Securities Litigation Around the World

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INTRODUCTION For years, investors, including asset managers, insurance companies, mutual and pension funds, as well as other financial institutions around the world have relied almost exclusively on the U.S. class action system for the recovery of losses from investor fraud. They have done so by participating in passive class action settlements or through active opt-out litigation. This strategy worked in most situations for both U.S. and non-U.S. securities; however, with the U.S. Supreme Court’s decision in Morrison v. National Australia Bank, 561 U.S. 247 (2010), since 2010 this approach is no longer feasible for securities traded outside the U.S. markets, so investors have to look for other avenues of loss recovery to cover non-U.S. damage claims. Although the vast majority of securities litigation takes place in the United States, and nine of the ten largest securities litigation settlements have come from the United States, international jurisdictions have been steadily implementing procedures that have allowed investors to obtain large settlements. Largest U.S. Settlements: Company Year Settlement Amount Jurisdiction 2008 (in USD bn) United States 1 Enron Corporation 2010 7.2 United States 2013 6.1 United States 2 WorldCom, Inc. 2010 3.2 United States 2019 3.2 United States 3 Tyco International Ltd. 2007 3.0 United States 2006 United States 4 Cendant Corporation 2.9 2014 2.5 United States 5 Petróleo Brasileiro S.A. - Petrobras: ADR 2016 2.43 United States 2020 United States 6 Nortel Networks Corporation 1.6 (Nortel I & II) 1.2 7 AOL Time Warner, Inc. Bank of America 8 Corporation: Merger with Merrill Lynch 9 Household International, Inc. 10 Valeant Pharmaceuticals International, Inc. Largest International Settlements: Company Year Settlement Amount Jurisdiction 2016 (in USD bn) The Netherlands 1 Ageas S.A./N.V. (f/k/a Fortis 2016 1.3 S.A./N.V. & Fortis N.V.) (NL) United Kingdom 1 2 Royal Bank of Scotland plc (UK) +1 (786) 235-5000 | [email protected] 2

INTRODUCTION In addition to the recent large European settlements, For effective global investor protection, relevant jurisdic- the European Commission (“Commission”) published a tions have to be identified and constantly monitored, as non-binding Recommendation on Collective Redress1 each case requires an individual concept to allow for risk- in 2013, with an eye toward future actions to harmonize free litigation, due to financing models, risk assessment, collective redress mechanisms in the European Union. claims in controversy and statutory conduct rules. DRRT Specifically, the Commission recommended that Mem- has experience pursuing loss recovery actions in a dozen ber States implement a general system of collective countries across five continents and is constantly moni- redress that could be used in all areas of law. The Com- toring the international landscape to identify jurisdictions mission also recommended that Member States report that are developing strong investor-protection laws and annual statistics regarding collective redress procedu- trustworthy institutions. DRRT has played a key role in res and share that data with the Commission so that many of the largest international settlements, including it could make its assessment on implementing further the aforementioned Fortis settlement, which is the largest EU-wide measures. investor recovery settlement in European history. DRRT has also been part of and instrumental in obtaining the Further, a publication by the U.S. Chamber of Commerce shareholder settlements with the Ageas S.A./N.V. (f/k/a Institute for Legal Reform (ILR), meant to “contribute to the Fortis S.A./N.V. & Fortis N.V.) in the Netherlands (2016) Commission’s evaluation” of whether or not to implement for EUR 1.3 billion, Royal Bank of Scotland in the United EU-wide collective redress mechanisms, did not take a Kingdom (2016) for GBP 800 million, Royal Dutch Shell in favorable view of collective redress, and in particular, the The Netherlands (2007) for USD 358 million, and Olym- U.S. system, and recommended implementing a number pus in Japan (2013) for JPY 11 billion. of measures designed to discourage collective litigation. Such recommendations include implementing stringent This manual gives an insight into securities litiga- class certification standards, restricting contingency fees, tion and investor protection in relevant jurisdictions preserving the “loser pays” system found in most European around the world. It focuses on the main aspects most jurisdictions and imposing severe restrictions on litigation relevant for institutional investors to evaluate any ju- funders, among others. Despite this negative assessment risdiction, that is, the availability of collective actions, of collective litigation and somewhat draconian recom- the court and attorney cost risks involved in bringing mendations to prevent its proliferation, collective redress an action, the various levels of publicity in these juris- is a necessary solution in many cases, and European coun- dictions, as well as the existence of a discovery proce- tries have been slowly implementing their own systems to eding and specialized investor protection laws. deal with modern legal problems. Though the U.S. class action system is widely derided during discussion of co- llective redress, many non-U.S. jurisdictions have adopted certain aspects of the class action procedures developed in the U.S. With this trend unlikely to reverse, even in the face of reports like the ILR’s, it is important for institutional investors to identify and evaluate opportunities in Europe and the rest of the world. [1] Commission Recommendation of 11 June, 2013 on common principles for injunctive and compensatory collective redress mechanisms in the Member States concerning violations of rights granted under union Law (OJ L 201, 26.7.2013, p. 60). 3 +1 (786) 235-5000 | [email protected]

INDEX 5 6 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 41 43 +1 (786) 235-5000 | [email protected] 4

Selected Jurisdictions by Domestic Equity Market Capitalization at Year-End Rank Exchange USD bn2 Total Number of Listed 23,327 Companies (Foreign & 1 NYSE Group (US) 13,002 2 Nasdaq (US) Domestic) 6,191 2,143 3 Japan Exchange Group (JP) 5,105 3,140 4,889 4 Shanghai Stock Exchange (CN) 4,701 3,708 3,637 5 Hong Kong Exchanges and Clearing HKEX (HK) 3,409 1,572 2,409 6 Euronext (EU) 2,098 2,449 7 London Stock Exchange Group (UK) 1,612 8 Shenzhen Stock Exchange (CN) 1,487 1,220 9 TMX Group (CA) 1,484 2,479 10 Deutsche Börse AG (DE) 1,217 2,205 1,187 3,413 11 Nasdaq Nordic (SE) 237 522 12 Australian Securities Exchange (AU) 13 Korea Exchange (ROK) 1,082 14 Taiwan Stock Exchange (TW) 2,092 15 B3 (fka BM&FBOVESPA) (BR) 2,283 16 Tel-Aviv Stock Exchange (TASE) (IL) 956 328 442 [2] Statistics based on 2019 year-end +1 (786) 235-5000 | [email protected] 5

237 Tel-Aviv Stock Exchange (TASE) (IL) [3] Statistics based on 2019 year-end B3 (fka BM&FBOVESPA) (BR) Selected Jurisdictions by Domestic Equity 1.187 Taiwan Stock Exchange (TW) +1 (786) 235-5000 | [email protected] 6 Market Capitalization at Year-End Korea Exchange (ROK) 1.217 Australian Securit ies Exchange (AU) Nasdaq Nordic (SE) Stock Exchanges by Market Capitalization in Billions of USD3 1.484 Deutsch e Börse AG (DE) TMX Group (CA) 1.487 Shenzhen Stock Exchange (CN) London Stock Exchange Group (UK) 1.612 Euronext (EU) Hong Kong Exchanges and Clearing HKEX (HK) 2.098 Shanghai Stock Exchange (CN) Japan Exchange Group (JP) 2.409 Nasdaq (US) NYSE Group (US) 3.409 3.637 4.701 4.889 5.105 6.191 13.002 23.327 25.000 20.000 15.000 10.000 5.000 0 BILLIONS OF USD

Selected Jurisdictions by Domestic Equity Market Capitalization at Year-End Stock Exchanges by Market Capitalization Total Number of Listed Companies (Foreign & Domestic)4 Total Number of Listed Companies (Foreign & Domestic) 4000 3709 3500 3413 3140 3000 2500 2413 2449 2479 2000 1500 2205 2283 1000 2092 500 0 1572 1220 1082 956 522 442 328 Tel-Aviv Stock Exchange (TASE) (IL) B3 (fka BM&FBOVESPA) (BR) Taiwan Stock Exchange (TW) Korea Exchange (ROK) Australian Securit ies Exchange (AU) Nasdaq Nordic (SE) Deutsch e Börse AG (DE) TMX Group (CA) Shenzhen Stock Exchange (CN) London Stock Exchange Group (UK) Euronext (EU) Hong Kong Exchanges and Clearing HKEX (HK) Shanghai Stock Exchange (CN) Japan Exchange Group (JP) Nasdaq (US) NYSE Group (US) [4] Statistics based on 2019 year-end +1 (786) 235-5000 | [email protected] 7

COUNTRIES +1 (786) 235-5000 | [email protected] 8

AUSTRALIA Are there collective actions, such as opt-out actions What are the cost risks of bringing an action? Can or other actions with representative aspects? attorneys work on success fees? Yes, class actions are available in the Federal Court Australia uses the “loser pays” system. The of Australia through the enactment of Part IVA of the representative party who brings the action is liable Federal Court of Australia Act 1976. The Australian for any costs awarded in favor of the class action class action system is, in general, an opt-out system. defendant. The concept of litigation funding is widely One or more shareholders may file an action as used in Australian investor protection cases and since representative of a larger group, the class.5 Until a mid-2005, all securities class actions in Australia fixed date, class members may – similar to U.S. class have been funded by commercial litigation funders. actions – opt out of the proceedings and will not Commercial litigation funders are allowed to work be bound by any judgment or settlement. In 2007, on a success-fee basis, while Australian attorneys however, the Federal Court of Australia approved a are not. The litigation funder assumes all risks of the class consisting of only one named person who was proceeding and receives a portion of any damages represented by a law firm/litigation funder. Additional awarded, in return for funding the litigation. claimants were only passively included in the class, which was approved by the court.6 In May of 2020, the Are proceedings public or confidential? Is there a Australian government proposed stricter regulations discovery proceeding? on litigation funders. It remains to be seen if these regulations will be enacted. A decision will likely Typically, in the opt-in cases, a small retail investor is come at the end of 2020. appointed as named plaintiff and is the only claimant actually named in the proceeding. However, if a case These cases are often described as “opt-in” cases, settles, all claimants may be specified by name in as claimants must explicitly express their interest the settlement agreement, though this agreement in joining the case to the litigation funder. Also, a remains confidential, and all parties are bound “named plaintiff” will be chosen, who will represent by nondisclosure and confidentiality agreements. the class, similar to the lead plaintiff position in the Thus, only the defendant would be able to see who United States. Until recently, Australia had in place takes part in a settlement. There is also a discovery Common Fund Orders (“CFO”). A CFO is a court order proceeding, but generally only the named plaintiff is which obliges all group members in a class action to affected. Other class members, such as the passive pay their proportionate share of a litigation funder’s contracting parties to the litigation funding agreement commission out of the proceeds of a judgment or (in which the contracting parties agree to pay a fixed settlement, whether or not the group members have percentage of the awarded sum in return for the entered into a funding agreement directly with the funding), are generally not subject to the Australian funder. However, the High Court recently ruled that discovery proceedings. the relevant sections of the Federal Court Act 1976 (Cth) and the Civil Procedure Act 2006 (NSW) do not Is there a specialized investor protection law? empower the Courts to make CFOs. As a result, this ruling will likely require all participants to register their Yes, mainly the Corporations Act 2001 and the claims by signing a funding/retainer agreement prior Australian Securities and Investments Commission to any imposed deadline or risk losing their claims. Act 2001. This action may result in classes closing before a court-imposed deadline. [5] The Federal Court of Australia Act 1976, §33C. +1 (786) 235-5000 | [email protected] [6] Dawson Nominees Pty Ltd v Multiplex Limited, FCA 1061 (2007). 9

