The bundling of claims in cartel damages litigation – Germany v. Netherlands v. UK v. Italy v. France
When pursuing damages in so called (follow on) cartel damages claims claimants can anticipate fierce resistance from defendants. The resistance is caused by the sheer volume of claims in these kind of cases. Collective claims can mount to several billions of euros (see for instance the claims asserted in Air Cargo and Trucks), sometimes even hundreds of billions, thus triggering defendants to counter with as many arguments (im)possible. Normally, the only way for claimants to survive this legal battle is to combine forces. Let’s tackle the defendants together. This is what is called the bundling of claims. Often litigation is impossible without the bundling of claims. One might argue that jurisdictions that forbid this bundling of claims are in breach of the doctrine of the useful effect. The useful effect doctrine constitutes a specific branch of the EU state action doctrine that serves to prevent Member States from enacting state measures that enable undertakings to escape antitrust accountability. In other words damaged parties must be able to pursue compensation of their damages. We have seen some recent case law of the European Court of Justice (ECJ) in which it applied the useful effect doctrine to the benefit of claimants. We did a comparative law research on the possibility of working together as claimants, thus the bundling of claims in various European jurisdictions.
Contributed by Konstantin Seifert, Oppolzer | Seifert Kartellrecht
In Germany, there is no specific regulation concerning the bundling of claims in cartel damage cases. As a result, there are no clear rules allowing or prohibiting the purchase or assignment of such claims and there are also no provisions allowing for a genuine opt-out antitrust class action. Thus, claimants (or “class action” organizers) that want to enforce damage claims of various injured parties in one and the same legal proceeding currently have to choose one of mainly three options under “regular” German civil law, civil procedure and – in one case – the general regulations concerning legal service providers:
Option 1 is going to court as a “joinder of parties” (“Streitgenossenschaft”), which means that every and all injured parties participating in the proceedings will be claimants next to each other. While this is undoubtedly permissible, the group of claimants (and the organizer/litigation funder behind them) face two challenges: The first one is that being a party to the proceedings every individual claimant can – in theory – take an active role in the trial, thus undermining the intended efficiencies of the “class” proceedings and potentially breaking up the united front of the claimants. Therefore, an elaborate contractual design may be needed in order to keep everyone aligned without overly imposing on the individual claimants (and risking an invalidity of the entire construct). The second challenge is that the court might simply decide to break up the proceedings into smaller pieces (up to one case per claimant), so that the claimants (and the claim organizer/funder) end up with dozens or hundreds of individual proceedings (each with their own – in Germany quite substantial – costs and cost risks). This has not been tested much, so the risk of a split-up is hard to gauge. However, the risk appears to be lower for smaller (still manageable) or very large groups of claimants (which would cause thousands of separate trials if split up, thus swamping the court) than for a mid-size group of claimants.
Option 2 is the assignment model, in which the injured parties assign their claims to a claim vehicle which then goes to court as sole claimant. The injured parties in turn bear no cost risk whatsoever and receive the lion’s share of the recovery (usually around 70%) whereas the rest goes to the claim vehicle/funder. While this is a very practical construct for all parties involved, it has had some teething problems and has – initially- been met with opposition on district court level. Multiple courts have found the assignments (i.e. the transfer of the claims to the claim vehicle) to be invalid due to either (i) insufficient financial resources of the claim vehicle or (ii) a violation of Germany’s Legal Services Act (“Rechtsdienstleistungsgesetz”). As a consequence, the trials inevitably ended in a fiasco (because the claim vehicle never possessed any claims it could enforce in court).
The first issue, however, practically arises only in special circumstances and can also be solved quite simply legally (but not cheaply). There has only been one landmark case in which the courts (in Düsseldorf) have held the assignments to be invalid due to insufficient funding of the claim vehicle. That case was particular in that the claim vehicle itself had publicly communicated its sparse funding before the assignments were made so that the injured parties (i.e. the assignors) were aware or at least had to have known about the lack of funding, which under law is a prerequisite for the invalidity of the assignments. Naturally, this will very rarely happen in other cases where clients simply have no reason to doubt the claim vehicles’ funding. Also, any (residual) risk can be excluded by providing sufficient financial resources to the claim vehicle to cover all costs reasonably expected in the proceedings (including, in particular, any potential cost reimbursements for defendant’s counsel). Because then, the defendant(s) would not be exposed to the undue risk of being unable to recover its costs for legal defense in case it won the case. As stated above this is simple in a practical sense, but it might be costly, because Germany has embedded the so-called loser pay principle in its procedural law, so counsels’ statutory fees and court fees might mount up to appr. 2 million euros. However, based on the Düsseldorf decisions, one can assume that taking out ATE (“after-the-event”) insurance (covering any adverse costs if the proceedings are lost) will also be sufficient and much more economical than depositing funds for all potential adverse costs in the claim vehicle’s bank account.
