At the end of October, a Dutch court dismissed a claim by a group of affected shareholders of Brazilian oil company Petrobras, ending a case that has been spanning for some 10 years. The shareholders will not receive compensation for price drops (“koersverlies”) caused by a bribery scandal in the multi-year, mass claims case.
In this case, investors claimed damages due to price drops in Petrobras shares in 2014 and 2015 following the news that the company had become embroiled in a €2 billion bribery scandal. In exchange for bribes to high-ranking officials within Petrobras and to Brazilian politicians, contracts were concluded on a large scale in which Petrobras overpaid construction companies and suppliers for purchased goods and services. The fraud came to light in 2014 as a result of a Brazilian criminal investigation and the stock market price of Petrobras shares fell significantly in 2014 and 2015.
A Dutch foundation (“Stichting”) represented the interests of Petrobras investors who suffered losses and who were not covered by a US$2.95 billion settlement that Petrobras reached in the United States. But the District Court of Rotterdam decided in a detailed judgment last month, based on legal opinions of Brazilian and Argentinean experts, that under Brazilian and Argentinean law there was no possibility to claim the type of damages being pursued.
Because several subsidiaries of Petrobras are established in the Netherlands, in addition to the mass claim case, claims for directors’ liability were also brought in the same Rotterdam court.
First, the Rotterdam court ruled on its jurisdiction to decide the directors’ liability claims based on Article 2:248 Dutch Civil Code (DCC) (joint and several liability of directors in the event of bankruptcy), Article 2:9 (joint and several liability in the event of improper performance of duties) and Article 6:162 (general tort) with respect to directors residing abroad. In the directors’ liability proceedings, the court-appointed insolvency practitioner in the Dutch bankruptcy of group subsidiary Petroplus International BV (PPI) summoned various parties.
There were ten defendants in the case, including one referred to as TMF, and five of which resided outside the Netherlands. The Dutch IP sought an order to pay the bankruptcy’s estate deficit based on the aforementioned articles of law, claiming all the directors improperly performed their duties.
Two of the defendants asked the court to declare that it lacked jurisdiction to decide the cases, but the court ruled that because three of the directors and TMF resided or were established in the Netherlands, the court had jurisdiction on the basis of Dutch procedural law. One of the defendants resided in Rotterdam, so the Rotterdam court also found it had relative jurisdiction on that basis, and – based on these same procedural rules – the court said it had jurisdiction over the other two directors residing in the Netherlands and TMF. With respect to the remaining directors/defendants, the court said it must make a distinction depending on the basis of the claims launched by the Dutch IP.
Under Article 2:248 DCC, the court concluded that the bankruptcy judgment assumed that PPI’s centre of main interests (COMI) was in the Netherlands. Therefore, main proceedings could be opened in the Netherlands based on the European Insolvency Regulation (the original 2002 version). The Court of Justice of the European Union (CJEU) has ruled on several occasions that courts in the country where insolvency proceedings have been opened also have jurisdiction, on the basis of Article 3(1) of the Insolvency Regulation 2002, to rule on disputes that arise directly from those insolvency proceedings and are closely related to them. In the Recast version of the Insolvency Regulation, Article 6 would have provided the same outcome.
The court said it would also have jurisdiction with regard to a claim under Article 2:248 DCC, since such a claim can be instituted exclusively by an IP in a Dutch bankruptcy for the benefit of the joint creditors.
With regard to Articles 2:9 and 6:162 DCC, the court found that jurisdiction cannot be determined on the basis of the Brussels I bis Regulation because the two defendants concerned resided in the United States and not in a European member state. The court concluded that it must assess its jurisdiction on the basis of national law, Dutch common international jurisdiction law as determined in Articles 1-13 Dutch Procedural Code in the case at hand. The court found that, applying those rules, it followed that it had jurisdiction over all the defendants because there was a “sufficient connection” between the claims against the various defendants for reasons of expediency that justify joint proceedings. According to the court, the fact that not all defendants were directors during the same period was not relevant to assume a “sufficient connection”.
The Article 6:162 DCC claim concerned a “Peeters/Gatzen” claim, named after a 1983 Netherlands Supreme Court ruling that determined a bankruptcy IP, under certain circumstances, is also authorised to defend the interests of the joint creditors of the bankruptcy estate on the basis of tort. In the Petrobras case, the court answered preliminary questions about jurisdiction with the outcome that such claims must sometimes be submitted to a court other than the Dutch court and, moreover, a different substantial law may also apply. The two directors subject to the claim referred the court to previously concluded agreements in which arbitration clauses and, later, forum choices were included. But the court found that, to the extent that agreements had been concluded with PPI, they had since been terminated; and, to the extent they have been entered into with subsidiaries of PPI, both PPI and the Dutch IP were not bound by them.
In summary, the Rotterdam District Court considered itself competent under the Insolvency Regulation with regard to Article 2:248 DCC, and under Articles 2:9 and 6:162 DCC through specific provisions of the Dutch Procedural Code.
In an international context, it can be quite difficult for a Dutch IP to litigate directors’ liability claims. It is also just as complex for directors living outside the Netherlands to calculate their position. Before their appointment, directors would do well to inform themselves of the apparent Dutch hornet’s nest of personal liability.
References
Court of Justice of the EU 6 February 2019, ECLI:EU:C:2019:96 (Peeters/Gatzen).
Rotterdam District Court 28 August 2024, ECLI:NL:RBROT:2024:9811
Rotterdam District Court 30October 2024, ECLI:NL:RBROT:2024:10725 (old-style collective action Petrobras/price drop damage)
This is a slightly adapted version of a regular column Bob Wessels is writing for Global Restructuring Review (GRR) on the topic of cross-border restructuring and insolvency in a European context. GRR is a subscription-only publication and the column appeared in GRR on 21 November 2024. See www.globalrestructuringreview.com.