AUSTRIA Are there collective actions, such as opt-out actions Are proceedings public or confidential? Is there a or other actions with representative aspects? discovery proceeding? Austria recognizes the concept of class actions Austrian court files are not open to the public, and through section 227 of the Austrian Civil Procedure when decisions are published, they are published Code. The provision does not explicitly allow for without reference to the parties’ names. Oral hearings class actions, but the Austrian Supreme Court has are generally open to the public, but no recordings interpreted that section of the Code to permit class are permitted. actions to proceed in Austrian court if they have “a specific Austrian character.” In order to meet the There is no discovery in Austria. Parties can apply requirements for joinder of parties in a class action: (i) to the court to compel the disclosure of specific the court must have jurisdiction over all of the claims; documents, but there is no comparable system of (ii) there must be an application of the same type of discovery to that in the United States. An exception procedure; and (iii) the matter in dispute must be of to this is that if a party uses a particular document the same nature with respect to the facts and the to prove part of its case, that document must be law. Austria also recognizes a mechanism similar to provided to the other party. a Dutch foundation, wherein several claimants assign claims to an institution that can proceed as a single No. Securities claims are generally based on the claimant. Austrian Civil Code, prospectus liability is also based on the Capital Market Act (Kapitalmarktgesetz). The procedure in Austria is on an opt-in basis, as parties must have their claims joined at the outset in order for the court’s decision to be binding upon them. What are the cost risks of bringing an action? Can attorneys work on success fees? Losing parties can be held liable for the prevailing parties’ costs in Austria.7 Recovery of attorneys’ fees is limited by statute, and only in very limited circumstances can the actual fees be recovered. Austrian lawyers are prohibited from working on a contingent basis;8 however, the Austrian Supreme Court held that third-party litigation funders can charge their fee as a percentage of the overall recovery. [7] The Austrian Code of Civil Procedure (Zivilprozessordnung) §41(1). 10 [8] The General Austrian Civil Code, §879(2)(2). +1 (786) 235-5000 | [email protected]

BELGIUM Are there collective actions, such as opt-out actions Are proceedings public or confidential? Is there a or other actions with representative aspects? discovery proceeding? A collective action on behalf of an unidentified group The court hearings are public but generally, only is only possible if it is brought by certain entities the conclusion of a ruling is available to the public; or organizations, such as consumer protection court replies, pleadings, and written evidence are organizations. This can be in form of an ‘opt-in’ or not available. ‘opt-out’ class action. There is no discovery proceeding in Belgium and However, in regular court proceedings, individual the parties may only rely on the evidence already claims may under certain circumstances, be joined in their possession. In exceptional cases, and if a into one action to form a group action for case party can clearly point out certain documents being management purposes.9 of high relevance to the case, the court may require the other party to produce such document. What are the cost risks of bringing an action? Can Is there a specialized investor protection law? attorneys work on success fees? No. Securities claims are based on general tort law Court costs in Belgium are fairly minimal, as only costs but issuers have to comply with the Law of August 2, for registering the writ of summons and for service 2002 on the supervision of the financial sector and of the writ of summons have to be paid. Belgium, on financial services and the Markets in Financial however, employs the “loser pays” principle, whereby Instruments Directive. the losing party has to bear the opposing party’s costs, including its attorney fees.10 Generally, however, the court will set the attorney costs to be awarded to the other party between EUR 90 and EUR 36,000. The award is usually below the actual costs incurred by the attorneys. This cost risk is intensified by the general prohibition for attorneys to work on the basis of success fees.11 Uplifts in the case of success, however, may be negotiated, similar to the system in the United Kingdom. [9] Code Judiciaire Article 701. +1 (786) 235-5000 | [email protected] [10] Ibid. at Article 1017. [11] Ibid. at Article 446ter. 11

BRAZIL Are there collective actions, such as opt-out actions What are the cost risks of bringing an action? Can or other actions with representative aspects? attorneys work on success fees? Brazil has a class action system, whereby a In general, the losing party has to bear the costs and representative may file a case on behalf of a group expenses of the prevailing party, and is also liable of claimants; however, only certain groups of to pay the attorneys’ fees of the prevailing party. In representatives may initiate such an action, including the class action context, however, the defendant is the public prosecutor’s office, the public defender’s liable to bear the court costs and attorneys’ fees of office, public entities and other agencies, as well all parties, as long as the litigation is not frivolous.14 as (registered) private associations and unions.12 In very limited cases (for the protection of public Attorneys are not prohibited from working on a administration assets) individuals may initiate a class success fee basis. action as well. Interestingly, these class actions are only binding on the class if there is a favorable outcome in Are proceedings public or confidential? Is there a the action. In case of an unfavorable outcome, the discovery proceeding? individual class members are still allowed to file an individual action. Court proceedings are generally public, with the exception of cases where secrecy is in the public In March 2016 the new Civil Procedure Code entered interest or that involve certain family matters. into full force and effect, allowing judges, public prosecutors or the parties involved to commence There is no pre-trial discovery proceeding in Brazil. special proceedings to resolve an issue of law that is The court may, however, request and seize the pending in multiple lawsuits.13 production of documents from third parties and may also request the production of documents by In 2000, the BM&F BOVESPA, the São Paulo stock the parties. If either party to the proceeding refuses exchange, introduced the Novo Mercado, a listing to produce documents, the court will consider the segment that requires companies to implement more relevant facts in favor of the adverse party. stringent corporate governance standards in order to be listed. One of the requirements to be listed Is there a specialized investor protection law? on the Novo Mercado is that companies must put an arbitration provision in their by-laws, submitting No. But a violation of Law 6.385/76 (“the Securities any and all disputes to arbitration at Brazil’s Market Law”) and Law 6.404/76 (“the Corporations Law”) Arbitration Chamber (MAC). With roughly one-third may serve as a predicate “illicit act” to support a of companies trading on the BM&F BOVESPA listed general tort claim. on the Novo Mercado, arbitration in front of the MAC is a scenario that must be taken into consideration by investors in Brazilian companies. [12] Federal Law No. 8078, Consumer Protection Code Article 82. 12 [13] Articles 976 – 987 of the Code of Civil Procedure (Law No. 13105). [14] Ibid. at Article 85. +1 (786) 235-5000 | [email protected]

CANADA Are there collective actions, such as opt-out actions What are the cost risks of bringing an action? or other actions with representative aspects? Can attorneys work on success fees? There are nine provinces in Canada with class action The basic rule in Canada is a “two-way cost rule.” proceedings legislation in effect. Since 2002, class That is, the loser pays costs to the winners of the action proceedings have also been possible before litigation. This means that the representative plaintiff the Federal Court under the regime introduced by faces two possible financial burdens: their own the Federal Court Rules, but the Federal Court only attorneys’ fees and disbursements, and those of the has limited subject matter jurisdiction (actions against defendants in the event the defendant is successful the government, actions including admiralty issues, in the action. and intellectual property issues). The Canadian class action system has both opt-in and opt-out Even when the “loser pays” rule applies, it is very jurisdictions. Ontario follows an opt-out model by which rare for the court to order the unsuccessful party to members of the class (regardless of their residence) pay the full amount of the prevailing party’s costs due are typically deemed to participate in the proceeding to the fact that Canadian courts have considerable unless they take an active step to opt out of the class.15 discretion to award costs on a basis which is “fair Québec, Saskatchewan, Alberta, Manitoba, Nova Scotia and reasonable” for the losing party to pay. and the Federal Court also follow and opt-out model. British Columbia, Newfoundland and New Brunswick In Canada, legal counsel may enter into success have adopted an opt-in/opt-out hybrid model where fee agreements whereby counsel agrees to fund members of the class that are residents within the the litigation and recover fees and disbursements province are deemed to participate in the proceeding only in the event of success in the litigation. The unless they specifically opt-out. Members of the class that agreement, however, must be approved by the are residents outside the province can only participate in court in order to be valid.16 the proceeding if they specifically opt-in. Are proceedings public or confidential? Is there a In Canadian class actions, a representative plaintiff is discovery proceeding? appointed, who must retain legal counsel and must fairly and adequately represent the interests of the All court filings are public, but details of transactions class. In general, Canadian class actions are very and damages are not and can be excluded from court similar in most aspects to U.S. class actions. filings. There is a pre-trial discovery proceeding in Canada. In most of the Canadian provinces, parties must allow full disclosure of all relevant documents after the pleadings are submitted. The procedure is, however, slightly more restricted than in the United States. [15] See e.g., Class Proceedings Act, 1992, S.O. 1992, c. 6, §9. Is there a specialized investor protection law? [16] Ibid. at §§32(3) & 33. Yes, the provincial Canadian securities acts, such as the Ontario Securities Act. 13 +1 (786) 235-5000 | [email protected]