The second issue is that the German Legal Services Act (“Rechtsdienstleistungsgesetz”) considers the enforcement of claims for the account of a third party to be a legal service, which may only be rendered by companies with a debt collection license. It is not impossible to obtain such a license, but even then, several district courts had held that the license would not cover a business model directly aimed at legal proceedings in court (as opposed to out-of-court). This, however, has recently been overturned by a landmark ruling of the Federal Supreme Court. The FSC has also further clarified another contested issue, which is the conflict of interests provision in the Legal Services Act. Some district courts saw a violation of that provision in the fact that (i) the interests of different (groups of) injured parties might not be aligned (so the claim vehicle or the settlement could favor some injured parties at the expense of others) and (ii) the interests of the injured parties on the one hand and the claim vehicle on the other hand might also not be aligned (since the claim vehicle bears all cost risks and thus might be inclined to accept a settlement sooner than the injured parties would for themselves). The FSC, by contrast, held that when designed properly (and particularly, if the claims are sufficiently homogeneous), these issues could be overcome. This should also hold true with regard to a potential conflict of interests between the injured parties and a third party funder (providing the resources to the claim vehicle), at least if the funder’s influence in the proceedings (i.e. on the claim vehicle) is limited (and/or if any settlement can be revoked by the injured parties). The latter point (influence of the funder) has even been picked up by the legislator who has adopted a corresponding change in the relevant provision (§ 4, 1) of the Legal Service Act, which entered into force on 1 October 2021. There are several appeal proceedings pending in those cases, where a violation of the Legal Services Act had been ruled on District Court level. In those proceedings, a number of higher regional courts (in Munich, Stuttgart, Schleswig, and Braunschweig)– even though they have not handed down final judgments – have issued orders and/or given opinions in oral hearings that strongly indicate they will overturn the first instance decisions and restore the validity of the assignments.
Given these developments, we can expect to see a renaissance of the assignment model in Germany. The extent of it will also depend on the outcome of an appeal case in the trucks cartel pending at the higher regional court of Munich which is much anticipated (and which will probably go up to the FSC to finally settle the matter and provide even more guidance for future permissible designs of the assignment model).
Finally, it should be borne in mind that the German Legal Services Act will not apply to foreign injured parties assigning their claims to a foreign claim vehicle which then brings the case to court in Germany (against, for example, a German defendant).
Option 3 is the purchase of claims, which then are also assigned to a claim vehicle. Since there is a fix purchase price and therefore the injured parties have no further interest in what becomes of “their” claims, the claim vehicle then goes to court entirely for its own benefit. Therefore, there is no question of rendering a legal service to someone else and consequently no issue with the Legal Services Act. However, there are practical disadvantages: the claim vehicle/funder requires significantly more financing in order to be able to purchase the injured parties’ claims up-front – assuming even more risk than in the assignment model (Option 2) or in the financing of a joinder of parties (Option 1). Inversely, the injured parties usually get only a fraction of what they would have received had they chosen for option 2 with a favorable outcome.
Dutch civil procedural law allows special claim vehicles to act as a plaintiff in proceedings. Dutch law provides the following options to enable a special purpose vehicle (SPV) to engage in proceedings.
Option 1 is that the injured parties can assign their claims to the SPV, which subsequently litigates these claims. The injured parties and the SPV can also enter into a contract of mandate which will entitle the SPV to litigate the concerned claim. The SPV can subsequently litigate these claims either in its own name, or in the name of the injured parties. This is what we call the “opt-in route”. Any participating party has to actively decide for themselves to join this collective action.
In various judgments in cartel follow-on cases in connection to the Air Cargo cartel, the Amsterdam District Court and Court of Appeal held that the assignment by individually injured parties of claims to a claim vehicle is in principle valid under Dutch law.
