1.4 Methodology and structure of research

In general, I consider the research topic from a positive law point of view, i.e. I analyse the applicable rules and regulations as well as relevant case law where these rules are applied by national courts. When I encounter obstacles to the above-formulated purpose, either in national law or in European law, I provide a proposal for reform if that can be considered the appropriate solution.

The rules on applicable law gain in relevance if the substantive prospectus liability rules diverge.1 Therefore, in part I of this research, I make use of the instrument of comparative legal research in order to explore the differences in private law prospectus liability rules under Dutch, French, German and English law.

First of all, chapters 2 to 6 contain an analysis of the private law prospectus liability regime in each of these jurisdictions. Even though the focus is on private enforcement, I briefly describe the administrative and criminal law sanctions applied to violations of prospectus rules as well. Chapter 7 provides a comparative analysis of the private law prospectus liability rules in these jurisdictions. I selected these four legal regimes on various grounds. First of all, the selection was made on the basis that these legal systems display the major differences in private law prospectus liability rules between the legal systems in the European Union. The differences arise particularly in regard to causation and burden of proof. With regard to the collective action and settlement procedures available, these jurisdictions display the widest range of possible outcomes as well. From a total absence of effective collective proceedings under French law to a system of collective settlement based on the opt-out model under Dutch law, with opt-in collective proceedings under English and German law. It is noteworthy that the German legislator is currently debating the adoption of an opt-out collective settlement possibility to be reached after a court ruling on the elements common to the damage claims in corporate misinformation cases. Another reason for selecting these regimes is the fact that the major European stock exchanges are situated in these Member States: London Stock Exchange, Frankfurt Stock Exchange (Deutsche Börse), Paris Stock Exchange (Bourse de Paris) and Amsterdam Stock Exchange.2

When this research was almost finished, it became known that the European legislator, according to Directive 2010/73/EU on the amendment of the Prospectus and Transparency Directive, also regards the significant differences between the prospectus liability regimes in the Member States as relevant. In order to identify and monitor the arrangements in the Member States, the European Commission was asked by the Council and the European Parliament to establish a comparative table of Member States' regimes. In January 2011, the Commission invited ESMA, the newly created European Securities and Markets Authority, to prepare, on behalf of the Commission, a comparative table of the liability regimes applied by the Member States in relation to the Prospectus Directive. This table should provide a complete and coherent set of information comparing the civil, administrative and government liability, criminal liability and sanctions applied in each Member State. I hope that on the basis of this information, the Commission is able to present a proposal that solves the inherent tensions and inconsistencies of a system of harmonised information requirements regarding prospectuses enforced by a single home Member State supervisory authority and divergent private law prospectus liability regimes in such a manner that its main goals of (equal) protection of investors and a level playing field for all financial market participants can be achieved.

Part II of this research firstly provides an overview of the various collective action and settlement procedures available to investors (associations) under Dutch, French, German and English law, and an analysis of the similarities and differences between these procedures. Given the international background of investors corporate misinformation proceedings, the private international law issues arising in collective proceedings have to be dealt with. First of all, the question of applicable law has to be answered. The recommendation to adopt a company's registered office as the connecting factor is not restricted to claims arising in collective proceedings, because the requirements of predictability and foreseeability of applicable law applies equally in individual court proceedings. Application of a set of multiple laws may render efficient and effective collective enforcement of corporate misinformation claims even more difficult, especially if the claimants' various investment accounts serve as the connecting factor. Therefore, a different conflict of law rule is proposed that seeks to enhance predictability and foreseeability in individual as well as in collective court proceedings.

Before discussing jurisdiction and binding effect of judgments in collective proceedings, it must be noted that the problems concerning jurisdiction for group members and the binding effect of judgments are less prominent in collective action procedures based on the opt-in model than on the opt-out model. Even though the members of the group in both models may come from different jurisdictions, the parties that are bound by the opt-in judgment voluntarily bring their claim against the common defendant. As a result of filing the claim, they are bound by the court's judgment thereupon irrespective of the fact that the common legal questions/issues are decided collectively. In an opt-out procedure, on the other hand, the claimants may be bound by a judgment and precluded from bringing an individual claim against the defendant unless they have chosen to opt-out.

With regard to jurisdiction, it is important to mention that the Brussels I regulation currently lacks any special jurisdiction rule in regard to collective proceedings. Therefore, the courts are compelled to establish jurisdiction in a somewhat artificial manner. This thesis, for that reason, contains a proposal to adopt a special jurisdiction rule for collective action as well as collective settlement procedures.

With respect to the cross-border, EU-wide binding and preclusive effect, the crucial question is whether a judgment given in the various collective procedures qualifies as a judgment under the Brussels I regulation. The Brussels I regulation provides for harmonised roles regarding jurisdiction, binding effect and enforcement for courts in the European Union. If a judgment rendered by one of the Member State's courts qualifies as a judgment in the sense of article 32 Brussels I regulation, this judgment has to be recognised and executed by all other national courts. The exact scope of the binding effect of these judgments is determined by the law of the court which rendered this judgment (lex fori originis). Therefore, the binding and preclusive effect (res judicata) of the court's rulings in the various collective proceedings under Dutch, German and English legal regimes is investigated. I do not consider the French collective proceedings, because the courts are not allowed to deviate from individual circumstances and rule on common legal questions/issues. Regarding the binding effect of a judgment declaring a settlement binding on an opt-out basis, the crucial question in this regard is whether the Brussels I regulation, which is based upon the classical model of adversarial proceedings between a known claimant and a known defendant, recognises a settlement declared binding upon interested parties who were (properly) notified of the settlement agreement and the subsequent court proceedings. If this question is answered affirmatively, those group members who did not opt-out are bound by the compensation they receive onder the settlement and precluded from claiming before any other court in the European Union.