DENMARK Are there collective actions, such as opt-out actions Are proceedings public or confidential? Is there a or other actions with representative aspects? discovery proceeding? Denmark introduced an opt-in class action system on The court hearings in civil proceedings are public but January 1, 2008. The requirements for such a class generally, only the conclusion of a ruling is available action are: a uniform nature of the claims in question, to the public; court replies, pleadings, and written that the court has subject matter jurisdiction for at evidence are not available. least one claim and that there is general jurisdiction for the other claims in Denmark, that the class action The Danish system employs a discovery system, but is deemed appropriate to handle the claims, that the it is not comparable to the U.S. discovery system. For group can be sufficiently identified and advised of example, there is no pre-trial discovery phase. Danish the case in an appropriate manner and that a group courts may only, on request of a party, order the representative can be appointed.17 disclosure of specific documents from the other party pursuant to section 298 of the Danish Administration What are the cost risks of bringing an action? Can of Justice Act. Usually, requests for disclosure are attorneys work on success fees? put forward in the complaint or in the statement of defense, and they have to be precise and of significant The court fees are capped at approximately EUR relevance to the case. 10,000 and are based on the value of the case. The fees have to be paid twice (once when filing the claim Is there a specialized investor protection law? and then two to four weeks before the oral hearing). Usually, the prevailing party will be able to recover its Yes, the Danish Capital Markets Act (værdipapirhan- costs from the losing party. As a basic rule, the costs delsloven). Further, since July 3, 2016, the Market awarded by the court to the winning party typically Abuse Regulation applies in Denmark directly. amount to 3% of the total value of the case. Attorneys in Denmark may represent parties on a “no win no fee” basis, although contingency fee agreements based on percentages are prohibited. The basis of the fee calculation is usually the (hourly) time spent working on the case, but regard may be given to the value of the case, the responsibility, and the risks involved, as well as the outcome. Conditional fee agreements and uplift fees are permissible as long as the fees are reasonable. [17] The Administration of Justice Act, §254(b)(1). 14 +1 (786) 235-5000 | [email protected]

FRANCE Are there collective actions, such as opt-out actions costs. In regard to attorneys’ fees, the party to which or other actions with representative aspects? the costs are awarded always receives less than it actually spent. There are no provisions limiting The French judicial system is developed in a way that lawyers’ fees. They are governed by the agreement individual parties have to claim the enforcement of between the parties and their lawyers. their own rights. The payment of attorneys cannot solely be based As a general rule, French judges cannot execute on a success fee. However, French attorneys can judgments that are binding on third parties. Therefore, receive an uplift for the successful resolution of a the Constitutional Council held that an opt-out case.18 system, like in the United States, is a violation of the French constitution. Are proceedings public or confidential? Is there a discovery proceeding? On March 18, 2014, the French government passed a new Consumers Act, which contains a group action Generally, court proceedings are public. In all cases, that can be used in certain cases and in which only judgments are announced publicly. Each party has national associations have standing to bring suit. to prove the facts on which its arguments rely. There The “class action” procedure is an opt-in system that is no discovery proceeding in France. Each party specifies a specific amount of time (no less than two must provide the other party and the court a copy months and no more than six months) during which of the documents that serve as evidence. individuals can join the class; however, this only occurs after a court determines liability. The French class Is there a specialized investor protection law? action system only covers consumer and competition disputes, health product liability, environmental No. But provisions of the Monetary and Financial liability, discrimination and personal data protection. Code and Commercial Code apply to investors. What are the cost risks of bringing an action? Can attorneys work on success fees? There are two types of costs concerning civil proceedings in France. The first one (dépens) includes, for example, court fees, witness indemnification and attorneys’ fees for mandatory representation. The other expenses, called “Article 700,” mainly consist of the attorneys’ fees (except for mandatory representation). If the court considers it unfair for one party to bear all the costs, it is empowered to obligate the losing party to bear all or part of the [18] Law No 71-1130, Art. 9 (Dec 31, 1971) Article 10. +1 (786) 235-5000 | [email protected] 15

GERMANY Are there collective actions, such as opt-out actions of costs codified in various statutes.20 Apart from that, it is common to agree on an hourly rate as well. or other actions with representative aspects? German civil procedural law does not permit With regard to courts costs, there is a fee cap for bringing a claim for a group of unknown claimants claims exceeding EUR 30 million in claim value. in the form of a U.S.- style class action. With Adverse costs follow the same statutory table of costs. the German Capital Markets Model Case Act Each additional defendant, who appoints his or her (Kapitalanlegermusterverfahrensgesetz – KapMuG), own attorney, will multiply these costs, because there there exists a law in Germany focusing on model will be more attorneys and, hence, additional fees. proceedings, in which questions of law or fact will be Since 2008, success fees are allowed in Germany in decided by the Higher Regional Court with binding very limited cases, where a client may not be able effect upon all pending proceedings before the to bring a case due to economic circumstances.21 By Regional Courts.19 The KapMuG has a sunshine clause involving third-party litigation funders, this success for October 31, 2020. On September 20, the German fee prohibition can, however, be legally circumvented. Parliament approved an amendment to extent its validity until December 31, 2023. Model proceedings Are proceedings public or confidential? Is there a apply to claims in which compensation is asserted for discovery proceeding? damages due to false, misleading, or omitted public capital markets information contained in prospectuses, Court hearings are subject to the general principle financial statements, etc. The KapMuG allows a of publicity, which allows the public to be present at claimant in securities litigation to initiate a model hearings but does not extend to photographs, sound case and to litigate specific factual and legal issues recordings or to TV/radio transmissions inside the at the Higher Regional Court. If at least nine further courtroom. The documents filed with the court are applications are filed, the Higher Regional Court confidential and not publicly available and judgments, selects one model plaintiff. All other similar pending when published, redact all the names of the parties cases are stayed, regardless of whether the parties involved. to those proceedings have applied for a model case. The decision reached in the model case will be legally There is no procedure for pre-trial discovery of binding on all cases that have been stayed, which will documents. However, section 142 of the German then resume litigating any individual aspects in the Civil Procedure Code grants the right to request lower court. the production of specific documents or narrow categories of documents if the requesting party can German law includes other instruments of collective substantiate its main content and its relevance to the redress, such as group complaints (Verbandsklage), outcome of the case. The parties have to make their shareholder derivative suits, and joinder of parties. case with the evidence available to them. What are the cost risks of bringing an action? Can attorneys work on success fees? Is there a specialized investor protection law? The usual rule is that the losing party bears the costs of Yes, the German Securities Trading Act (Wertpapier- the lawsuit, including the costs of the successful party handelsgesetz) and German Prospectus Liability Act and the court fees. This includes adverse party costs (Wertpapierprospektgesetz). and court costs, both of which are regulated by tables [19] Kapitalanleger- Musterverfahrensgesetz (KapMuG) §22. [20] Code of Civil Procedure, §32(B)(1) (Zivilprozessordnung [ZPO]) §91, Attorney Fees Act (Rechtsanwaltsvergütungsgesetz) and Legal Costs Act (Gerichtskostengesetz). [21] Ibid. at §§114 – 127. +1 (786) 235-5000 | [email protected] 16

HONG KONG Are there collective actions, such as opt-out actions Is there a specialized investor protection law? or other actions with representative aspects? No. However, there are several statutes guaranteeing Pursuant to Order 15, Rule 12 of The Rules of the investors’ rights, such as the Code on Takeovers and High Court, the only collective actions permitted Mergers and the Companies Ordinance. in Hong Kong are representative proceedings. The representative plaintiff is not initially required to seek court approval. Instead, the collective plaintiffs can nominate the representative plaintiff. The only requirement is that the representative plaintiff have the same interests as the collective plaintiffs. Accordingly, all members of the group should have a common interest or element, a common cause for action, and a remedy that benefits the entire group. What are the cost risks of bringing an action? Can attorneys work on success fees? Although the represented parties are not liable for costs, the court has the power to order that costs accumulated in a group action be borne by all the members of the group equally, or only among the lead plaintiff(s).22 Contingency fees are not permissible in Hong Kong. Are proceedings public or confidential? Is there a discovery proceeding? Court hearings are generally public. The complaint, known as the Writ of Summons is also public. Pleadings and other documents filed in court proceedings are confidential until the documents are referred to in open court. Discovery begins once the defendant files the answer, known as its defense. In comparison to civil countries, there is a robust discovery mechanism in Hong Kong. [22] Sections 52A and 52B of the High Court Ordinance and Order 62, Rule 6A of the Rules of the High Court 17 +1 (786) 235-5000 | [email protected]

HUNGARY Are there collective actions, such as opt-out actions Are proceedings public or confidential? Is there a or other actions with representative aspects? discovery proceeding? Currently, there is no provision in Hungarian law Court hearings are generally open to the public. that provides for securities collective actions or However, upon specific request, it is possible for court representative actions. Although, Hungary enacted hearings to be confidential. Moreover, in accordance a new Code of Civil Procedure on January 1, 2018, with freedom of the press, a media content provider which includes a class action opt-in scheme, the new may make image and sound recordings of a public Civil Code23 is only applicable to actions brought in hearing.25 All higher court judgments are published the public interests, such as consumer, employment, and made available to the public via an internet and environmental tort matters. Hungary also webpage, although the identities of the parties to the has provisions for collective actions in the field of action are anonymized on the webpage in an attempt competition law, and consumer protection. to provide some degree of confidentiality. What are the cost risks of bringing an action? Can There are no specific provisions for pre-trial discovery, attorneys work on success fees? as there is no discovery mechanism in Hungary. However, if a party uses a particular document to The costs of bringing an action vary depending on the prove an element, allegation, or defense of its case dollar amount of the controversy. Typically, adverse that document must be provided to the opposing court costs will be awarded to the prevailing party. party. Parties can apply to the court to compel the The prevailing party may also be awarded litigation disclosure of specific documents. Nevertheless, costs by submitting their attorney’s bill of costs to discovery proceedings in Hungary are limited. the court.24 It is permissible for attorneys to represent clients on a success fee or contingency fee basis. Is there a specialized investor protection law? However, the amount charged shall not exceed two- thirds of the total amount of fees accrued. Yes, Act CXX of 2001 on the Capital Market. [23] Section 571 the Code of Civil Procedure (as in force on 1 July 2018) 18 [24] Section 81(5) Act CXXX of 2016 on the Code of Civil Procedure (as in force on 1 July 2018) [25] Section 232(1) Act CXXX of 2016 on the Code of Civil Procedure (as in force on 1 July 2018) +1 (786) 235-5000 | [email protected]

