Claims assigned to a litigation vehicle: who needs to prove what?
Two recent decisions from the Amsterdam Court of Appeal have confirmed that litigation vehicles cannot come empty-handed to the court, and should provide documentation regarding the assignments of claims they submit. The Dutch legal system allows companies and individuals to assign their claims to a “litigation vehicle” or “claims vehicle” that bundles those claims into a single action. In its decisions of 10 March 2020, the Court of Appeal ruled that it is up to litigation vehicles to prove that the assignments can be invoked against the debtor.
The court shed more light on the amount of information and documentation the vehicles need to provide, and the division of the burden of proof.
The decisions were rendered in follow-on cartel damages proceedings between the litigation vehicles Stichting Cartel Compensation (SCC) and Equilib, and a number of airlines. SCC and Equilib are litigation vehicles whose business model consists of bringing to court bundled claims assigned to them by allegedly injured parties.
According to the Amsterdam Court of Appeal, Dutch law does not necessarily require the litigation vehicles to positively establish that the claims were successfully transferred to the litigation vehicles. Instead, the Court of Appeal considers it sufficient for the litigation vehicles to establish that the debtors can discharge their alleged debts by paying the (purported) assignees. Whether or not the debtors can discharge their alleged debts by paying the (purported) assignees is to be established in accordance with the law that governs the assigned claims (also see Article 14 Section 2 of the Rome I Regulation, No. 593/2008). Under Dutch law, a debtor can pay the purported assignee and discharge his debt, as long as he has reasonable grounds to assume that the assignee validly acquired the claim. The debtor can thus rely on his good faith, even if it later turns out that the claims were not validly assigned.
With this ruling, the Court of Appeal seems to be introducing a new norm as to what exactly litigation vehicles need to prove. The Court of Appeal provisionally assumed that Dutch law applies to each of the submitted claims. The burden of proof that the assignments can be invoked against the airlines, is on the litigation vehicles. According to the Court of Appeal, litigation vehicles can – pursuant to Dutch law – substantiate the assignments they have received by notifying the airlines of the assignments, and providing extracts of the title and the deed in which the claim is described with sufficient clarity. It will then be up to the airlines to argue why there are reasonable grounds for doubts as to the validity of the assignment of the claims to the litigation vehicles.
It remains to be seen whether this line of reasoning will ultimately be upheld by the Dutch Supreme Court. However, since the Court of Appeal indicated that it will not grant the airlines leave to file an appeal against its ruling, it may be several years before the Supreme Court has a chance to give its view.
This article was published in the Competition Newsletter of April 2020. Other articles in this newsletter:
