12.3 Conclusion part II

The main question of this research was whether the private international law rules on applicable law that currently apply to prospectus liability claims and the rules on recognition of judgments are suitable for a proper-functioning private enforcement of EU prospectus rules. Special attention was given to the complexities arising from proceedings in which investors collectively seek damages for the losses incurred as a result of a misleading prospectus.

On the basis of this research, I have come to the conclusion that the current private international law rule on the law applicable to prospectus liability claims as enacted in the Rome II regulation and interpreted by the European Court of Justice, is not suitable for an effective private enforcement of EU prospectus mies. The lex loci damni rule that applies the law of the place where the investor holds his investment account to prospectus liability claims creates an unequal treatment of investors, a hindrance to adequate collective proceedings and a potential non-alignment between the jurisdiction enforcing the public law prospectus rules and the applicable private law prospectus liability regime. The rules on recognition of judgments provide for a cross-border, EU-wide binding effect for judgments in collective proceedings. The scope of the binding effect is determined by the law of the Member State where the judgment was rendered (lex fori originis). The binding effect is limited to the procedural parties (subjective scope of res judicata). Since the collective action proceedings available onder French, German and English law are all based on the opt-in model, the restriction to the procedural parties is not an impediment to recognition of the respective judgments in these proceedings. The main problem regarding recognition of judgments arises with respect to the recognition of the judgment declaring a collective settlement binding on those investors who were not reached and therefore were deprived of the possibility to opt out.