The burden of proof regarding the legal validity of the assignment of the claims lies with the claim vehicle, the Amsterdam District Court ruled. In a damages action initiated by claim vehicle Stichting Cartel Compensation (SCC), the court clarified that claimants will fulfil their obligation to furnish facts by submitting an extract of the deed of assignment and the title:
“4.14. The District Court starts from the premise that if the documentation brought into the proceedings contains per shipper: (i) the assignment agreement (title) and (ii) the deed of assignment and (iii) it is clear that these were signed/issued by the assignor, it is sufficiently established that SCC is the party entitled to the claims, unless there are concrete indications, to be put forward by the airlines, that a legally valid assignment has not taken place in spite of this.”
“The court assumes that if the documentation per shipper submitted to the proceedings contains: (i) the assignment agreement (title) and (ii) the deed of assignment, and (iii) that it is clear that these have been signed/furnished by the assignor, then it is established to a sufficient degree that SCC is the entitled party to the claims, unless there is concrete evidence, to be submitted by the airline companies, showing that nonetheless, no legally valid assignment has taken place. It is important in this respect that the assigned debtor (and the court) can establish on the basis of the documentation that the assignor and assignee did actually intend to assign the claim In this case, the Amsterdam court held (on the basis of the assignment documents provided by SCC) that the assigned claims were described in a sufficiently clear and precise manner:
“4.21. The court finds that it is sufficiently clear from the aforesaid assignment documentation and bailiff’s notifications that this concerns claims from the shippers for compensation for all damages resulting from the cartel, including overcharge, interest, lost profit and costs. […] It has also been taken into account that this concerns claims arising from tort by virtue of a cartel (the size and duration of which was apparent to the cartel members but not to the shippers). The position of the airline companies basically boils down to the fact that the shippers did not wish to assign their entire claim for damages arising from the cartel but excluded parts of it which, in the absence of evidence to support this, seems to the court to be implausible. It is furthermore clear that this concerns claims from all the members of the cartel referred to in the decision (as debtors of the claims). The deeds of assignment (due in part to the reference to the assignment agreements) accordingly contain sufficient details to be able to determine which claims are concerned. Contrary to what the airline companies have argued, it is not necessary for the determinability of the assigned claims, namely the claims for damages that are based on tort (participation in the cartel), that it can be established (now already) which shippers purchased which flights (which routes).
4.32. Based on all of the preceding, the conclusion is that the assignments that are governed by Dutch law are legally valid. This implies that the defence of the airline companies that the litigation assignments are not valid does not need to be discussed.”
This criterion was applied in another likewise judgement of the District Court of Amsterdam and later confirmed in appeal, by the Amsterdam Court of Appeal (2020); if the claim vehicle has fulfilled its above mentioned burden of proof, it is then up to the airlines to argue, in the context of substantiating their defence, how and why the validity of the assignment should be questioned on reasonable grounds, the appeal court ruled. The appeal court added that the debtors had a limited right to information and that they could not claim additional documents, referring to the parliamentary history of Article 3:94(4) DCC, which provision provides that the person against whom the debt-claim is to be exercised may demand that a written summary of the notarial or private deed and of its legal basis are handed over to them.
The appeal court further added that at (this stage of) these proceedings it is, under Dutch law, not necessary to establish whether or not the assignment of the claims was validly made, since that is not necessarily important in the relationship between assignee (claim vehicle) and debtor (cartelists). The important thing is whether the debtor has to accept the effectiveness of the assignment against him. If the debtor subsequently were to pay to a party who was not authorised to receive the payment, the debtor can object to the party to which the payment was to be made that he paid in full, if he reasonably assumed that the payment was made to the recipient.
This means that cartelists’ defenses in cartel cases, seeking access to all the underlying documents, will thus be brushed aside at first instance. The documents in question may become relevant if there are reasonable grounds to doubt the validity of the assignment, but such discussions often focus on one or a few assignment agreements rather than on all assignment agreements submitted by the claimant. Overall, the abovementioned judgements have substantially reduced the possibilities of cartelists to call into question the validity of assignments when governed by Dutch law.