INDIA Are there collective actions, such as opt-out actions A lead applicant is appointed who can claim or other actions with representative aspects? damages from the company, a director, the auditor(s), and/ or expert, advisor or consultant Under Indian Procedural Law, so-called Public Interest which were caused by any improper or misleading Litigation (“PIL”) is allowed. In such cases an individual statement, any fraudulent, unlawful or wrongful act or a group of people may file a complaint. There are or omission. “Class actions” may not be brought two ways of starting a PIL: by the court itself or by an against a banking company. individual representing other persons who suffered losses. What are the cost risks of bringing an action? Can attorneys work on success fees? PILs can only be filed against several public bodies/ regulatory bodies or the state and not against private The losing party has to pay the winning party’s costs bodies, which makes them less valuable. of the litigation, if the court asks it to do so. Contingency fees are not permitted under Indian However, the Companies Act 2013, which fully law.27 An exception is only made for very poor entered into force on April 1, 2014, allows class clients, who otherwise would not be able to file actions in India. Section 245 of the Companies a claim. Attorneys’ fees are regulated. The hourly Act 2013, introduces the concept of “specialized minimum is Rs. 250 and the maximum is Rs.15,000 class actions” by shareholders and depositors of a (approximately USD 4 to USD 250). company to the Indian legal regime. At least one hundred shareholders of the company or such Are proceedings public or confidential? Is there a percentage of the total number of shareholders as the discovery proceeding? court prescribed are required to file a class action.26 In addition, a separate provision for a “securities Litigation is private in India. Files are not open class action” is also provided under section 37 of the to the public. There is no discovery proceeding Companies Act 2013. Under this provision, a lawsuit comparable to the U.S. system. can be filed (or any other action may be taken) for a misleading statement, or for the inclusion or omission Is there a specialized investor protection law? of any matter in a company prospectus. Such an action can be filed by any person, group of persons or No. But there are provisions in the Companies Act any association of persons affected by the statement/ 2013 for representative actions and the Securities inclusion/omission. and Exchange Board of India (SEBI) has established an Investor Protection and Education Fund, which Furthermore, a public notice shall be sent to all class aids investors in undertaking legal proceedings. members, who will be bound by the outcome of the class action. The costs of the action are paid by the company or any other person responsible for the improper act. [26] The Companies Act 2013, Art. 245(3). +1 (786) 235-5000 | [email protected] [27] The Bar Council of India Rules under the Advocates Act 1961, Chapter II of Part IV Rule 20. 19

ISRAEL Are there collective actions, such as opt-out actions Court costs are rather high in Israel. They are 2.5% or other actions with representative aspects? of the claim value plus other costs, which occur from additional work the court does, for example The class action law in Israel came into existence in translations and research. 2006.28 For the certification of the claim, you first have State funding for class actions is available for those to examine a registry, the Ledger of Representative cases that concern “public and social importance.” Actions, managed by the court administration. The courts are generally unwilling to permit private This registry provides information on whether a third-party litigation funding for class actions. similar claim is already pending. If there is no action pending, the court will decide whether a class action Are proceedings public or confidential? Is there a is the suitable tool to handle the case. When the discovery proceeding? court grants a certification order, it must define the class. The court enjoys great discretion in defining the Proceedings are generally public and there are no class. Once listed as a class action, the claim is either discovery proceedings in Israel. settled or litigated. Due to the fact that there is an active representative Is there a specialized investor protection law? plaintiff, the other affected parties seeking compensation, No. are passive during the proceedings. Israeli law provides for an opt-out solution.29 As such, a member of the class must opt-out if he/she does not want to be part of a binding court decision. What are the cost risks of bringing an action? Can attorneys work on success fees? The courts want to avoid an over-encouragement of utilizing class actions. Therefore, the court alone decides on the costs for the representative plaintiff and the class counsel.30 This includes settlements. As a result, the court has the power to overturn any agreements made by the parties including attorneys’ fees. As a guideline, the court awarded 8% for the representative plaintiff and 9% of the total sum for the class counsel in a case that needed judicial approval for a settlement. [28] Class Action Law, 5766-2006, (March 2006). 20 [29] Ibid. §11. [30] Ibid. at §§22-23. +1 (786) 235-5000 | [email protected]

ITALY Are there collective actions, such as opt-out actions As in most civil law jurisdictions, there is no or other actions with representative aspects? discovery process similar to that in the United States. Parties generally do not have any duty to In April 2019, Parliament passed a new law expanding provide any documents to the other party; however, the scope of class actions in Italy. The law provides specific documents can be requested. In the case of that class actions are available to protect individual a specific document request, the court will order the rights and can be utilized against both public and document produced after it is established that the private entities. The law will take effect in November document exists, it is in the possession of the other 2020. Until the expanded class action law goes into party and that it is relevant to the case. effect, group actions are broadly available for any type of complaint. Is there a specialized investor protection law? What are the cost risks of bringing an action? Can Yes, the Consolidated Finance Act (Testo unico delle attorneys work on success fees? disposizioni in materia di intermediazione finanziaria, legislative decree no. 58 of Feb. 24, 1998). Italian courts are able to award costs and fees to the winning party.31 The court has discretion over what percentage of the costs must be borne by the losing party. Generally, the losing party must pay at least court costs and fees and can also be liable for the legal costs and fees of the winning party. This will be capped by statute. Italian law does not specifically prohibit or allow contingency fees. Thus, it is generally accepted that success fees are legal. Are proceedings public or confidential? Is there a discovery proceeding? Court documents are confidential. Thus, can only be viewed by the parties and the court. Court hearings are not public except for final hearings. However, decisions made by Italian courts are publicly available. [31] Article 91 para. 1 of the Code of Civil Procedure. +1 (786) 235-5000 | [email protected] 21

JAPAN Are there collective actions, such as opt-out actions Are proceedings public or confidential? Is there a or other actions with representative aspects? discovery proceeding? Opt-out class actions do not exist in Japan. Several Hearings in Japanese courts are generally public, but claimants may, however, jointly file a single proceeding in limited cases feature confidential hearings. Court pursuant to Article 136 of the Japanese Code of Civil filings, such as the complaint, are also available for Procedure (JCCP). The requirements for such a joint inspection at the court to anyone who asks for the suit are that the rights or obligations that are the complaint using specific information (e.g., case subject matter of the suit is common to two or more number or party names) for a minimal fee. persons; or are based on the same factual or statutory cause; or are based on the same kind of causes in There is no discovery proceeding similar to the U.S. fact, or by law. system in Japan. Furthermore, the courts greatly prefer documentary evidence as opposed to witness The parties to such a joint suit may also appoint one examination. or more representative(s) from among them pursuant to Article 30 JCCP to act on their behalf in conducting Is there a specialized investor protection law? the joint suit. What are the cost risks of bringing an action? Can Yes, the Financial Instruments and Exchange Act, attorneys work on success fees? particularly Article 21-2, but claims for damages The losing party has to bear the costs of the suffered by investors may also be based on and proceedings, which are determined by the amount in prosecuted effectively under Japanese Civil Code controversy.32 Article 709. For attorney fees, there is no “loser pays” rule in Japan. Attorney fees may be subject to special cost arrangements with the clients, but they must be “appropriate and reasonable.”33 Moreover, true “no win, no fee,” i.e., success fee arrangements are not permissible, even though success fees are permissible as an “incentive fee” on top of regular fees that can be billed either hourly or as a fixed fee. [32] Article 61 of the Code of Civil Procedure. 22 [33] Act on Costs of Civil Procedure (Act No. 40 of April 6, 1971) Ch. 1, Article 2(x). +1 (786) 235-5000 | [email protected]

LUXEMBOURG Are there collective actions, such as opt-out actions Are proceedings public or confidential? Is there a or other actions with representative aspects? discovery proceeding? Luxembourg law does not provide for any class action Court proceedings are as a general rule public, but mechanism. However, group actions are possible can be held privately in certain situations. Despite through simple joinder of claims, and in some the fact that court proceedings are usually open circumstances representative actions are possible.34 to the public, court documents are not publicly Representative actions may only proceed twhen the accessible. This rule includes judgments, decisions representative is a statutorily authorized body that is and court orders. Nevertheless, any person can acting for the collective interests of its constituents.35 request access to case law concerning a specific The only entity which has been allowed to file that matter or a particular decision by contacting the group action so far is the ULC (Union Luxembourgeoise relevant body at the court. Case law communicated des Consommateurs). In practice, investors are limited this way does not mention the parties’ names. to bringing group actions in Luxembourg, meaning that each member of the group must have standing Parties must exchange the documents they intend to to participate. use as evidence for their case.36 If a party does not disclose a document with enough time before the What are the cost risks of bringing an action? Can proceeding, it runs the risk of the court excluding attorneys work on success fees? that document and not considering it as evidence in the case. However, parties are not subject to massive Luxemburg law differs between legal expenses and document requests from their adversaries. Requests compensation for proceedings. Legal expenses (frais are generally limited to requests for specific pieces et dépens d’instance) (Article 238, NCPC) are usually of evidence. chargeable to the unsuccessful party. Compensation for proceedings (indemnité de procédure) (Article Is there a specialized investor protection law? 240, NCPC) covers the adverse party`s fees. These fees must be requested by the parties and are only No. Securities claims are based on general tort and granted if a party proves that it is unfair for it to pay contract law but there are certain laws including them. Usually, the unsuccessful party is not ordered the Prospectus Law, Transparency Law and Market to pay compensation for proceedings. If a court Abuse Law that regulate company’s behavior which decides that it would not be unfair to have each party can be used to form a claim under tort law. pay its own fees, then the court will not award any compensation for proceedings. Lawyers may not work on success fees in Luxembourg. However, lawyers are in general free to determine their fees, which depend on the work required and the complexity of the case. Fees can be charged on an hourly basis or a flat fee. [34] Article 206, Nouveau Code de Procedure Civile (hereinafter “NCPC”). [35] Article 23 of the Law of 30 July 2002 on Unfair Competition Practices (loi sur la concurrence déloyale, publicité trompeuse et comparative). [36] Article 279, NCPC. 23 +1 (786) 235-5000 | [email protected]

MEXICO Are there collective actions, such as opt-out actions Are proceedings public or confidential? Is there a or other actions with representative aspects? discovery proceeding? Mexico does have a class action system for certain Court proceedings are, as a general rule, public, but areas of dispute. Disputes regarding consumer can be held privately in certain situations. Criminal goods and services, financial services, environmental proceedings and cases involving children are often damage, and antitrust may be resolved using the closed, with the lawyers and parties being the only Mexican class action system, which is an opt-in ones involved. Despite the fact that court proceedings system.37 To qualify for a class action in Mexico, the are usually open to the public, court documents are class must have at least 30 members, the issues of law not publicly accessible. This rule includes judgments, and fact pertinent to the dispute must be common decisions and court orders. Particular decisions can to the class, and the defendant must be connected be requested by anyone, but the parties will remain to the damage suffered by the class members38. Both anonymous. liability and damages can be claimed. Discovery procedure do not exist, therefore, parties Potential class members have the option to opt-in must exchange the documents they intend to use as within 18 months after settlement or judgment, and evidence for their case. If a party does not disclose a therefore it is possible to wait to see whether the case document with enough time before the proceeding, is successful or not before joining. it runs the risk of the court excluding that document and not considering it as evidence in the case. Parties What are the cost risks of bringing an action? Can can ask the court to order production of certain attorneys work on success fees? documents, but requests are limited to specific pieces of evidence. There are no court fees in Mexico pursuant to the Is there a specialized investor protection law? Mexican Constitution as “justice is free.” However, bringing actions require paying other types of fees No. The Securities Market Law (Ley del Mercado de such as legal fees and expenses to move the case Valores) regulating company’s behavior does not forward, which might include expert witness costs, specifically protect investors relying on a company’s translation costs, administrative expenses, etc. A disclosure. successful litigant can request that the court order the unsuccessful litigant to pay these costs, and the unsuccessful litigant can in turn challenge that request. Courts can only award costs up to a certain percentage of the amount claimed in the proceeding (up to 10%), so while there is the possibility of adverse costs, the danger to litigants is reduced. Lawyers can work on contingency, but it is not common as fees are capped at 3% for recoveries higher than USD 9 million. Litigation funding is allowed for non- lawyers that are not party to the dispute. [37] Article 578 of the Mexican Federal Code of Civil Procedure. 24 [38] Article 581 of the Mexican Federal Code of Civil Procedure. +1 (786) 235-5000 | [email protected]

