12.2.3.3 Cross-border, EU-wide binding effect of a judgment declaring a collective opt-out settlement binding

When a court rules in one of these collective proceedings on the misleading nature of the prospectus and the defendant's responsibility for the prospectus, the parties may wish to settle out of court in order to prevent both further litigation costs as well as to avoid the risk of being ordered to pay for the other party's legal expenses in multiple damage claims. The defendant may be even more inclined to settle in case of a de iure or a de facto presumption of causation. The most efficient and practical way to reach a settlement is to start negotiations between an investors association or other representative organisation and the issuing company. In order to efficiently make the settlement agreement binding on all investors favouring this settlement, Dutch law provides for a procedure to request the Amsterdam Court of Appeal to declare the settlement binding on all interested parties unless they opt out. Under the WCAM (Dutch Collective Settlement of Mass Damage Act), the interested parties are first of all notified about the contents of the settlement and the request to declare it binding so as to enable them to avail themselves of any procedural means available to support or contest the settlement. The court will only declare the settlement binding if it is regarded as reasonable on the basis of certain criteria, amongst others, the fürness of the compensation awarded to the victims of this mass damage event. By doing so, the court acts as the guardian of the absent group members. The interested parties are also notified of the court's declaratory judgment so that they are able to use their right to opt-out within the term determined by the Amsterdam Court of Appeal.

An impediment to recognition of this declaratory judgment is the fact that interested parties, i.e. the victims in whose interest, among others, the procedural parties concluded the settlement, do not have to be personally notified. If the identity of the investors is known to the requesting parties, they will be notified by registered mail. The WCAM allows potential victims, whose identity is not known, to be addressed by means of advertisements in newspapers and websites. This form of notification may lead courts in other Member States not to recognise the Dutch declaratory judgment's binding and preclusive effect on the basis of article 34(2) of the Brussels I regulation. Article 34(2) prescribes that a judgment is not to be recognised where it was given in default of appearance, if the defendant was not served with the document which instituted the proceedings or with an equivalent document in sufficient time and in such a way as to enable him to arrange for his defence, unless the defendant failed to commence proceedings to challenge the judgment when it was possible for him to do so. In the ASML/SEMIS case, the European Court of Justice ruled that a mere formal irregularity, which does not adversely affect the rights of defence, is not sufficient to prevent the application of the exception to the ground justifying non-recognition and non-enforcement.

On the basis of this analysis of the WCAM procedure and its safeguards, it is concluded that under the Brussels I regulation-regime, in principle, all group members, including those absent at the trial, are bound by the Amsterdam Court's declaration. Unknown interested parties who have not been reached and therefore had no opportunity to be heard or to opt out despite being notified in accordance with the WCAM could, under particular circumstances, invoke a ground for refusal of recognition on the basis of article 34(2) of the Brussels I regulation.