Option 2 is that the SPV can bring a so-called “collective action” on the basis of article 3:305(a) of the Dutch Civil Code (DCC), either old legislation, or new legislation, depending on whether the events that are subject to the action occurred prior or after 15 November 2016. Article 3:305(a) DCC, old legislation, enables the SPV to demand declaratory relief with regard to liability and causal relationship, for the benefit of groups of injured parties as far as their claims are sufficiently similar and insofar as the claim vehicle promotes these interests pursuant to its articles of association. The options under the old regime are limited to declaratory decisions only, however, these collective actions can provide the momentum necessary to force the injuring party to accept a collective settlement. A SPV can commence a collective action under Article 3:305(a) DCC (old) without the cooperation of the injured parties, but is subject to other limitations. This is the “opt-out” route. All injured parties are included, when finally a settlement has been reached, parties can opt out of this settlement and pursue their own goal. More strict rules with regards to corporate governance apply in the “opt-out” system, naturally because damaged parties can be drawn into this kind of litigation without prior consent. The old Article 3:305(a) DCC only remains available when the relevant events took place before 15 November 2016.
Recently the Dutch legislator updated the collective action regime, with the amendment of the Act on the Resolution of Mass Claims in Collective Action (Wet afwikkeling massaschade in collectieve actie, “WAMCA”), and has introduced a mechanism to claim payment of damages in collective actions on behalf of the injured parties, as well as a lead plaintiff system. The legislator further added a number of additional safeguards and requirements for claim vehicles to constitute a viable representative claim as is required under Article 3:305(a) DCC to ensure the standing of the claim vehicle. For example, the SPV has to be sufficiently representative, has to have sufficient experience and expertise to commence and conduct the action and has to have a supervisory body. The merits of a case will only be assessed after the court has established that the claim is admissible under Article 3:305(a) DCC and the plaintiff has made it sufficiently plausible that pursuing the collective action is more efficient than individual claims (Article 1018(c) par 5 sub b Dutch Code of Civil Procedure).
If it has been established that a claim is admissible and successful, the court is also allowed to determine the amount of damages and the way in which the damages will be paid. As the WAMCA rather new, there is no case law yet that gives guidance on how the courts will in practice deal with these competencies as there are no cases yet that have reached this phase.
The “opt-out route” is also an option for collective actions for damages under the WAMCA. If the collective action is on an opt-out basis, a court decision granting or dismissing the collective action will be binding on all injured parties who are member of the class, who reside in the Netherlands and who did not opt out. The court decision will also be binding on members who reside abroad but in principle only if these parties opt in within a time period to be set by the court after the lead plaintiff has been appointed and announced, although the court is allowed to rule otherwise at the request of the plaintiff. The WAMCA regime is limited to claims concerning events that took place after 15 November 2016.
Option 1 and 2 can be combined. Collective actions, option 2, can only be brought by a Dutch foundation or association and claims as described above under option 1 can also be brought by other vehicles than Dutch foundations and associations, provided the plaintiff’s law of incorporation empowers it to bring legal actions (article 10:119 (a) DCC).
In the UK, the ancient rules against “trafficking” of litigation: the law of ‘maintenance and champerty’, still has effects on the possibility to bundle claims.
Law of maintenance and champerty
Historically, English law did not recognize and enforce arrangements which qualified as ‘maintenance’ and/or ‘champerty’. ‘Maintenance’ entails the support of litigation in which the supporter has no legitimate concern without just cause or excuse. ‘Champerty’ is an aggravated form of maintenance in which the party who maintains the litigation funds the litigation and in return receives a share of the proceeds of a successful claim. The conclusion of such agreements was punishable under criminal law and constituted a tort.
Meanwhile, English law and UK courts have become more flexible and have adopted in principle a favorable perception towards the funding of litigation. Maintenance and champerty have been abolished as crimes and torts for a few decades, but the general rule has been left in place that a contract that breaches the rule against maintenance and champerty is considered to be contrary to be public policy and therefore unenforceable (section 14(2) of the CLA).
UK case law
Recent case law of the UK courts clarified that this rule does not necessarily invalidate a third party litigation funding agreement, unless there is some other element that is contrary to public policy. That might be for example, when the funder has undue control over litigation and/or when the funder receives a disproportionate share in the proceeds as opposed to the claimant(s).
The UK Courts have however shown to be less tolerant when claims are assigned to a third party which pursues the claim in its own name, as opposed to third party litigation funding. Assignment agreements may still be labeled as ‘champerty’ or ‘maintenance’ in particular when the assignee has no legitimate personal interest in pursuit of the assigned claims.
