Regular readers of this blog know my view that the  rise of collective investor actions outside the United States is one of the most important developments in the world of directors’ and officers’ liability in recent years. The increase in collective investor actions has been particularly noteworthy in Europe. In the following guest post, ISS Securities Class Action Services and the FOX Williams law jointly report on the current state of play in European Class Actions.  The ISS SCAS authors are Jeffrey Lubitz, Managing Director, and Elisa Mendoza, Esq., Associate Director. The Fox Williams authors are Andrew Hill, Partner; Anisha Patel, Senior Associate; and Sam Tarrant and Olwen Mair, Associates. A .pdf version of the report is available here. As the authors note, investors increasingly are finding innovative ways to bring such claims and the courts and legislatures across Europe appear willing to find solutions to ease the burden and costs traditionally associated with these actions, making them more accessible to investors. I would like to thank the authors for allowing me to publish their report as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is the authors’ article.



While class actions in Europe may appear to in be in their infancy, especially in comparison to the United States, there have been many interesting developments in case law and legislation across Europe that will hopefully make it easier for investors to hold companies to account for failures to meet ESG-related standards. Investors are increasingly finding innovative ways to bring such claims and the courts and legislatures across Europe appear willing to find solutions to ease the burden and costs traditionally associated with these actions, making them more accessible to investors.

We summarize the latest developments in Europe below.



1.) Recent English case against Shell’s Board of Directors

In March 2022, ClientEarth, an environmental law charity which holds shares in the publicly-listed oil and gas company, Shell plc, announced that it had engaged in pre-action legal correspondence with Shell’s board of directors.  The potential proceedings demonstrate the increasingly creative means that activist investors and civil society organizations are exploring to encourage better corporate governance of listed companies, especially in the fossil fuel sector.

ClientEarth has been a shareholder in Shell since 2016. It initially sought to gain investor information and voting rights in the company but now is looking to bring a derivative action against Shell in the English High Court. A derivative action is a claim brought by a shareholder on behalf of the company in relation to a breach of duty by the company’s directors. It is therefore the company that is entitled to any remedy obtained, for example, the payment of damages. A derivative action is a means for shareholders to seek redress for wrongs committed against the company and to benefit indirectly from the overall improvement in the company’s future governance, which the derivative action hopefully instigates.

ClientEarth asserts that Shell’s board, made up of 13 executive and non-executive directors, has mismanaged the company’s climate risk through adopting an energy strategy that is inconsistent with its target to “become a net-zero emissions energy business by 2050” and the Paris Agreement. ClientEarth alleges several “serious shortcomings” in Shell’s strategy, including that the net zero emissions target is not reflected in Shell’s operating plans or budgets and the reduction targets do not involve reductions in absolute greenhouse gas emissions. ClientEarth contends this strategy will harm the long-term competitiveness of Shell itself and constitutes a breach of the directors’ statutory duties to:

  1. promote the success of the company for the benefit of its members as a whole (section 172 of the Companies Act 2006 (“CA 2006”)); and
  2. exercise reasonable care, skill and diligence in the discharge of their duties (section 174 of the CA 2006).

We understand the claim is still at an early pre-action stage and Shell’s board of directors will have

three months to respond. It remains to be seen whether the publicity generated by the potential claim is enough to persuade Shell’s board to act in a way which upholds ClientEarth’s objectives and meets Shell’s own express commitments. However, ClientEarth has indicated that, if the response is unsatisfactory, it will formally file its claim in the English High Court.

Once filed, ClientEarth will require the court’s permission to continue with its derivative claim. Amongst other things, ClientEarth will have to demonstrate that the directors did not have regard to the wider interests of Shell when exercising their judgment or that the directors did not believe, in good faith, that the strategy would promote Shell’s success.

When considering derivative claims, the court must also consider the views of other members of Shell with no personal interest in the claim. ClientEarth may therefore point to the fact that in 2021, approximately 30% of the company’s shareholders voted against the board at Shell’s annual general meeting in support of a resolution requiring the company to set out Paris Agreement-aligned emissions targets (which doubled from 14% of the company’s shareholders in 2020).  This reflects the general trend of investors’ stronger ESG objectives being manifested through active stewardship, both via their shareholder voting rights and via litigation.

