Institutional investors turn to Dutch courts to recoup VW losses
Lawyers behind a US lawsuit against Volkswagen have set up a European structure to enable institutional investors around the world to recoup billions of dollars in damages from the German carmaker over its emissions scandal.
Bernstein Litowitz Berger & Grossmann, lead counsel in a US class action against Volkswagen headed by the £1.4bn Arkansas state pension fund, is one of two law firms behind a new foundation aimed at recouping money for investors in the carmaker through the Dutch courts.
Institutional investors have gone through the Dutch courts to claim damages against global businesses on several previous occasions, including against Converium, the reinsurance company, in 2012, and Shell, the oil company, in 2009.
The foundation is the latest in a series of legal actions against VW, which has seen its share price and sales plummet since it was accused of using “defeat devices” to cheat US emissions tests last year.
Lawyers say the barrage of legal action will heap pressure on Volkswagen to reach a settlement with investors nursing heavy losses on the back of the scandal.
One lawyer involved in legal action against Volkswagen said: “It is not only in the interest of investors but also in the best interests of VW to resolve this soon so that they can end this bad chapter.”
The Dutch foundation has “received extensive interest from institutional investors from across Europe and the US”, according to Huub Willems, chairman of the board of the Volkswagen Investor Settlement Foundation.
Mr Willems, who is also a former president of the Amsterdam Court of Appeal’s enterprise chamber, which oversees corporate proceedings in the Netherlands, declined to name the investors.
“We believe we can assist investors to obtain a meaningful recovery for their damages in connection with the diesel emissions scandal while allowing Volkswagen to turn the page and focus on producing excellent cars,” he added.
Under Dutch law, the Amsterdam Court of Appeal can declare an international collective settlement binding, even if the alleged misconduct took place outside the country.
But a settlement can only be reached if a company agrees to engage with investors. The foundation said it is confident the carmaker will do so. Volkswagen’s share price nearly halved over the past 12 months. It did not respond to a request for comment.
Bernstein Litowitz Berger & Grossmann’s position on the US class action involving VW’s American depository receipts, a type of stock that represents shares in a foreign corporation, gives the firm “a unique position to negotiate on behalf of investors with Volkswagen”, the foundation said.
Volkswagen is facing further legal action in its home market. In January, law firms from Germany and the US filed a capital markets claim, similar to a collective lawsuit in the US, on behalf of a US institutional investor that has suffered a “big loss”.
“We currently represent around 70 institutional investors from Europe, the UK and the US, as well as up to 6,500 private VW shareholders with a damages [claim] of several hundred million euros,” said Klaus Nieding, a lawyer at Nieding and Barth.
Earlier this month, Volkswagen said it would delay its full-year results, scheduled for March 10, due to “open questions and the resulting valuation calculations relating to the diesel emissions issue”.
Bentham Europe, a litigation finance group backed by Elliott Management, the US hedge fund, and Australia-listed IMF Bentham, also plan to file a damages claim in Germany in March.