A court in the Netherlands has ruled that a collective investor action against Petrobras and related entities pending in the court can go forward, notwithstanding the arbitration clause in Petrobras’s articles of association. The defendants had sought to argue that because of the arbitration clause the foundation that was pursuing the Dutch action on behalf of investors had no standing to pursue the claims. The Dutch court’s May 26, 2021 ruling rejecting the defendants’ argument will now permit the action to go forward. A copy of Petrobras’s May 27, 2021 press release about the court’s ruling can be found here. A June 3, 2021 Law360 article about the Dutch court’s ruling can be found here.



The Dutch investor action relates to the massive corruption investigation – known in English as Operation Car Wash – that, among other things, resulted in the company’s agreement to pay $853.2 million to U.S. and Brazilian authorities. The corruption investigation was also the subject of a U.S. securities class action lawsuit filed on behalf of Petrobras investors who bought Petrobras securities in the U.S.  The U.S. securities class action lawsuit ultimately settled for $3 billion.


The action pending in the Dutch court was initiated in 2017 and is being pursued on behalf of investors who purchased Petrobras securities on the Brazilian stock exchange formerly known as Bovespa and now known Brazil Bolsa Balcão S.A. or B3, as well as on the Latibex Bolsa Madrid (Spain) and the Luxemburg Stock Exchange (Luxemburg). The claims are being pursued on the investors’ behalf by Stichting Petrobras Compensation Foundation (SPCF). The Foundation seeks a declaratory judgment that the defendants misled investors by concealing the bribery scheme, publishing misleading financial information and deceiving investors.


The defendants had sought to argue to the Dutch court that the claims could not be pursued in the Netherlands because the company’s articles of association includes a clause (article 58) that the company argued required the dispute to be subject to arbitration in Brazil rather than litigated in the Netherlands court.


The May 26, 2021 Judgment

In its May 26, 2021 Judgment, the District Court in Rotterdam rejected the defendants’ argument that the arbitration clause precluded the Netherlands action. An official English language version of the May 26 judgment is not yet available. However, a June 3, 2021 press release of the International Securities Association & Foundations Management Company, a group funding the litigation in the Netherlands,  summarizes the court’s rulings in the May 26 judgment.


In rejecting the defendants’ arguments that the arbitration clause barred the Netherlands action from going forward, the Dutch court noted that the defendants had made the exact opposite argument in arbitration proceedings in Brazil, in which they had argued that the clause did not compel arbitration of the investors’ claims. The court also noted that a broad interpretation of the arbitration clause would result in the investors being denied access to an “independent national court.” Since access to an independent court is a “fundamental right,” any provision that would cut off this court access should be “clear and unambiguous.”


The court ruled that arbitration provision did not clearly and unambiguously cut off this right, since on two prior occasions Brazilian courts have ruled that Article 58 only applied to internal operations of the company. Since the Foundation’s claims did not involve a dispute about the company’s internal operations, the arbitration clause, the court ruled, did not apply. The court also affirmed the Foundation’s position that the class of Petrobras investors should include all eligible investors and not exclude a subset of investors domiciled in Brazil or in Portuguese speaking jurisdictions.


However, the court did rule that investors who are currently active in arbitration proceedings or in separate litigation involving the same facts in Brazil or elsewhere are excluded from the global class of investors on whose behalf the Foundation was proceeding in the Netherlands. The court affirmed that the Foundation represents a sufficiently large class of investors and that the collective action process in the Netherlands is an efficient vehicle in which to prosecute the claims of the eligible and damages class of global investors.


The court set September 1, 2021 as the date by which Foundation is to submit its further arguments and facts regarding the merits, specifically the Foundation’s arguments that Petrobras violated investors’ rights under the laws of various jurisdictions.



The court’s May 26, 2021 ruling is just the latest procedural development in this long-running legal battle in the Dutch courts. Nevertheless, the court’s ruling that the action may go forward is significant – it is a significant boost for the investors seeking to pursue the claims in the Netherlands and a significant blow to Petrobras, which has sought to avoid the claims.


The issue of the enforceability of the arbitration clause has been much litigated in the Dutch court. Readers may recall that in a May 2018 interim ruling (discussed here), the Dutch court had previously held in an interim ruling that the arbitration clause did not preclude the investors from pursuing their claims in the Dutch court. However, in connection with a separate 2020 ruling of the Dutch court, the question of the preclusive effect of the arbitration clause was put back in play in connection with the court’s consideration of the separate but related question of the Foundation’s standing to represent the investors’ interests. The issues surrounding the relationship between the enforceability of the arbitration clause and the Foundation’s standing are complex and arcane; suffice it to say here that even after the court’s May 2018 interim, the issue of the enforceability of the arbitration clause continued to debated, but now appears to finally have been put to rest in the court’s most recent May 26, 2021 ruling.


I have been watching the Petrobras investor proceedings in the Netherlands closely, for what the proceedings might mean in terms of the availability of the Dutch forum and the Dutch procedures for other global collective investor actions. The Dutch court’s latest ruling could also represent something of a milestone event in the development of the Netherlands as a global forum for collective investor actions.


There has been a certain amount of hand-wringing in some quarters about the global rise of collective investor actions. Among other concerns voiced as part of this discussion is the worry that the “open” approach to collective investor actions in certain jurisdictions (including, for example, the Netherlands) has led to a kind of global forum shopping. As discussed here, among the specific concerns voiced with respect to the Netherlands are fears Dutch courts are allowing “ad-hoc litigation vehicles or foundations” to proceed as representative of large numbers of claimants, often with little nexus to the Netherlands.


Ever since the U.S. Supreme Court’s 2010 ruling in the Morrison case and the elimination in many cases of the availability of a U.S. forum for global investor claims, there has been an ongoing discussion whether the courts of another jurisdiction would emerge as the preferred forum for the resolution of collective investor actions.


Even as the relative merits of other possible jurisdictions have been discussed, I have consistently thought that the Netherlands represented the likeliest jurisdiction to emerge as a preferred forum. My views in this regard were reinforced by the action of the Amsterdam Court of Appeals to declare binding the massive €1.3 billion settlement in the Fortis action – the largest collective investor settlement ever in Europe.


As is demonstrated by this action filed under the Dutch procedures on behalf of Petrobras investors, and further illustrated by the action under the Dutch procedures filed by VW investors claiming damages relating to the company’s diesel testing scandal, the existence of the Dutch procedures and the apparent openness of Dutch courts to collective investor claims could encourage groups seek to take advantage of the Dutch procedures to resolve the claims within what is in effect an opt-out class action case resolution mechanism.


Columbia Law School Professor John Coffee noted in his recent article about the global rise of collective investor actions (discussed here) that one factor in the rise of these kinds of actions – particularly in Dutch courts – is the entrepreneurial efforts of U.S. plaintiffs’ class action attorneys. Indeed, on its website, the Foundation pursuing the Petrobras investor claims acknowledges that its efforts represent the joint collaboration of a number of parties, including several U.S.-based plaintiffs’ law firms (identified by name here). These law firms’ efforts are one of many factors that suggest that there will be further efforts to try to use procedures – including procedures in the Netherlands – to pursue collective actions on behalf of investors.