Leading cases regarding the assignment of claims have been for a long time Trendtex Trading Corp v Credit Suisse (1982) and Jennifer Simpson (as assignee of Alan Catchpole) v Norfolk & Norwich University Hospital NHS Trust (2011):
- The Trendtex case established that the assignment of a bare right of action is considered to be against public policy where the assignee does not have a “sufficient interest” to justify pursuit of the proceedings for his own benefit. The court considered that the aim to profit from the litigation does not amount to a “sufficient interest”, and neither does the pursuit of litigation as part of a personal campaign.
- The court applied the principles from Trendtex also in the Simpson The cause of action assigned in this case concerned a cause of action in tort for personal injury. The claim was pursued by Mrs Simpson against the hospital where her husband had been a patient. While a patient at the hospital, her husband had contracted an infection called ‘MRSA’. Another patient at the hospital had also contracted the infection while treated in the hospital. The other patient assigned her claim to Mrs Simpson for the consideration of £1, and she pursued the claim in her own name and for her own benefit. The court considered that the assignment of a bare cause of action in tort for personal injury remains unlawful and void (para 24), stating that even though Mrs Simpson might have had ‘honorable motives’ in pursuing the claim, to demand attention for the (supposed) failing of the hospital, this was not the sort of interest the law recognized as “sufficient” as required by section 14(2) CLA. According to the court, the assignment in this case amounted to champerty, because it involved the purchase of a claim which, if it would be successful, would lead to Mrs Simpson recovering damages in respect of an injury she had not suffered. In the view of the court, that is an assignment of a bare right of action, in the sense the assignee has no legitimate interest, and is therefore void (para 28).
This case law makes clear that it is not so easy for a third party to pursue claims in its own name, when there’s no ‘legitimate’ personal interest and profit is the only goal.
There are however some recent cases which might suggest that there might be a development towards a more liberal approach by the UK courts with regards to the assignment of claims:
- In the case of JEB Recoveries LLP v Binstock (2015), claims that were assigned to a special purpose vehicle ‘JEB Recoveries’, were accepted by the UK High Court. The original claim concerned was a debt due from defendant under a contract between the defendant an Mr Wilson. Mr Wilson assigned his claim to the claimant SPV, which was established by him and two others. The court held that although the assignment of a bare cause of action had long been recognized as champertous and that, without more, assignment of the claim of a nominal sum would be likely to offend public policy, in this particular case there was more: the assigned claims were not a bare right of action but included debts, and also a connection remained between the assignor and the SPV pursuing the claims: Mr. Wilson had a one-third interest in JEB Recoveries and also assisted in the pursuit of the claims. This was different in the Simpson case, in which Mrs Simpson only pursued the claim in order to pursue a separate (personal) campaign. The court also cited the court in Simpson, which had held that the law on maintenance and champerty is open to further development as perceptions of public interest change, with reference to, inter alita, new statutory regulation since the Simpson case allowing certain damages-based agreements.
- Two years later, in the case of Casehub Ltd v Wolf Cola Ltd (2017), the UK High Court also allowed the bundling of claims by claim purchase agreements. The claims assigned were claims of customers against the defendant, who operated a software business, to be refunded the cancellation fees paid by them on the ground that the cancellation fee provisions in the terms and conditions of the defendant, were unlawful. The claims were assigned either in return for a percentage of the proceeds, or in return for a fixed amount. The court considered that in this case, the assigned claims did not amount to a bare cause of action because the assigned claims qualified as the right to the sum in question and the assignment of the right to bring a restitutionary claim to recover the sum, which would be incidental and subsidiary to that right (para 25).
Consequently, the question remained whether the claimant had a legitimate interest in the pursuit of the claims and whether there was a risk the integrity of the legal process would be impugned in some way (para 27). The court concluded that there were no public policy grounds which would lead to the conclusion that the assignment is invalid, to the contrary, the court held that there were strong public policy grounds in favour of upholding the agreement. In brief, because the assignments enhanced access to justice for the customers, while the court did not see a risk in this case of the litigation process being abused. The court also recognized that the claimant had a legitimate commercial interest in being able to pursue the claims assigned to it in order to protect the liquidates sums it acquired (para 28).
While these cases might suggest a shift in the UK courts perception towards the assignment of claims, it remains uncertain whether these cases will be upheld in all situations of assignment of claims. The acceptance by the courts of the assignment agreements in JEB Recoveries and Casehub was very case and fact specific, while the courts also made clear that the Simpson and Trendtex cases remain leading cases regarding this subject matter.
