European Securities Litigation Risk Grows 
 
Client Alert
 
Securities class action litigation is no longer purely an American institution.  This week saw what is believed to be the first ever European securities class action settlement.  Royal Dutch Shell announced a $352.6 million settlement with non-United States investors who bought shares on European exchanges, as well as $47 million in attorneys'  fees to three U.S. law firms that represented the European shareholders.  Any company listed on a European exchange must carefully consider the risks posed by the growing threat of securities litigation in Europe.

Historically, non-U.S. investors had trouble suing for securities fraud in Europe due to laws prohibiting class-wide litigation.  This week's settlement--thought to be the largest class action settlement of any kind in Europe--signifies that times are changing.  Under a new Dutch statute, which the Amsterdam Court of Appeals applied for the first time in the area of securities law, investors may bring class-wide settlements binding on all of the shareholders covered.  Several other European nations have moved to enhance the rights of shareholders to sue.  Germany has passed legislation allowing investors to bring model case proceedings to resolve common factual or legal questions in shareholder lawsuits, and a new British law allows shareholders to bring suit against directors.

The Shell settlement, which still must be approved by the Amsterdam Court of Appeals, indicates that investors overseas are increasingly willing to seek legal redress in local courts for alleged corporate misconduct.  Indeed, Shell investors involved in the settlement report that the Dutch settlement is larger than the average settlement achieved in comparable securities class actions in the U.S.  For companies with securities traded in Europe, the securities litigation landscape has certainly become more complex.

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