NETHERLANDS Are there collective actions, such as opt-out actions What are the cost risks of bringing an action? or other actions with representative aspects? Can attorneys work on success fees? Under article 3:305a of the Dutch Civil Code, Usually the party losing the trial pays the winner’s representative actions can be filed by a representative costs.39 A success fee may be agreed upon, but an organization protecting the interests of its members. agreement where no fee has to be paid in case of The most common type of organization is a Dutch losing the case is not permitted (full contingency).40 foundation, established for purposes of a particular A success fee agreement might also include a fixed action. There are two kinds of foundations: open and percentage of the damages awarded by the court or closed. Open foundations previously could only for the settlement sum. An exception is made in cases a declaration of liability, while its participants were where this is excessive. All lawyers and funders fees kept confidential from the defendant and the public; are subject to the court’s review. whereas closed foundations could sue for damages, but its participants could not remain confidential. Are proceedings public or confidential? Is there a discovery proceeding? On July 2005, the Wet Collectieve Afwikkeling van Massaschades (Dutch Act on Collective Settlements of In general, the proceedings are public. However, Mass Claims, WCAM) was passed to make collective since an open foundation directly sues the other settlements of mass claims possible, allowing open party, the actual affected party (the member or foundations to negotiate a settlement on behalf of participant) does not become a party to the claim. all claimants, independently of their membership to the foundation. A potential settlement must be Settlement are agreed upon between the foundation approved by the Court of Appeal in Amsterdam, and the party having to pay the damage. The which may declare it binding and thus enforceable in foundation’s participants will have to be disclosed the EU. Affected investors are able to opt out of the to the payer, usually through a claims filing process, settlement agreement within at least three months but not to the public. after the approval. The obligation to produce evidence in the Netherlands On April 19, 2019, in an effort to make the WCAM is limited. It is, however, possible that specific documents more effective, the Wet afwikkeling massaschade in will have to be produced and that a petition concerning collectieve actie (Act on Redress of Mass Damages a preliminary hearing of witnesses and/or experts could in a Collective Action, WAMCA) was passed to allow be granted by the court. open foundations to sue for damages on behalf of all affected Dutch citizens, with the possibility for Is there a specialized investor protection law? foreigners to opt-in. The WAMCA went into effect on January 1, 2020. It grants jurisdiction to Dutch courts No. But article 3:305a of the Dutch Civil Code as long as the harmful act was committed after its date (Burgerlijk Wetboek) includes all types of actions of the entry into force and either inside, or bearing a and the WCAM provides for settlements on behalf close relationship to, the Netherlands. At the same, of a class. the governance and funding requirements for open foundations were made stricter and more transparent. [39] Dutch Code of Civil Procedure, Article 237. +1 (786) 235-5000 | [email protected] [40] Article 25 of the Gedragsregels. 25

NORWAY Are there collective actions, such as opt-out actions Are proceedings public or confidential? Is there a or other actions with representative aspects? discovery proceeding? The class action system in Norway is relatively new, Court proceedings are open to the public, and as it was established in early 2008. Norway has both the docket is available to the public. Pleadings are opt-in and opt-out class actions but it is the court that available to the public by request, although exceptions determines whether the class action will proceed on can be made subject to the court discretion. an opt-in or opt-out basis depending on the particular situation. The opt-in procedure is much more common There is no U.S.-style pre-trial discovery mechanism. and is essentially the de facto procedure. Accordingly, Specific requests for production, if the evidence is the court will establish the deadline for all interested reasonably and accurately identified, are permissible potential class members to opt-in. A court will only once a proceeding has commenced. institute a class action on an opt-out basis when each individual claim is so small that it is unlikely for any Is there a specialized investor protection law? claimant to bring an individual action, and when the claims require no individual consideration. No. But the Securities Trading Act includes provisions on market abuse and prospectus rules.41 Moreover, the court will appoint the class representative who is tasked with ensuring that the class members “are kept properly informed about the class action”. Class action lawsuits require that the claimants have claims based on uniform (or predominantly uniform) facts and legal grounds. What are the cost risks of bringing an action? Can attorneys work on success fees? Civil litigation in Norway operates on a “loser pays” system. In fact, should the class not prevail, the class representative is responsible for the court costs and prevailing party’s attorney’s fees provided that the court decides that the costs have been necessary compared to the importance of the case. Therefore, the court has discretion over the dollar amount of adverse attorney fees and court costs awarded. As such, the adverse costs for the losing party may be a small percentage of the actual costs. Attorneys are prohibited from representing parties on a contingency-only basis. However, attorneys can contract to receive a bonus should their party prevail. [41] See https://www.finanstilsynet.no/globalassets/laws-and-regulations/laws/securities-trading-act.pdf 26 +1 (786) 235-5000 | [email protected]

PEOPLE’S REPUBLIC OF CHINA Are there collective actions, such as opt-out actions What are the cost risks of bringing an action? or other actions with representative aspects? Can attorneys work on success fees? On July 31, 2020 and effective immediately, the The new Provisions, which have a goal of lowering Supreme People’s Court of China released the costs for investors, allow for the claimants to be Provisions on Issues of Representative Securities reimbursed for reasonable costs and attorney’s fees Litigation (the “Provisions”), which creates a class-action should the Defendant lose. Court fees can be partially lawsuit system in China. Subject to the satisfaction or wholly refunded to claimants even if they lose of certain criteria, investors who have sustained the case. Pursuant to Chinese law, success fees or losses due to misrepresentation on securities, insider contingency fee arrangements are not permitted in trading, and market manipulation can initiate either joint or representative actions where the number of “ordinary representative litigation” based on Article litigants on either opposing side is greater than 10. 95, paragraphs 1 and 2 of the PRC Securities Law or “special representative litigation” based on Article 95, Are proceedings public or confidential? Is there a paragraph 3 of the PRC Securities Law. discovery proceeding? Under special representative litigation, the requirements Proceedings are generally public in China, and include having 1) the same matter of action; 2) more there is no discovery mechanism in China. However, than 10 claimants; 3) two to five elected representatives; a party must provide evidence in support of their and 4) the claimant submit prima facie evidence (e.g. allegations. As such, and pursuant to Article 64 of administrative decision, criminal judgment, Defendant the CPL when a party is unable to collect evidence admission, stock exchange disciplinary action). In for reasons “beyond their control, or where the contrast, special representative litigation requires a people’s court deems that the evidence is necessary group of 50 or more qualified investors to appoint an for the trial of the case, the people’s court shall investor protection institution to file on their behalf investigate and collect the evidence.” and participate in the proceedings as representative. The court will review the merits of the case and decide Is there a specialized investor protection law? which investors are qualified to be claimants at an early The Provisions are intended to operate as China’s stage of the proceeding. new investor protection law. With the Provisions, lawmakers have decided to adopt an “opt-out” regime. When a special representative litigation is filed, the investor protection institution can register investors of the same class without their explicit consent. Only investors that have explicitly chosen to opt out of the litigation will be exempted from the outcome. Any qualified investors are allowed to register before the first instance trial, and any opted-out qualified investors are allowed to start a separate legal action. 27 +1 (786) 235-5000 | [email protected]

PORTUGAL Are there collective actions, such as opt-out actions Are proceedings public or confidential? Is there a or other actions with representative aspects? discovery proceeding? Collective actions are codified under Portuguese Court hearings must be held public except where the law. Moreover, although infrequent, securities class disclosure would be harmful.43 Exemptions from public actions are permitted. For example, one such class proceedings may be made if a court determines that action occurred in 2016, against the Bank of Portugal the proceedings would be harmful if open to the public. related to the collapse of Banco Espírito Santo. The members of the class include all claimants There are no specific discovery provisions related holding the same interests claimed in the action. to securities collective action proceedings. As such, Similarly situated prospective claimants who do not there is no pretrial discovery mechanism in Portugal. affirmatively “opt-out” are deemed to have “opted- Nevertheless, pursuant to The Code of Civil Procedure in.” As such, final judgments or settlements will bind Law No. 41/2013, there is a discovery mechanism all potential claimants except for those claimants during the litigation phase. However, the requesting who have formally opted out. Additionally, collective party must identify the document from producing actions can also be brought by representative bodies party.44 such as associations or foundations that are duty incorporated. Is there a specialized investor protection law? What are the cost risks of bringing an action? Can Yes, the Portuguese Securities Code. attorneys work on success fees? Class actions differ from most litigation in that the court does not mandate a filing fee or court fee for the claimants in class actions, unless the allegations are grossly unfounded. Moreover, if the claimant loses, the claimant will pay reduced court fees that are statutorily capped.42 Additionally, the prevailing party can recover a portion of its attorney’s fees. However, the amount of the recoverable attorney fees is limited. Attorneys are prohibited from working on a success fee or contingency fee only basis. However, it is permissible for the attorney to work on hybrid model of billable hours and part success fee. [42] Decreto Lei No. 34/2008 of February 26, 2008, Article 454. 28 [43] Article 163 Code of Civil Procedure Law No. 41/2013 [44] Article 429 +1 (786) 235-5000 | [email protected]

