Deepwater Horizon Litigation: Class Action Jurisdiction?

By Michiel Teekens, TeekensKarstens advocaten notarissen

The Deepwater Horizon drilling-rig explosion caused the largest marine oil spill in the history of the petroleum industry. The oil spill that began in the Gulf of Mexico covered over 110,000 square kilometres of the ocean surface and reached over 2,000 kilometres of shoreline. Besides the personal tragedy, the oil spill caused devastating short- and long-term environmental effects. The Deepwater Horizon rig was leased by BP, which was confronted with various class action lawsuits and investigations.

A Dutch class action based on article 3:305a Dutch Civil Code was filed before the Amsterdam District Court in the Netherlands by the Dutch Association of Stockholders (the VEB) on behalf of all shareholders that bought, held, or sold BP shares between 2007 and 2010 through an investment account at a Dutch bank. The VEB argues that BP, seated in the UK, made misleading and false representations in its annual accounts and public statements about the causes of the oil spill and the magnitude thereof, which resulted in an extreme stock price drop and thus damages for the shareholders.

The Amsterdam District Court and Court of Appeal considered the VEB claims related to purely financial damage to an investment account held in the Netherlands, which itself is not a suffcient factor for Dutch jurisdiction under article 7(2) Brussels Recast Regulation (Erfolgsort). The VEB filed cassation proceedings.

In its judgment of 14 June 2019, the Supreme Court reviewed the relevant case-law of the CJEU, namely the Kolassa case, the Universal Music case, the Löber case, and the E-date case. The Supreme Court requested the CJEU to provide a preliminary ruling.

One of the questions was if the E-date case could imply that by providing false or misleading information in a general manner through public statements and its annual accounts directed to all its shareholders, and not to a specific shareholder group, BP should reasonably understand and expect it could be sued in any and all countries where its shareholders suffer damages on their investment accounts. If this is not the case, the follow-up question is if there are additional circumstances available to establish Dutch jurisdiction, among those the classaction character of the proceeding.

The CJEU preliminary ruling might provide additional insights in these two interesting international issues.

Michiel Teekens

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TeekensKarstens advocaten notarissen (TK) is a full service Dutch law firm with extensive experience in the field of international law. TK has established specific international teams to provide international clients with tailor-made services and information.

Michiel Teekensis a Partner with TeekensKarstens advocaten notarissen (TK). He is an international corporate and commercial litigator and Chair of the International Law team of experts in TK. He also serves as Global Chair of the GGI Litigation & Dispute Resolution (LDR) Practice Group.

Published: Litigation & Dispute Resolution Newsletter, No. 12, Spring 2020 l Photo: Lukasz Z - stock.adobe.com