12.2.3.1 Binding effect of collective judgments onder national law

There are significant differences between the national laws on the question whether judgments in the various collective proceedings have binding effect. There are two basic models of collective proceedings. On the one hand, collective proceedings in which a representative claimant requests the court to make a declaratory judgment where after (if positively ruled upon) conditions to establish liability in individual proceedings on damage claims may follow. On the other hand, collective proceedings in which investors individually claim damages and the courts suspend these proceedings and request another court to rule upon the common legal questions/issues. After the other court has ruled, the individual proceedings will be resumed.

The Dutch collective action based on section 3:305a DCC is an example of the first model. An investors association request the court to declare that the prospectus was misleading towards investors. The courts ruling in the follow-up proceedings initiated by the individual investors are not technically bound by the first court's judgment on the misleading nature of the prospectus, or its absence. The reason that the `collective judgment' has no binding effect is the subjective scope of the binding effect, i.e. only the parties involved in that particular procedure are bound to the declaratory judgment. In the collective action proceedings, the investors association and the defendant(s) are the procedural parties, whereas in the other proceedings, the individual investors and the defendant(s) are the procedural parties.

The German Capital Markets Model Case Act (Kapitalanleger-Musterverfahrensgesetz, KapMuG) is an example of the second model. When at least 10 investors have initiated proceedings in which common legal questions/issues have to be treated, the district courts have to suspend these proceedings and these common questions/issues are referred to the Higher Regional Court (Oberlandesgericht, OLG) for a ruling thereupon. Section 16 of the Capital Markets Model Case Act provides the statutory basis for the binding effect of the Higher Regional Court's ruling on the common legal questions/issues. Under the English Group Litigation Order ("GLO"), the court may select one or more test claims for full trial and suspend the other proceedings with common questions/issues. The court also determines to what extent its rulings on the test claims have binding effect in regard to the other claims. In general, the English civil proceedings rules give great autonomy and discretion to the courts in dealing with collective proceedings.