REPUBLIC OF CHINA (TAIWAN) Are there collective actions, such as opt-out actions is an hourly rate and the other is charging a fixed or other actions with representative aspects? sum for the handling of the case, depending on its complexity. A securities class action system is still being developed in Taiwan. Currently, only the Securities and Futures Attorneys may also agree with their clients upon Investors Protection Center (SFIPC) may initiate class a fee, determined by a certain percentage of the actions upon request of at least 20 investors on an total sum awarded by the court upon winning the opt-in basis.45 case. Hence, attorneys can work on success fees; however, fees are capped at 10% of the case’s total The SFIPC serves as a representative during the value. proceeding. As a consequence, the parties seeking compensation have no active role in the proceeding, Are proceedings public or confidential? Is there a because it is the SFIPC that takes action. discovery proceeding? Due to several factors, however, the effective In Taiwan, proceedings are generally public. participation in this system is very limited. Case Discovery proceedings do not exist in Taiwan. notices are only submitted in Chinese. In addition to that, deadlines are very short (usually less than Is there a specialized investor protection law? two weeks), making involvement in these actions burdensome for international investors. Furthermore, Yes, the Securities Investors and Futures Traders all filings have to be made by a local representative Protection Act. in Chinese, which means incurring additional costs. What are the cost risks of bringing an action? Can attorneys work on success fees? The Taiwan Code for Civil Procedure (TCCP) states that the litigation fees should be paid by the party, which initiates the litigation in advance.46 As class actions in Taiwan are currently restricted to SFIPC actions, special rules apply by which the court costs are capped for such proceedings. Finally, the loser has to pay all fees. Attorneys’ fees in Taiwan are based on an agreement between the attorney and his clients. Mainly there are two options for calculating attorneys’ fees. One [45] The Securities Investors and Futures Traders Protection Act (2002) Article 28. +1 (786) 235-5000 | [email protected] [46] The Taiwan Code for Civil Procedure, Article 94-1. 29

REPUBLIC OF KOREA Are there collective actions, such as opt-out actions Are proceedings public or confidential? Is there a or other actions with representative aspects? discovery proceeding? The Securities Related Class Action Act permits class Court proceedings are public. Pre-trial discovery actions for claims involving; 1) insufficient disclosures does not exist, and discovery during the trial is in registration statements, periodic reports, and limited. However, a court may order the production of prospectuses; 2) market fraud such as market documents upon request of the litigants in exceptional manipulation, and insider trading; and 3) external cases.47 auditors for improper auditing. The court will only grant an application for a class action subject to a Is there a specialized investor protection law? minimum of fifty members of the class that collectively held 0.01% of the total outstanding shares of the Yes. There are provisions within the Financial defendant company. Once the class action is approved Investment Services and Capital Market Act that focus by the court, it must notify the class members about on investor protection. the action and advise the members that they have a right to opt-out. The lead plaintiff is designated by the court following an application. However, a lead plaintiff shall not serve as lead plaintiff more than three times in the last three years. What are the cost risks of bringing an action? Can attorneys work on success fees? There are no enumerated rules regarding costs. When the court renders its judgement, it will also decide which party bares the costs. However, usually the courts follow the principal of losing party pays the prevailing party’s costs. Additionally, contingency fee or success fee arrangements are permitted. [47] Ibid. at Article 32. 30 +1 (786) 235-5000 | [email protected]

RUSSIAN FEDERATION Are there collective actions, such as opt-out actions Are proceedings public or confidential? Is there a or other actions with representative aspects? discovery proceeding? Effective in October 2019, the Russian Federation will Proceedings in Russia are open to the public. allow individuals or entities with similar claims to file There is no pre-trial discovery proceeding in Russia. a lawsuit. The group must have at least 20 plaintiffs In addition, neither Russian legislation nor Russian and one representative will be selected. The claim court practice contains any procedure similar to information must be published in the media, making what is known as discovery in the United States. others aware by opting-in. What are the cost risks of bringing an action? Can Is there a specialized investor protection law? attorneys work on success fees? Yes, the Investor Protection Act 1999, which grants The losing party usually has to pay for the costs of foreign investors the same rights that domestic the winning party, provided that they are reasonable. investors enjoy. Whether the costs of the class action are reasonable or not is determined by the court. Contingency fees are not specifically prohibited in Russia; however, such fee arrangements are not generally legally enforceable. Thus, if a client refuses to pay, an attorney may be left with nothing despite a successful resolution of the case. 31 +1 (786) 235-5000 | [email protected]

SOUTH AFRICA Are there collective actions, such as opt-out actions members. Lawyers may not work exclusively under or other actions with representative aspects? contingency, although they may enter into “no win-no pay” arrangements and even though success bonuses The new South African Constitution of 1996, in its are allowed, total compensation cannot, in any case, article 38.c, gives individuals and legal persons the surpass 25% of the gross amount recovered.49 Third- right to file a class action. Originally, these were only party funders who are not retained as lawyers are not filed in connection with violations of constitutional subject to these restrictions and can, consequently, rights, however, in Children’s Resource Centre agree on a pure contingency fee. Trust and Others v Pioneer Foods (Pty) Ltd and Others of 2012, the South African Supreme Court Are proceedings public or confidential? Is there a expanded their availability to all kinds of civil cases, discovery proceeding? potentially including securities claims, but this has been rejected by lower courts so far, insisting in that South Africa upholds the principle of open justice, aggrieved shareholders seek recovery strictly through which means that trials are public and can even derivative actions. Higher courts are still to make any be broadcasted. In addition, court documents are determination in that regard. available to the public as soon as they are filed and although a party may request for certain documents to Class actions in South Africa differ from the U.S. be sealed, the other party may oppose such request. model and there is still no law that regulates their Fortunately, passive members of a class action face procedure. Rather, courts have slowly laid down the no publicity risk, since they are not named in the guiding factors, adopting a piecemeal approach. In complaint. Furthermore, discovery, which remains the case of Nkala and others v. Harmony Gold Mining much less comprehensive than in the United States, Co Ltd and Others of 2016, the competent court first only requires the named parties to make voluntary determined the liability of the defendants, applicable offers of all relevant documentation.50 to all members of the class (similar to an opt-out), but then proceeded to evaluate the damages suffered by Is there a specialized investor protection law? each individual plaintiff. What are the cost risks of bringing an action? Can No. The South African Companies Act of 2008 (“the attorneys work on success fees? Companies Act”), only contemplates, in its Article 104, prospectus liability for untrue statements. False Even though court fees in South Africa are minimal, statements or omissions in prospectuses can result in because of the “loser pays” rule, entities acting as either criminal or civil liability. However, as there is plaintiffs might have to post an appropriate security no private right of action attached to the violation of bond. The adverse party cost risk is limited as the the Companies Act, shareholders are left to resort to attorney’s fees are set by statute.48 Costs are usually common law or tort law in order to recover losses due awarded in a joint and several basis, but there are to a director’s negligence or intentional acts. currently no rules on how to allocate costs among class [48] See Rules regulating the conduct of the proceedings of the several provincial and local divisions of the High Court of South Africa (Rules of 32 procedure SA). Rule 67 et seq. [49] Contingency fee act, 1997 paragraph 2(2), further clarified by Masango and Another v Road Accident Fund and Others (2012/21359) [2016], paragraph 22 et seq. [50] Rules of procedure, rule 35 et seq. +1 (786) 235-5000 | [email protected]

SPAIN Are there collective actions, such as opt-out actions Are proceedings public or confidential? Is there a or other actions with representative aspects? discovery proceeding? There are no class actions in Spain. Groups of Court hearings are in theory open to the public, but individuals can file a joint action in matters involving in practice are usually restricted to people connected consumer rights or antitrust violations or they can to the proceeding (parties, witnesses, experts, etc.) be represented by a consumer association, but in all due to the size of the courtrooms. Case dockets are cases, their identity will be known to public. These not open to the public. actions can claim both liability and damages51. Representation for passive claimants is not possible, There is no discovery procedure in Spain. Courts can but the court can order a public announcement order the production of specific documents, but only regarding the existence of the action, allowing more when one party has requested the document and claimants to join without the proceedings being proven the document’s relevance and that it cannot stayed.52 If the extent of potential claimants is known obtain the document but by court order.56 When or can be determined, it is the duty of the existing the court orders the document to be produced, the claimants to notify those other potential claimants.53 If producing party does not provide the document to the potential claimants are unknown, the proceedings the other party, but instead to the court itself. will be suspended for two months beginning with the court’s announcement of the action. After those two Is there a specialized investor protection law? months, no new claimants may join the proceedings. No, as the Securities Market Law (Ley del Mercado de Valores) does not specifically protect investors What are the cost risks of bringing an action? Can relying on a company’s disclosure. attorneys work on success fees? Spain employs the “loser pays” rule. Thus, the losing party is generally liable for the successful party’s costs54; however, attorneys’ fees are not generally awarded in the amount that the successful party actually paid. Instead, the Spanish bar association suggests criteria which judges use to determine the lawyers’ fees in a particular case. Specifically, courts will analyze the claim, including the amount in dispute, and the amount and quality of the work the winning attorney actually did. The court is free to consider other factors as well. Spanish lawyers are allowed to work on a success fee basis.55 [51] Articles 74-80 of Act 1/2000 of 7 January on Civil Procedure (Ley 1/2000, de 7 de enero, de Enjuiciamiento Civil) (hereinafter Civil Procedure Act). [52] Article 11 of the Civil Procedure Act. [53] Article 15 of the Civil Procedure Act. [54] Article 394 of the Civil Procedure Act. [55] The Ruling of the Supreme Court, appeal No. 5837/2005 (November 4, 2008). [56] Article 328 of the Civil Procedure Act. 33 +1 (786) 235-5000 | [email protected]

SWEDEN Are there collective actions, such as opt-out actions Are proceedings public or confidential? Is there a or other actions with representative aspects? discovery proceeding? All civil actions are permitted as real opt-out class As a basic principle, both hearings and dockets are actions under the Swedish Group Proceedings Act. public in Sweden. The court can order the disclosure The Group Proceedings Act came into effect in 2003. of specific documents at the request of either party It provides that any claim can be brought as a class of the proceeding. Generally, pre-trial discovery, action when a class proceeding is the most suitable especially witness depositions, are not permitted to handle the case. The class action is brought in the under Swedish law. name of a representative claimant, who can be either an individual or legal person, a public authority, or a Is there a specialized investor protection law? non-profit organization.57 There is also the possibility of group actions and representative actions of other No and investor class actions generally need to sort (consumer rights, etc.). Class judgements can prove a wrongful act, instead of merely a negligent deal with both liability and damages. act, in order to proceed. The willful violation of the regulations promulgated by the Swedish Financial Class actions have been seldom used and the extant Supervisory Authority may constitute said wrongful examples show that the proceeding can be protracted act, but no clear guidance exists. due to class certification issues and the relative inexperience of Swedish courts. What are the cost risks of bringing an action? Can attorneys work on success fees? There are very low filing fees and the loser has to pay the costs of the opposing party. Since the class members are not a party to the lawsuit, they are not responsible for the costs.58 Although there are exceptions, costs never exceed the sum arising from the lawsuit. As far as class actions are concerned, litigation funding and success fees are allowed in Sweden, but the court has to approve them beforehand.59 If the court approves such an agreement made between the attorney and his client, the fees can be paid out from the amount recovered by the group as a result of the lawsuit. [57] The Group Proceedings Act (May 30, 2002) §§4-8. 34 [58] Ibid. at §33. [59] Ibid. at §38. +1 (786) 235-5000 | [email protected]

