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Virgin ruling in the first ever class action law suit

Virgin ruling in the first ever class action law suit

In 2009 Denmark introduced the possibility of filing class action law suits based on an opt-in-model. The opt-in-model is different from the well know US opt-out-model.

Shortly after the new class actions statutes became effective the first class actions law suits were filed in the wake of the financial crisis that among others caused several Danish banks to go bankrupt. One of the first and most highly profiled disputes was the case of the Danish bank, Bank Trelleborg. The centre of the dispute was the status of the minority shareholders’ protection as the state run (and owned) clearing company, Finansiel Stabilitet (Financial Stability), saved the bank.

The salvation of the sound parts of Bank Trelleborg left a group of minority shareholders dissatisfied with the Danish financial supervisory authority, Finanstilsynet, and very quickly a group was formed to evaluate the possibilities of making the Danish financial supervisory authority liable for the losses of the minority shareholders. The minority shareholders claimed that the mandatory share redemption was at a too low rate and that the majority to call for such redemption was not met.

The Supreme Court ruled that the majority demand of 70% was not met but this had had no effect on the rate of the shares redeemed. The minority shareholders had not proved that the rate was too low.

The ruling is the first final ruling in a class action law suit in Denmark. The procedure going first through the High Court and later through the Supreme Court has proven the Danish take on class action law suits to be an efficient system which allows even very small claims to be heard and tried despite their size. Most of the single claims in this dispute would not have made the thresholds to qualify for the anything but simplified procedures and yet alone they would have been feasible for the thorough and complicated litigation which is needed in complex matters such as these.

The entry of class action law suits in Denmark highlights the urgency that manufacturers and larger cooperations cannot rely on the previous assumption that smaller claims are likely not the be pursued and litigated.

Despite the defeat of the merits of the case it proved that class actions are to be recognized in Denmark. The next line of cases is already in process and especially the Consumer Ombudsman is actively going to seek claims through the new class action institute.

The entire judgment can be found on:
http://www.domstol.dk/hojesteret/nyheder/Afgorelser/Pages/DomibankTrelleborg-gruppesgsmlet.aspx

However, the Supreme Court judgment is only available in Danish. Lund Elmer Sandager would be pleased to provide a translation and further advice on the judgement or similar issues.

David Frølich

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