JURE summary

JURE summary

A plaintiff residing in Germany (hereinafter ‘the plaintiff’) sought, by way of action, payment of damages for the acquisition of shares by a director and managing director (hereinafter ‘the defendant’) of an unlisted public limited company established in Switzerland (hereinafter ‘the PLC’).

According to its securities prospectus, the business purpose of the PLC was the acquisition and collection of B2B receivables. The PLC also dealt with the resale of its own shares which were also offered to private investors by the branch in Germany by employed telemarketers. After insolvency proceedings had been initiated for the assets of the PLC, the subscribed shares became worthless. The defendant instructed the telephone salesmen to deceive prospective buyers and to provide them with inaccurate information.

The Landgericht Düsseldorf (hereinafter ‘the Court of First Instance’) ordered the defendant to pay the plaintiff EUR 49.400 against the transfer of the shares. The defendant is liable pursuant to Article 826 BGB (¹) because he has not fulfilled his obligation to disclose information.

The defendant challenges the international and local jurisdiction of the Court of First Instance by appeal to the Oberlandesgericht Düsseldorf (hereinafter ‘the Court of Appeal’). Nor did he act intentionally with regard to the sale of the shares.

The defendant’s appeal is admissible and partially successful.

The Court of First Instance has jurisdiction under Article 5(3) of the new Lugano Convention (²). Both the place of performance and the place of fulfilment determine the court’s jurisdiction. The PLC also traded in Germany through its German branch. Moreover, the place of fulfilment of the alleged Intentional damage contrary to public policy is Germany.

German law is applicable pursuant to Article 40(1) of the EGBGB (³). The plaintiff paid for the shares he acquired from its German bank account to the PLC’s bank account in Germany.

The requirements for Intentional damage contrary to public policy by the defendant according to Article 826 BGB are not met. According to the result of the hearing of evidence, an acquisition of receivables took place for the purpose of factoring. The defendant believed in the business model he had initiated and the establishment of a profitable factoring company. Nor has it been demonstrated that the defendant instigated or deliberately failed to prevent investors from carrying out investment transactions without necessary clarification.

Nor can the acquisition of shares by the PLC be described as a highly speculative business practice. Although these shares were riskier than standard shares, they were not speculative to the same extent as a stock exchange futures transaction.

The securities prospectus need not necessarily be made available to investors on paper. A prospectus available on the website has the same credibility.

In response to the defendant’s appeal, the Court of Appeal partially altered the judgment and dismissed the plaintiff’s claim in its entirety.

(¹) Bürgerliches Gesetzbuch (German Civil Code).

(²) Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters.

(³) Einführungsgesetz zum Bürgerlichen Gesetzbuch (Introductory Statute to the Civil Code).