The ClientEarth action is an innovative use of litigation to encourage better corporate governance by holding a company’s directors personally liable for failing to properly prepare for the net zero transition. It does, however, indicate how investors themselves may also be exposed to claims of a similar nature. For example, a  similar claim was brought by members against the Universities Superannuation Scheme (“USS”), the UK’s largest private pension scheme by assets under management, and its directors.  The claimants alleged, amongst other things, that the directors’ failure to (i) divest in fossil fuel-emitting companies and (ii) create a credible plan around climate change commitments, has prejudiced, and continues to prejudice, the success of the pension scheme and amounts to a breach of the directors’ duties.

Unfortunately, the court recently refused permission for the claim to proceed as a derivative action because, inter alia, the claimants did not establish a prima facie case that USS suffered immediate financial loss as a consequence of the directors’ alleged failure.  In addition, the claimants were not able to demonstrate that there was a causal connection between the investment in fossil fuels and any changes to their benefits. The judge therefore held that the members did not have a sufficient interest or standing to continue the claim. This decision is not an indication that ClientEarth’s derivative action (or any other similar claim) will not succeed as each case will be decided on its own merits, but it will undoubtedly serve as useful commentary to other investors who face or may be considering launching a similar derivative action.

These cases will hopefully function as an impetus for better governance with regards to companies’ and investors’ own climate change commitments and ESG strategies, particularly given the real risk posed to directors personally.

The derivative action pursued by ClientEarth is also a continuation of other recent shareholder actions it has launched in other jurisdictions,  including a shareholder action against the Polish power industry company Enea SA, which resulted in the Polish Court finding that the resolution authorizing the construction of a new coal-fired power plant was legally invalid.

Furthermore, the campaign group, ShareAction, alongside 117 individuals and 15 institutions, filed a shareholder resolution in early 2021 asking HSBC, Europe’s second largest fossil fuels financier, to publish a strategy and targets to reduce its exposure to fossil fuel assets, starting with coal. ClientEarth wrote to members of HSBC’s board supporting the demands laid out in ShareAction’s resolution.

As a result, and in spite of recent comments from Mr. Kirk, a member of HSBC’s Responsible Investing Team at the FT’s Moral Money Summit in mid-May 2022,  HSBC committed to ending financing of coal-fired power and thermal coal mining in the EU and OECD by 2030, and worldwide by 2040.  HSBC acknowledged publicly that meeting the goals of the Paris Agreement and the expansion of coal-fired power did not align.

2.) Recent developments in English securities litigation

Aside from the innovative and untested derivative actions mentioned above, English securities litigation pursuant to ss.90 and 90A of Financial Services and Markets Act 2000 (“FSMA”), remains the “traditional” means for investors to recoup losses from UK listed companies resulting from misleading or untrue statements in the company’s published information (or dishonest delays in publishing required information). It is also increasingly being explored by civil society organizations and investors as a means by which investors can hold their investee companies to account where the market has been misled, to satisfy their fiduciary, stewardship and ESG-related obligations and commitments. We are therefore seeing more ESG-focused securities litigation in the pipeline for these reasons.

As described in a recent ISS paper,  a key characteristic of group actions before the English courts in the securities space is the requirement for claimants to ‘opt-in’ to the litigation and for the correct claimant entity to be identified before they can be listed on the claim form and participate in proceedings. In addition, for claims relating to misrepresentations or omissions of required information, claimants must demonstrate to the court that they relied upon the issuer’s published information.  These so-called hurdles have often been perceived by potential investor claimants as significant, time-consuming evidentiary hurdles to tackle before their participation in proceedings can be confirmed.

Several recent developments in the English securities case of Allianz Global Investors GmbH and others v RSA Insurance Group (the “RSA case”) have, however, given hope to claimants by minimizing the evidentiary burden to prove their reliance on a defendant’s published statements.