Therefore caution is still in order when it comes to the assignment of claims under UK law, as it will have far reaching consequences when a court will hold that an assignment is in breach of the law of maintenance and champerty: the assignment will be void and the claims cannot be pursued.
Contributed by Giovanni Scoccini, Scoccini & Associati
Italian law allows to bundle claims from different claimants in one lawsuit provided that these claims have the same causa petendi. This is the case with cartel damages claims, which stem from a single unlawful behaviour. Where the causa petendi is the same it is possible to file either a joint action under Article 103 of the code of civil procedure (c.c.p.) or a class action under the recently introduced Article 840 bis c.c.p
Option 1. The joinder of parties under Article 103 c.c.p is the traditional procedural instrument to realize economies of scale in the legal proceedings. It allows to bundle claims from claimants irrespective from where they are located (in Italy or abroad), provided that the lawsuit is filed with the court of the defendant’s domicile. On the other hand, if the lawsuit is filed with the court of the place where the harmful event occurred, the joinder of only the parties that are in the same jurisdictional district is possible. This could limit the use of the joinder of the parties if the defendant is not domiciled in Italy. However, the possibility that there are no defendants domiciled in Italy appears rare following the judgment of the Court of Justice in the Sumal case (C-882/19) in which judgement the Court established the liability of the local subsidiaries of the parent company which is the addressee of the infringement decision. Likewise in Germany, the Court may decide to break up the proceedings of the bundled claim either if it is requested by all the parties or if the joint management of the case may delay the proceedings or it may be too burdensome. In the truck cartel litigation, the court decided to break up the claims concerning the Scania vehicles from the other claims because the pending appeal of Scania against the Commission decision may result in a stay of the proceedings. The joinder of parties allows savings in the court fees and of the other costs of the proceedings.
Option 2. The new class action regime in Italy has been introduced by Law n. 31/2019 and is applicable to unlawful conducts that have taken place after November 19th 2020. The new class action regime is open both to consumers and undertakings directly or through an association. The proceedings is divided in three phases: 1) admissibility of the action; 2) judgment on the merit of the case 3) in case of success, payment phase of the compensation to members.
The class action can be filed by a single plaintiff which can also be an association provided that it is enrolled in the list kept by Ministry of Justice. In the first phase the Court will decide on the admissibility of the action. The action shall be declared inadmissible if it is blatantly ungrounded, the claims are not homogeneous (i.e. different causa petendi), there is conflict of interest between the plaintiff and the defendant or the applicant does not have the resources to adequately pursue the claim.
If the Court established that the action is admissible, the interested parties that have homogeneous claims can join the action and the case will go to trial. The Court shall not apply the formal rules of the code of civil procedure. It can ascertain the liability of the defendants taking into account statistical data and simple presumptions. The cost of the technical assessment shall be paid temporarily by the defendant.
In case of success the Court awards compensation to the plaintiff, that kicked off the class action, establishes which are the injured parties, opens the possibility again to new members to file an application to join the class action, appoints the judge in charge of the payment procedure and a representative of the members of the class action.
The defendant can file a reply to the applications of the members that can be assisted by their lawyers. After the assessment of the applications and of the replies of the defendant, the representative of the members shall draft a payment project to be submitted to the judge that will decide whether to grant the applications or not. The defendants shall pay the legal costs to the original plaintiff, the fees of the representative of the members and the legal costs of the single members. These costs can be significant.
The new class action regime shall be welcomed for its efficiency because it allows to file a pilot case easy to manage by both the court and the lawyer of the claimants and to postpone the heavy work of book building of members, the collection and the assessment of the documents only when and if the pilot case is successful. On the other hand, it can be very burdensome for the defendant that may be found guilty and condemned to pay compensation to an indefinite number of members following a judgment based on statistical data and simple presumptions. In case of defeat the legal costs for the defendant can be significant.
Another option available for bundling the claims is the assignment of the claims. The assignment of receivables is provided by article 1260 of the Italian civil code, and the Supreme Court made it clear that damage claims may be transferred like any other receivables. However, when assigning/purchasing claims under Italian law, there might be another spanner in the works in the form of a potentially required banking authorization pursuant to article 106 of the Consolidated Law on Banking (TUB). This provision may be applicable to (inter alia) the acquisition of cartel damages claims, and even though this is not a clear-and-cut case, this provision deserves consideration as the consequences of violating article 106 TUB might have far-reaching consequences.
