9.1 Introduction

The private law prospectus liability rules are not harmonised. The Prospectus Directive 2003 merely requires Member States to ensure that their laws, regulations and administrative provisions on private law liability shall apply to prospectus liability claims against persons responsible for the information given in a prospectus.1 Prospectus liability claims are based upon general tort law.2 However, the Prospectus Directive 2003 does not contain a conflict of law rule that determines which law is applicable to prospectus liability claims for damages. As concluded in chapter 7, the private law prospectus liability regimes in Dutch, French, German and English law differ considerably despite the common public law information requirements harmonised by the Prospectus Directive 2003. Therefore, it is important to determine which law is applicable to prospectus liability claims. Especially in cases of collective, EU-wide proceedings, the suitability of the conflict of law rule is crucial, because in these proceedings the court's power to rule is limited to common questions of law or fact. This limitation is warranted by the fact that provisions of collective proceedings are a procedural instrument to enable effective and efficient litigation; it should not alter substantive rights.3 For that reason, in the event different laws apply, the question crises whether the clans of claimants have a common question of law or fact at all. However, it is important to mention that the proposal for a conflict of law rule is not restricted to collective proceedings; there are important arguments for a different conflict of law rule in individual damage claim proceedings as well.

The proposal to adopt a specific conflict of law rules in regard to corporate misinformation cases is restricted to non-contractual obligations to inform investors about the company because in those cases the individuals affected by the company's behaviour did not prior to the event subject their legal relationship with the company to a particular legal regime unlike in a contractual context. Therefore, it is easier to justify the subjection of the legal relationships of all individuals affected by the same tortious behaviour of the same defendant(s) to one single legal regime, because there is no ex ante agreement between the parties which laws and/or level of protection will apply to their relationship.

From 11 January 2009, the Rome II regulation determines which law is applicable to claims arising from non-contractual obligations brought before a Member State's court.4 The general or default rule in the Rome II regulation is the lex loci damni, the law of the place where the direct damage occurs is applicable to claims arising from non-contractual obligations.5 With respect to prospectus liability claims, the place where the financial loss was sustained by the investor is likely to be the relevant connecting factor. In Kronhofer6 , the European Court of Justice ruled that the principal place where investors suffered their financial losses is the place where they hold their investment account7

In this chapter, I discuss the likely consequences of the Rome II regulation for prospectus liability claims against issuers and their directors. In this respect, it is advisable to apply the private law rules of the same jurisdiction as the applicable capital markets law.8 In section 8.2, the problems arising from the multiplicity of tort law regimes applicable to prospectus liability claims in relation to the objective of the Prospectus Directive 2003 to achieve an intemal market for capital are described. In section 8.3, I analyse whether prospectus liability claims fall in one of the categories excluded from application of the Rome II regulation. The relevance of the ECJ judgment in Kronhofer with respect to prospectus liability claims is emphasised in section 8.4. In section 8.5, I argue that the law applicable to liability claims arising from the publication of false or misleading information about the issuer and its securities should be the financial markets law that determines the disclosure duties of the issuer. In section 8.6, some concluding remarks are provided for.