The RSA case relates to the claim that RSA Ireland engaged in inappropriate accounting practices and the deliberate manipulation of insurance claim reserves by under-reserving large loss claims between 2009 and 2013. Allianz is one of over 170 institutional investors bringing a claim against RSA under section 90A and Schedule 10A of FSMA.

The claimants allege they have suffered loss and damage due to acquiring or continuing to hold shares in RSA in reasonable reliance on RSA’s misleading or untrue statements and/or omissions made in relevant published information. The claimants further argue that RSA’s dishonest or reckless delay in publishing relevant information of its Irish subsidiary’s misconduct, despite RSA’s senior executives being aware of the misconduct, resulted in them suffering loss and damage.

In this case, the English High Court has granted case management orders which we consider to be favorable from an investor claimant’s perspective.


First, in February 2022 the court permitted a “split trial” approach, whereby questions relating to the defendant’s liability (whether the statements were untrue or misleading and whether the ‘persons discharging managerial responsibilities’ at the issuer knew or were reckless in this regard), will be dealt with during an initial trial. The trial will therefore focus on the knowledge of the wrongdoing of directors, de facto directors, shadow directors and/or senior executives and the true/misleading nature of the relevant statements published to the market. Following this, questions relating to reliance, causation and damages would then be determined in a second trial.

The court recognized that if the Claimants were to lose on the issues raised in the first trial, their case would be at an end or reduced in scope. Therefore, taking a split trial approach is beneficial for all parties involved as it promotes efficiencies by streamlining legal costs to core liability issues at an earlier stage of proceedings. We consider that this approach will encourage settlement earlier in the proceedings before unnecessary costs and time are spent on issues covered in the second trial (especially if the defendant is found liable in the first trial).

We believe this decision is even more helpful because the judge changed his earlier 2021 decision on the split trial. The judge acknowledged how cases develop and evolve from early case management conferences and that the court is entitled to (and should) revisit earlier case management decisions. This recognition of the court’s flexibility with regards to case management is beneficial to investor claimants.

Adducing expert evidence for index-linked funds

Earlier, in January 2022, the court also allowed the investor claimants to adduce expert evidence from a market analyst and a fund management expert on the nature of index-linked funds. It has long been a debate between claimants and defendants in these types of cases whether so-called “passive” investors should be treated in the same manner as “active” investors. The debate centers around the issue of reliance.

We hope that such expert evidence will serve to educate and persuade the court of the view that the statutory right to claim compensation under (ss.90 and 90A of FSMA) should encompass both “active” and so-called “passive” investors on the basis that it ought not matter what type of investors the claimants are when the issuer is misleading the entire market.

“Sampling” method

Further, the court in the RSA case has previously permitted the investor claimants to address the ‘reliance’ requirement by adopting a “sampling” method. This method permits categories of evidence to be filed for groups of investors with similar characteristics, instead of producing evidence for each claimant individually. This method will significantly reduce the volume of evidence that needs to be produced by the claimants and, therefore, reduce the upfront cost and evidentiary burden on the investor claimant group as a whole.

Overall, the recent approaches adopted by the court in the RSA case demonstrates the English court’s willingness to adopt pragmatic solutions and reduce barriers to entry for potential investor claimants in these types of cases. Such methods will hopefully be used in other securities litigation cases and make the management of large claimant groups easier and more cost effective. By reducing the burden for investor claimants holding corporations to account, this “traditional” route for investors to recoup losses from UK listed companies may be more readily available for other types of securities litigation relating to climate change and other ESG-related issues.

3.) Representative actions – a potential for “opt-out” securities claims in the future?

The English Civil Procedure Rules include a provision under Rule 19.6 permitting one or more representative party/parties to bring a claim on behalf of a class of individuals where the representative(s) and the class have the same interest in the relevant claim.  We believe this provision has been under-utilized by investor claimants and their lawyers to date due to the uncertainty around how the court will apply the ‘same interest’ requirement.

