Corporate & Securities Law

What?s more: KapMuG, Lovells? class actions

By Werner R. Kranenburg

Asked to comment on KapMuG and Lovells LLP’s recent creation of a practice group focused on class actions in Europe (see previous post), Bernd Jochem of German firm Rotter Rechtsanwälte Partnerschaft has, with thanks, submitted the following on behalf of his firm:

As a law firm focussing on investor rights we have not only seen new legislation like the KapMuG coming into force but also a rising interest of institutional investors to participate in such actions in Germany.

Together with litigation funding, which is established in Germany, the KapMuG gives institutional investors the opportunity to fulfill their fiduciary duties without taking a leading role with all its consequences. Since a test case under the KapMuG does not - unlike in the U.S. - stop the clocks running under the statutes of limitation for those who have not filed a court claim, in Germany an investor who wants to reserve his rights still has to file at least an initial claim.

However, only one case will be the test case while the other proceedings will be stayed. This has led to the participation of several, even foreign, institutional investors to participate in the case against Daimler, which will be the first one to be decided under the new KapMuG by the German High Court of Justice (”Bundesgerichtshof”) in the near future. Expectations are the court will deliver its decision between December 2007 and March 2008.

New cases that will be filed soon will involve the stock drop of IKB Kreditbank [Xetra: IKB] shares due to the subprime exposure in the U.S. Here too we are experiencing a significant interest by institutions to participate.

I absolutely agree with Lovells’ expectation that in this regard the focus for such actions will be in the UK, Germany and the Netherlands and that securities and anti-trust law will be the main areas.

In the comment he adds that it is his expectation that “[t]he cross-border issues in this context will also lead to alliances among law firms of different countries focussing on class actions.” The firm already has a long-standing relationship with US plaintiffs’ firm Shalov Stone Bonner & Rocco LLP.

Stefan Winheller of Winheller Rechtsanwälte (US relationship: Schiffrin Barroway Topaz & Kessler LLP), in a separate reaction to the same post, stated that “the KapMug is not like the US style class action: it is not an opt out system and each investor has to file suit on its own. At least it allows aggrieved investors to recover their damages with lower cost risks.” (Subscribe)

Full post as published by With Vigour and Zeal on October 11, 2007 (boomark / email).