Article 106 TUB provides that “the exercise towards the public of the activity of granting loans in any form is reserved for authorized financial intermediaries, registered in a special register held by the Bank of Italy.”.
The activities envisaged by Article 106 TUB require that they are carried out with some degree of professional manner towards third parties (“towards the public”) and one of the examples of what is meant by the “activity of granting loans” is the ‘purchase of receivables for consideration’. This means that receivables, which might cover cartel damages claims of cartel victims, when acquired in a professional manner, might constitute a reserved financial activity within the meaning of article 106 TUB.
When no authorization has been granted, such qualification is a risk because violation of article 106 TUB may have far reaching consequences. Not only will the (unauthorized) transaction(s) be considered invalid, the ‘lender’ may risk criminal sanctions pursuant to Article 132 TUB, which provides for criminal sanctions ranging from pecuniary sanctions to imprisonment.
It is held in case law that for specific financial activities to be considered abusive and therefore criminal, it is necessary that the activity is professionally organized with methods and tools such as to foresee and allow the systematic granting of an indefinite number of loans, addressing a potentially vast number of people.
Even though the scope of article 106 TUB and the abovementioned case law within the specific context of the acquisition of cartel damages claims is not entirely clear (yet), the provision deserves consideration given the potential consequences when it may turn out that the provision does apply to (certain) models by which claims are bundled; being invalidity of the (assigned) claims and possible criminal sanctions pursuant to Article 132 TUB.
Contributed by Marc Barennes, bureau Brandeis Paris
In France, there are no specific rules authorizing or prohibiting the bundling of claims in cartel damage cases. However, there are three main mechanisms allowing cartel victims to bring large damages claims.
Option 1 is the joint actions model, whereby cartel victims bring individual (separate) claims at the same time, before the same court, to which they request that these claims be dealt with jointly pursuant to Article 367 of the procedural civil code. Such actions will normally be dealt with jointly as the claims are connected and it is in the best interest of justice that they be decided together. The challenges plaintiffs will face are the same ones as those identified above for the option 1 in Germany. While there is no doubt that joint actions have in fact successfully been brought in other fields than competition law, none of these actions have been brought yet before the French courts in the specific area of cartel damages claims.
Option 2 is the assignment model, in which the injured parties assign their claims to a private entity which acts as claim vehicle. The claim vehicle, rather than the injured parties, brings the case in its own name. There are two potential scenarios. According to a first scenario, the claim vehicle buys the claim for a price which is paid once and for all at the time of the assignment. In such a case, the assignor does not have any financial interest in the outcome of the case which is brought by the assignee in its own name. According to a second scenario, the claim vehicle buys the claim for a price which is totally or partially paid once the damages are recovered only. In this second scenario, the assignor keeps a stake in the outcome of the case brought by the assignee. However, as the assignees have transferred their claims to the assignors who will bring the claim in its own name, they bear no cost nor any risk and normally receive the lion’s share of the recovery (usually around 70%) whereas the rest goes to the claim vehicle/funder.
The French courts have not yet had the opportunity to decide in a cartel damage claim whether either of these two types assignments are valid under French law (let alone EU law). However, pursuant to the principle of contractual freedom (“principe de liberté contractuelle”) and that claims may be validly transferred pursuant to Article 1321 of the Civil Code, no rule prevents such an assignment of cartel damages claims under French law.
Assignors should however be particularly careful in two regards. Firstly, to the extent that the second type of assignment described above could be considered as an activity carried out by a recovery agency pursuant to Articles R124-1 to R124-7 of the civil procedural execution code, the assignee should hold a specific authorization to recover these damages. Secondly, assignees should pay specific attention to the right provided for in Article 1699 of the civil code. Pursuant to this Article, in cases where an assignor transfers a « claim » which is disputed before a court to an assignee, the debtor of the claim may put an end to the dispute by paying to the assignee the price (plus fees and costs) the assignee paid to the assignor to acquire the claim (the so-called « droit de retrait »). In other words, a claim vehicle which would buy a cartel damage claim which was disputed by the debtor before a court may end up being entitled to claim only the price (plus fees and costs) it paid to the assignor for that claim, instead of the full value of the claim.