A recent judgment of the UK Supreme Court in the Lloyd v Google LLC   case demonstrates that (although on that occasion the claimant failed to satisfy the court that it met the ‘same interest’ requirement) where the factual background shows that the interests of the class are aligned, the court is nevertheless willing to accept a claim proceeding as a representative action under Rule 19.6. This would essentially introduce an “opt-out” mechanism to English group litigation, which is currently only available for competition cases before the UK Competition Appeals Tribunal. We believe this mechanism is well-suited to shareholders bringing securities litigation, especially in the ESG context, and will obviously serve to heavily reduce, if not remove, the burden on investor claimants in opt-in cases.

4.) Recent cases focusing on pursuing companies for Governance issues

In addition to cases focusing on environmental actions, the English courts have been occupied with other proceedings where investors are seeking to hold companies to account for their failure to meet governance standards. By way of example, claims have been brought against Tesco plc in relation to the false accounting scandal, where Tesco announced in September 2014 that it believed it had overstated its profits guidance by an estimated £250m (which have now all settled); Serco Group plc in relation to a false accounting scandal regarding its electronic tagging contracts in 2010 to 2013; and against G4S plc, again, in relation to it falsely charging the UK Ministry of Justice for the tagging of prisoners (e.g. for prisoners who had died).

In January 2022, there was another novel development when the UK Official Receiver  of a British multinational construction and services group, Carillion plc and several of its subsidiaries, that collapsed in 2018, brought an unprecedented action against KPMG LLP, Carillon’s longstanding auditors, with potential damages estimated of £1.3 billion. As part of the Official Receiver’s duty to maximize returns for creditors of Carillion, it has alleged that KPMG failed to identify misstatements and multiple red flags in Carillion’s accounts in breach of its duties as an auditor.

This follows an investigation by the UK Financial Reporting Council into KPMG’s conduct (including KPMG’s forgery of documents), which has resulted in KPMG set to pay a £14 million fine, one of the largest against an auditor in UK history. It will be interesting to monitor how the case develops and whether auditors will be liable to account to creditors, which could have interesting consequences for UK insolvency proceedings going forward and for shareholders generally, where securities litigation may not be available because of the defendant issuer’s insolvency.



As the English courts continue to expand and develop their jurisprudence around securities and ESG-related litigation, so too is the rest of Europe. Germany has a long history of providing opportunities for institutional investors to pursue securities class actions. German courts have also been known for providing relief to investors in the ESG-focused cases. However, although Germany affords investors an avenue to pursue securities litigation, and progress appears to be occurring, there are still reservations regarding shareholder-related settlements following such securities litigation (and the extended duration of securities litigation cases in Germany should be a concern for investors).

1.) The First Collective Litigation Scheme

Germany created an avenue for securities holders to create a group or class proceeding to litigate grievances against companies. In 2005, the legislature enacted Germany’s first collective litigation scheme, called the Capital Investors Model Proceedings Act (the “KapMuG”).  The KapMuG’s lifetime has recently been extended until December 31, 2023.  The KapMuG allows judges to choose one of multiple similar actions being pursued to be the “model” case on which the disputed facts are tried and then the judgment or ruling from the “model” case can be applied to all other proceedings that have substantially the same allegations and underlying disputed facts.

In 2018, the German legislature added new protections for shareholders and introduced a new model action which allows consumer protection bodies to file declaratory actions to have courts determine the liability claims of consumers against commercial parties.  This new legislation was partially inspired by the vast numbers of claimants that filed claims against Volkswagen and Porsche for the revealed emissions scandal.  The new legislation combines elements of the KapMuG (model case proceedings) with the EU Injunctions Directive.

Due to the German legislature creating this avenue for shareholders to redress grievances, Germany has been the jurisdiction for some very popular securities claims, such as those against Volkswagen, Porsche, Bayer, and most recently, Wirecard. Volkswagen and Porsche involve ESG elements in that they related to the environmental impact of the company fraudulently declaring that its vehicles had lower emissions than they did in reality. These actions have been somewhat successful, in that the cases have made their way through the model case procedures and are close to a resolution. Germany is therefore becoming known as a jurisdiction where these cases have traction and will be heard by the courts, despite the Defendant’s efforts to move to dismiss them.