SWITZERLAND Are there collective actions, such as opt-out actions Are proceedings public or confidential? Is there a or other actions with representative aspects? discovery proceeding? There is no class action system in Switzerland like Generally, proceedings are public in Switzerland. there is in the United States; however, there are However, public interest in commercial cases is several group litigation mechanisms. One example is a usually limited and briefs and documents filed by shareholder group litigation proceeding based on the the parties and the court’s deliberations are kept “constitutive action” (Gestaltungsklage) recognized confidential. under Swiss law for status questions, such as paternity or marital status.60 This principle has been adapted A court order determines which party has the burden to corporate law, allowing shareholders to sue the of proof. According to that, the parties present company on behalf of itself and all shareholders.61 their exhibits during the main hearing in order to The resulting judgment will be binding not only to the enable the court to form an opinion, but there is no plaintiff itself, but to other shareholder.62 However, it discovery proceeding. has not been used in the context of a securities class actions. Is there a specialized investor protection law? Another well-known mechanism is the association suit, Yes. The Collective Investment Schemes Act where an association pursues the financial interests of (Kollektivanlagengesetz) and its related ordinance its members.63 These suits are, however, strictly limited Collective Investment Schemes Ordinance to the area of challenging administrative actions.64 (Kollektivanlagenverordnung). Therefore, they are not an option for investors. What are the cost risks of bringing an action? Can attorneys work on success fees? The fee amount depends on the money involved and the time spent. The losing party has to pay the winning party’s attorneys’ fees as well as the court fees. Contingency fees are not permitted under Swiss law. The fees that attorneys are allowed to charge are usually governed by the applicable bar association.65 [60] Article 127 of the Federal Code of Civil Procedure (FCCP). [61] See Code of Obligations, arts. 754-60. [62] See Code of Obligations, art. 706(5). [63] Bundesgesetz gegen den unlauteren Wettbewerb of Dec. 19, 1986, SR 241 [Unfair Competition Act], art. 10(2)(b). [64] Bundesgesetz über das Verwaltungsverfahren of Dec. 20, 1968, SR 172.021, art. 48(a); Bundesgesetz über die Organisation der Bundesrechtspflege of Dec. 16, 1943, SR 173.110, art. 103(a). [65] See, e.g., Verordnung über die Anwaltsgebühren of Jun. 10, 1987, ON 215.3, §2 (Canton of Zurich); Dekret über die Anwaltsgebühren of Nov. 6, 1973, BSG 168.81, art. 10 (Canton of Bern). 35 +1 (786) 235-5000 | [email protected]

UNITED KINGDOM Are there collective actions, such as opt-out actions What are the cost risks of bringing an action? Can or other actions with representative attorneys work on success fees? aspects? The rule regarding costs of litigation is that the loser While the United Kingdom, for the most part, relies pays. Adverse party costs can be exceptionally high on an opt-in system, it offers a collective mechanism (several million pounds); however, special After the known as a Group Litigation Order (GLO). It provides Event (ATE) insurance is available that covers such for the case management (by the same court and a contingency. A success fee basis in litigation in usually by the same judge) of a number of similar claims England and Wales can only be achieved by third- that “give rise to common or related issues of fact or party litigation funding. law.”66 It should be noted that the GLO mechanism is not regarded as representative litigation, as it covers Attorneys are allowed to work on a success fee/ all individual claims that have been brought, even contingency fee, whereby they receive an uplift to though individual test or lead cases may be selected their hourly rate in case of a successful outcome of for decision-making in advance of other cases within the litigation. 67Since the beginning of April 2013, the group. In England and Wales, claims may also these attorneys are also allowed to recover fees from be asserted in representative actions where one the damages being awarded to their clients. representative acts on behalf of a class of individuals pursuant to rule 19.6 of the Civil Procedure Rules Are proceedings public or confidential? Is there a (CPR) of England and Wales. Under Rule 16.9 of the discovery proceeding? CPR It is a requirement that the representative share the “same interests” with those whom they represent Although most court hearings are public, litigation in the lawsuit. Due to the restrictive interpretation of in the United Kingdom is private and court files and this requirement the mechanism is not used frequently. pleadings are usually not open to the public. However, several recent developments suggest that There is no discovery proceeding as comprehensive we are entering a new-era in UK class litigation. The as in the U.S. system, but there is limited document Consumer Rights Act 2015 created a UK-wide regime disclosure and the potential witness examinations. allowing competition law claims to be brought on behalf of a class in the Competition Appeal Is there a specialized investor protection law? Tribunal, a specialist court. This regime applies only to claims for damages (or an injunction) of UK or EU Yes, the Financial Services and Markets Act 2000, prohibitions against anti-competitive agreements. particularly section 90 (prospectus liability) and The Competition Appeal Tribunal may make a section 90A (liability of issuers). collective proceedings order on an opt-in or opt- out basis. In Scotland, the Civil Litigation (Expenses and Group Proceedings) Act 2018, which came into force on July 31, 2020, enacted a “group procedure” that creates both opt-in and opt-out mechanisms. The new opt-out mechanism will permit actions on behalf of all claimants domiciled in Scotland (who do not proactively opt-out) and (b) and claimants outside Scotland who proactively choose to opt-in. [66] Civil Procedure Rules, Part 19.10 et seq 36 [67] Courts and Legal Services Act 1990 §58, and Legal Aid, Sentencing and Punishment of Offenders Act 2012 §44. +1 (786) 235-5000 | [email protected]

UNITED STATES Are there collective actions, such as opt-out actions Attorneys in the United States typically work or other actions with representative aspects? pursuant to a contingency fee agreement or on a success fee basis. Moreover, most law firms finance The United States has perhaps the most robust the action so that there are no economic risks for class action regime in the world, which is an opt-out the claimants. Furthermore, since 2003, attorneys’ system. As such, a decision or settlement in the action fees in class actions have been subject to court is binding on all members of the class certified by discretion.71 As such, the court has the ultimate the court, unless the said class members specifically authority to determine if the success fees are a “opt-out” of the action.68 Furthermore, the court will “reasonable percentage of the amount of any appoint a “lead plaintiff”. The lead plaintiff conducts damages and prejudgment interest actually paid to the proceeding on behalf of all class members. The the class.” Therefore, courts will police and prevent lead plaintiff is typically the member of the class who is excessive or ill-proportioned success fees. most capable of representing the interests of all class members. Generally, this would be an institutional Are proceedings public or confidential? Is there a plaintiff who “has the largest financial interest in the discovery proceeding? relief sought by the class”69; thus, ensuring that the action is conducted in the most professional and Most, if not all hearings are public. All court filings effective way. are publicly accessible. However, all evidence or documents exchanged between the parties during Rule 23 of the Federal Rules of Civil Procedure the pre-trial discovery remain confidential until trial, outlines the procedure of filing and managing a which – statistically – is very unlikely (roughly, only class action in federal court. Generally, a class will be 2% of filed cases make it to trial in the United States). certified under Rule 23 if (1) the class is so numerous However, the parties can file for protective orders. that joinder of all members is impracticable; (2) there are questions of law and fact common to the class; (3) During pre-trial discovery, litigants are required to the claims or defenses of the representative parties disclose information and documentation related to are typical of the claims or defenses of the class; (4) the case and identify witnesses. The Federal Rules the representative parties will fairly and adequately of Civil Procedure as well as prevailing case law protect the interest of the class; and (5) prosecuting guarantee the effectiveness of this right. separate actions would create a risk of inconsistent judgments or prejudice to other individual class Is there a specialized investor protection law? members’ rights; class-wide relief is appropriate, or the common questions of law and fact predominate Yes, for federal cases, mainly the Securities Act of over any individual interests.70 1933 and the Securities Exchange Act of 1934. What are the cost risks of bringing an action? Can attorneys work on success fees? Each party must bear its own legal fees and court costs. However, in contrast to most other countries and absent abuse, the United States does not mandate that the losing party pay the prevailing party’s legal fees or court costs. [68] Fed. R. Civ. P. 23(c)(3). +1 (786) 235-5000 | [email protected] [69] 15 U.S.C. §78u-4(a)(3)(B)(iii)(I)(bb). [70] Fed. R. Civ. P. 23(a)-(b). [71] Fed R. Civ. P. 23(h). 37

COMPLETED CASES +1 (786) 235-5000 | [email protected] 38

COMPLETED CASES DRRT provides services for clients with collective assets under management of over USD 12 trillion including the leading global asset managers, insurance and reinsurance companies, sovereign wealth funds, pension funds, and mutual funds. For well-over a decade, DRRT has assisted the world’s leading institutional investors with the protection of their assets, and represented them in their efforts to receive fair compensation for fraud and violations of company transparency, and improvements in corporate governance at public companies in order to prevent future shareholder misrepresentation situations. In doing so, we have achieved some remarkable settlements for clients. Ageas S.A./N.V. (f/k/a Fortis S.A./N.V. & Fortis Olympus Corporation - Japan N.V.) - Netherlands €1.3 billion settlement in 2016 ¥11 billion settlement in 2015 Stichting Investor Claims Against Fortis (“SICAF“) In 2013, DRRT reached a JPY 11 billion settlement for reached an agreement with Ageas NV/SA (“Ageas“) the benefit of its group of investor clients, which was pursuant to which Ageas will pay an amount of EUR not official until signed by Olympus on March 27, 2015, 1.2 billion to eligible shareholders covered by the putting an end to litigation commenced in 2012 over settlement. This is the largest settlement of investor the consequences of the accounting fraud committed claims in Europe so far. SICAF represents over 150 by the company in the years before. This settlement institutional investors from various parts of the world ended a long settlement agreement drafting process (U.S., Canada, U.K., Continental Europe, Asia) on following the early, pre-judgment mediation and whose behalf two separate court actions were filed preliminary settlement in October 2013. DRRT, in against Ageas and other defendants in Utrecht cooperation with its Japanese local counsel, has between 2011 and 2012 seeking damages on their spearheaded this unique Japanese group litigation and investments in Fortis shares in the period from May broken new ground in Japanese securities litigation 2007 to October 2008. The active involvement of which resulted in the biggest settlement of its kind in the litigating institutions in the Dutch court and the Japanese history. The settlement resulted in an earlier involvement of the Foundation in a leading role in the payment to clients compared to other settlements and Dutch litigation since 2011 contributed significantly clients have remained anonymous, while investors of to this historic settlement. other groups have been made public. Gildan Activewear Inc. - Canada Royal Bank of Scotland Group plc - United Kingdom $22.5 million class action settlement in 2010 £800 million settlement in 2016 Gildan Activewear Inc. (“Gildan“) materially increased DRRT reached a GBP 800 million settlement with its stock price due to issuance of misleading earnings Royal Bank of Scotland plc (“RBS“) in the case arising guidance for the fiscal year 2008, misleading statements from the April 2008 rights issue on behalf of over 300 that its Dominican Republic manufacturing facility was institutional investors from all over the world. The RBS operating at a comparable scale of production to its settlement represents a significant step for investor more mature Honduras manufacturing facility, and the loss recovery efforts in Europe. Not only is it the second failure to make timely disclosure of alleged adverse largest settlement of its kind in European history, events affecting the productivity of its Dominican following the March 2016 Fortis/Ageas settlement, Republic textile manufacturing facility. Based on it also ranks among the top 15 settlements in the this, Gildan’s shares rose to over CAD 46 per share. history of global shareholder litigation. This resolution Following Gildan’s announcement on April 29, 2008 provides a remarkable recovery per share, rarely seen reducing its fiscal 2008 earnings guidance, Gildan’s in group or class action settlements of its kind and stock price fell 30%. This case represents a successful size, and a mutually desirable end to expensive and selection of the most appropriate forum for litigating complex litigation. shareholder claims under this circumstance. 39 +1 (786) 235-5000 | [email protected]

