & parcels, mobility and fintech. In Bas we see an ambitious partner who has the same entrepreneurial drive, level and values as the other partners of bureau Brandeis, which will provide a huge amount of synergy.”


In the last few years Bas Braeken has achieved major successes for T-Mobile, Canal+, Prijsvrij and others. He also regularly conducts legal proceedings before the European judicial authorities in Luxembourg.


Partner Machteld Robichon: “Bas’s outstanding knowledge and experience are a perfect fit with the regulated market practice of Simone Peek (financial law and life sciences) and mine (practices of change, media and telecoms) and with the cartel damage practice of Hans Bousie and Louis Berger. His focus on telecoms and media is also in keeping with the focus of Christiaan Alberdingk Thijm’s practice.”


Bas Braeken: “I am very impressed by the level of the lawyers at bureau Brandeis, the professionalism of the organisation and the single-minded desire to deliver the best service day after day. The existing practice at Brandeis is a seamless fit with my own practice, which very largely consists of proceedings, compliance and investigations, in addition to providing guidance to clients in complex merger control processes. I see a great deal of synergy and look forward to working with my new partners.”


About bureau Brandeis


bureau Brandeis is a boutique law firm that specialises in conducting complex proceedings for the corporate sector. It has experience in all the relevant fields of law, with a preference for the challenger: corporate litigation, commercial litigation, privacy, competition law, financial law, administrative law, intellectual property, media law, telecommunications law, class actions, international arbitration and cassation. With the arrival of Bas Braeken the firm will have 31 lawyers, seven of them partners.