Option 3 is the fiduciary model (“fiduciaire”), which allows injured parties to assign their claims to a fiduciary entity which sole role is to recover their damages. Unlike the assignment model in which assignors transfer theirs claim to a private company acting as a claim vehicle, injured parties become constituents and beneficiaries of the fiduciary entity which brings the claim in its own name. If the fiduciary entity is funded by a litigation funder, all the costs and risks of bringing the claim may be borne by the fiduciary entity rather than the injured victims. While Articles 2011 to 2030 of the civil code provide for the conditions pursuant to which the fiduciary entity may act, the courts have not yet had the opportunity to decide a case in which a fiduciary entity claims cartel damages. There is however no reason to think that the fiduciary mechanism, which presents some similarities with a US “trust” or Dutch “Stichting”, is not particularly adapted to bringing large cartel damages claims.
All in all we come to the conclusion that in the various member states of the European Union there is a variety in the possibility to ascertain claims by bundling them. Since we feel that it is adamant for claimants to bundle their claims (otherwise they would effectively be excluded from the possibility to pursue damages at all) we are curious whether in any jurisdiction the argument of the useful effect doctrine will be accepted to facilitate the bundling of claims.
Hans Bousie (editor), with contributions from:
Giovanni Scoccini and
 European Commission decision of 9 October 2010 and 17 March 2017 Case AT.39258 (Airfreight).
 European Commission decision of 19 July 2016 Case AT.39824 (Trucks).
 ECJ 16 November 1977 case C-13/77, ECLI:EU:C:1977:185 (INNO/ATAB).
 ECJ 14 March 2019 case C-724/17, ECLI:EU:C:2019:204 (Skanska); ECJ 28 March 2019 case C-637/17, ECLI:EU:C:2019:263 (Cogeco).
 District Court Düsseldorf 17 December 2013 file no 37 O 200/09 (Kart) U; Higher Regional Court Düsseldorf 18 February 2015 file no VI-U (Kart) 3/14.
 Higher Regional Court Düsseldorf (fn 3), at rec. 104 seq.
 See, e.g., District Court Hannover 4 May 2020 file no 18 O 50/16.
 Federal Supreme Court 13 July 2021 file no II ZR 84/20.
 See, e.g. District Court Munich 7 February 2020 file no 37 O 18934/17.
 Federal Supreme Court 13 July 2021 file no II ZR 84/20, at rec. 55.
 File no 21 U 5563/20.
 File no 5 U 173/21.
 File no 7 U 130/21.
 File no 8 U 40/21.
 File no 29 U 1319/20.
 District Court of Amsterdam 2 August 2017 ECLI:NL:RBAMS:2017:5512, para. 4.14.
 District Court of Amsterdam (fn 14), para 4.12 et seq.
 District Court of Amsterdam 13 September 2017 ECLI:NL:RBAMS:2017:6607.
 Court of Appeal of Amsterdam 10 March 2020 ECLI:NL:GHAMS:2020:714, para. 4.10.5.
 Court of Appeal of Amsterdam (fn 17), para. 4.10.2.
 Court of Appeal of Amsterdam (fn 17), para. 4.10.3.
 The new legislative proposal for the Act on the Resolution of Mass Claims in Collective Action (Wet afwikkeling massaschade in collectieve acties, “WAMCA”) was adopted by the House of Representatives on 29 January 2019 and entered into force on 1 January 2020.
 Article 1018(i) par 2 Dutch Code of Civil Procedure.
 Article 1018(f) par 1 Dutch Code of Civil Procedure.
 Article 1018(f) par 5 Dutch Code of Civil Procedure.
 Trendtex Trading Corp v Credit Suisse (1982) AC 679 HL.
 Jennifer Simpson (as assignee of Alan Catchpole) v Norfolk & Norwich University Hospital NHS Trust  EWCA Civ 1149.
 JEB Recoveries LLP v Binstock  EWHC 1063 (Ch).
 Casehub Ltd v Wolf Cola Ltd  EWHC 1169 (Ch).
 The decree of the Ministry of Economy and Finance of 2 April 2015 no. 53 (MD 53), Article 3.
 MD 53 (fn 21), Article 2
 see Court of Venice 13 February 2013 No. 316; Court of Venice 2 September 2014 No. 1758; GdP of Rom 18 July 2016 No. 24510; GdP of Prato 1 February 2016 No. 80.
 Italian Criminal Court Section V No. 18317/2016.