COMPLETED CASES Royal Dutch Shell plc - Netherlands $381 million Dutch settlement in April 2007 On April 11, 2007, Royal Dutch Shell plc signed a settlement agreement to compensate non-U.S. investors for the damages caused by various false statements of the company, relating primarily to its proved oil reserves from 1999 to 2003. The settlement agreement provides relief in the amount of USD 352.6 million, and an additional sum of USD 28.4 million was available to align the relief under the non-U.S. settlement agreement with the funds under the U.S. settlement. Royal Dutch Shell furthermore agreed to pay interest as per April 1, 2008. On May 29, 2009, the Dutch Court of Appeals declared the settlement binding on all members and represented investors and a payout of the funds took place mid- 2011. DRRT was instrumental in negotiating this Dutch foundation settlement for the entire non-U.S. class and brought in over 25% of all participants in the foundation at a time when the non-U.S. investors were facing dismissal from the U.S. class action for lack of jurisdiction. The result was the first “class-action-type “settlement in securities litigation matters in Europe under the then fairly new WCAM statute. US Opt-Out Cases US Lead Plaintiff Cases American International Group, Inc. General Motors Corp. Bank of America Corporation Merck & Co., Inc. (Vytorin) Citigroup, Inc. Merck & Co., Inc. (Vioxx) Royal Ahold, N.V. Petróleo Brasileiro S.A. +1 (786) 235-5000 | [email protected] 40

SIGNIFICANT ONGOING CASES Daimler AG - Germany Mitsubishi Motors Corporation - Japan Representing 100+ institutional investors seeking Representing 125+ institutional investors claiming over €1 billion in damages related to cheating on over $200 million in damages in connection with emission tests for diesel engines and engagement in emissions manipulation. cartel. On April 20, 2016, Mitsubishi President Tetsuro On September 18, 2015, the Volkswagen manipulation Aikawa admitted to the public that the Company scandal was revealed. As a response, Daimler’s has been cheating Japanese emissions tests since CEO, Dieter Zetsche called a press conference on at least June 2013. In the aftermath of the scandal September 26 on which he categorically denied any becoming public, the Company’s investors lost more emission manipulation, assuring investors that he than 50 percent of the value of their investment with was personally involved in all development projects. its market capitalization declining by JPY 435 billion This explicit denial was included in Daimler’s 2015 (USD 4.1 billion). In the press release of April 20, 2016, Annual Report. Less than a month later, on July 21, Mitsubishi disclosed that since 2013, about 625,000 2017, Der Spiegel revealed that various German vehicles were improperly tested. On April 26th, car manufacturers had been acting in concert since Mitsubishi vice president Ryugo Nakao admitted that 1996 to suppress competition, gain and keep market the company’s “improper testing” - which gave more share and increase their own profits. According to favorable results for its vehicles - has been going on the European Competition Authorities, the cartel had for around 25 years. agreed since 2006 on the reduction of the AdBlue (Urea) tanks used to control NOx emissions, and on Petróleo Brasileiro S.A. – Petrobras - Brazil the software designed to cheat emission tests (defeat Representing 90+ institutional investors claiming devices). over $660 million in damages related to the bribery scandal. Danske Bank A/S - Denmark Representing 200+ institutional investors seeking Petrobras, one of the largest oil and gas companies over $1 billion in damages related to money in the world and formerly the largest corporation in laundering scandals. Brazil in terms of revenue, has been involved in a major corruption and bribery scandal since 2014, affecting Danske is currently embroiled in one of the largest the correctness of its financial statements and public money-laundering scandals the world has ever seen. filings for at least the past 6 years. The disclosures The scandal centers on Danske’s Estonia branch and of the extent of the bribes and corruption and their its suspicious nonresident transactions which included impact on the financial condition of the company have transactions by customers from Russia, Azerbaijan, causes its U.S. as well as Brazilian equity securities Ukraine, and other ex-Soviet states. For years, (common and preferred) to lose over 72% since the Danske said nothing publicly about the issue and scandal became public. Moreover, Petrobras violated even misrepresented the extent of its participation its representations to its shareholders concerning its in the money laundering scheme. This was done self-imposed Code of Ethics covering anti-corruption while Danske repeatedly promoted its anti-money and anti-bribery practices. laundering policies and practices to the public. On February 27, 2018, several reports emerged indicating that Danske’s upper management had engaged in a cover-up of the scheme as it continued to grow its non-resident portfolio. 41 +1 (786) 235-5000 | [email protected]

SIGNIFICANT ONGOING CASES Toshiba Corporation - Japan Volkswagen AG - Germany Representing 120+ institutional investors claiming Representing 350+ institutional investors claiming over $600 million in damages resulting from an over €5 billion in damages in connection with accounting fraud. “Dieselgate”. Toshiba engaged in years of organized, top-down On Friday, September 18, 2015, the U.S. Environment accounting fraud of an extent of over USD 1.2 Protection Agency (“EPA”) issued a notice of violation billion going back to at least 2008 and continuing of the Clean Air Act against Volkswagen AG (“VW”) until it was caught in Q2/2015. On July 20, 2015, and other affiliates, resulting in a potential fine of up to an independent investigation committee disclosed USD 18 billion (USD 37,500 per vehicle and infraction, that Toshiba had overstated its operating profits by covering 482,000 vehicles in the United States). Only USD 1.22 bn. The report further confirmed that the two days later, on Sunday, September 20, 2015, VW fraud inside of Toshiba was organized and mostly admitted to installing a so-called “defeat device coming from the lack or delay in reporting substantial software” in various 2.0 liter diesel engine models, losses connected to its infrastructure, semiconductor, which dramatically reduces the nitrogen oxide (NOx) personal computer and television business divisions. emissions of diesel cars during the testing, thereby On December 7, 2015, Japan’s Financial Services distorting the outcome of official emission tests. On Agency (FSA) recommended a fine of JPY 7.37 billion Tuesday, September 22, 2015, VW admitted that (USD 60 million) for Toshiba’s accounting-related 11 million diesel-powered vehicles were affected violations, a record in Japan. The activities of the worldwide. Japanese FSA further underscore the gravity of the accounting fraud at Toshiba and leave no doubt of its liability also for resulting investor losses. Vivendi S.A. - France Representing 100+ international institutional investors with collective damages exceeding €1 billion related to falsifying its financial statements. From at least 1998 through mid-2002, Vivendi engaged in a scheme to artificially inflate its share prices by materially and fraudulently misstating its financial results as well as its debt and liquidity situation. This rendered Vivendi’s financial statements and balance sheets published in its Annual Reports for all years between 1999 and 2001 materially false and misleading. Only shortly after the ouster of Vivendi’s then-CEO Jean-Marie Messier on July 3, 2002, did Vivendi disclose that, following an acquisition spree directed by Messier, Vivendi had amassed approximately USD 18 million in debt and was consequently facing a severe liquidity crisis. +1 (786) 235-5000 | [email protected] 42

DRRT - WHO WE ARE AND WHAT WE DO DRRT is an international law firm and market leader DRRT’s institutional claims filing team offers first-in- in the client- oriented global loss recovery industry. class service and state-of-the-art technical setup to DRRT focuses on the recovery of losses resulting recover the maximum amount possible for its clients. from misstatements, misrepresentations or fraud by With offices in Miami, Frankfurt, London and Paris, public companies and engages in securities litigation, DRRT’s multilingual team is uniquely equipped to arbitration and other alternative dispute resolution service institutional investors around the world. Asset methods around the world. and investment managers, mutual fund companies, insurance and reinsurance companies, sovereign DRRT’s team of multinational attorneys and financial wealth funds and other institutional investors with analysts has been pioneering global shareholder collective assets under management of over USD protection, specifically investor loss recovery 12 trillion have entrusted DRRT with the monitoring, and corporate governance improvements. DRRT claims filing and handling of international securities is known for exploring new jurisdictions and litigations. developing creative approaches to obtain what matters most to DRRT’s clients: fair compensation for investment losses stemming from a company’s violations of disclosure obligations and transparency rules, as well as corporate governance improvements to protect assets in the future. DRRT offers completely risk-free and fully funded representation around the world and has been involved in many multi-billion dollar lawsuits in the United States, Canada, Europe and Asia, recovering billions of US dollars for investors, against companies such as The Royal Bank of Scotland Group plc, Ageas S.A./N.V. (f/k/a Fortis S.A./N.V. & Fortis N.V.), Enron Corporation, Sky Deutschland AG/Premiere AG, Hypo Real Estate Holding AG, Bank of America Corporation, Olympus Corporation, Merck & Co., Inc., Vivendi S.A., Royal Ahold, N.V., Royal Dutch Shell plc, AOL Time Warner, Inc., General Motors Corporation, Lehman Brothers Holdings, Inc., Bernard L. Madoff Investment Securities LLC, Petroleo Brasileiro S.A., Volkswagen AG, Toshiba Corporation and Mitsubishi Motors. Disclaimer: The information provided on this pamphlet does not, and is not intended to, constitute legal advice nor the formation of a lawyer or attorney client relationship; instead, all information, content, and materials are for general informational purposes only. We recommend to consult a lawyer for case-specific legal advice. While we strive to keep the information up to date and correct, we make no representations or warranties of any kind, express or implied, about the completeness or accuracy with respect to the content reflecting the comprehensive status of the law or legal developments. 43 +1 (786) 235-5000 | [email protected]

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