To date, only two litigation cases filed pursuant to the KapMuG procedures have settled in Germany. The first was only in 2021 when Deutsche Telecom settled for an estimated value of below €100 million.  Although news of this settlement reflects well on Germany as a jurisdiction that supports shareholders in holding companies accountable, the Deutsche Telecom case took over 20 years to settle, suggesting that actions under the KapMuG procedures can be time-consuming and cumbersome.

Most recently a case against Hypo Real Estate Holding settled for €190 million. This case settled in 13 years. While this is significantly shorter than the Deutsche Telecom case, it is still a lengthy litigation in comparison to other parts of the world.  Although the KapMuG has been criticized for various factors including complexity and inconvenience, the recent substantial settlements do show that the KapMuG proceedings offered in Germany enable shareholders to obtain substantial remedies that could not otherwise be attained.

2.) Recent Case in Germany – Securities Class Action – Wirecard

Wirecard is the most recent example of shareholders pursuing an action against a company for violation of ESG principles in Germany. While there is no direct class action against Wirecard, due to the company claiming insolvency, there is a securities class action effectively being pursued against Wirecard’s auditors Ernst & Young GmbH (“EY”). This case therefore has a distinct resemblance to the Carillion-related action being brought against KPMG in the UK.

In 2018, Wirecard had joined the DAX blue-chip market index, making it officially one of the 30 most valuable German companies listed on the Frankfurt Stock Exchange.  In January 2019, the Financial Times made allegations that raised questions about the integrity of the company’s accounting practices.  By October 2019, Wirecard hired KPMG to conduct an independent audit to address the allegations made by the Financial Times.  In 2020, KPMG found that Wirecard did not provide sufficient documentation to address the accounting irregularities.  Among other deceit, Wirecard gave EY staff prepaid cards to make purchases from their third party acquiring business (“TPA”).  EY gave them a clean bill of health based on that shopping trip, but the merchants were not real and all had been set up by Wirecard executives to dupe the auditors.  After KPMG’s investigation, EY refused to sign off Wirecard’s 2019 accounts due to the company misrepresenting that it had €1.9 billion in cash balances on trust accounts linked to the so-called TPA that no one could find and did not actually exist.  The elaborate fraud involved corrupt bank employees, fake online shops and even mock-up bank branches in the Philippines.  Wirecard disclosed the €1.9 billion never existed and its share price collapsed immediately.  The CEO, Markus Braun quit in June 2020 and was arrested on suspicion of falsifying the company’s accounts.  On June 29, 2020, the company filed for bankruptcy, owing creditors almost $4 billion.  In July 2020, German prosecutors arrested three former top executives of Wirecard, including the former CEO, Markus Braun, alleging they masterminded a criminal racket to fake the company’s accounts and defraud creditors of billions of Euros.

The events described in this scandal evidence a prime example of poor governance. Some investors shared their strategies and their observation of governance standards while the scandal was playing out and whether it impacted their investment strategies. Some confided that the data could not be explained, investors made remarks that they came out of meetings with Wirecard more confused than they went in. Another investor noted that “if the governance is not okay and the company doesn’t seem to make any progress in how they explain the data, then it is a signal that the governance is not fine and the rest cannot be very successful either.”

This particular investor sold out of Wirecard and invested in another company before the fraud came to light showing a real example how the “G” in ESG really has been creating a lot of alpha in the strategy.  This case and the investors’ reaction to the mismatch of data with the yarn being spun by Wirecard executives highlight the importance of good governance and the investors’ knowledge and trust in that governance in order to safeguard the investing company; the alternative being significant monetary losses for investors if signs of poor governance are ignored.

3.) Wirecard – Use of Insolvency Proceedings

The pursuit of recovery for shareholders of Wirecard via claims in insolvency proceedings is an interesting development which so far is rarely seen in the class action arena. Usually, bankruptcy proceedings call for the liquidation of a company and pay secured creditors first, such that any unsecured creditors (such as shareholders) cannot viably be made whole and often receive pennies on the dollar for their claims. This result makes insolvency proceedings unattractive as an avenue to pursue recoveries for shareholders in most circumstances.

However, several law firms including (but not limited to) DRRT, Breiteneder, and Rotter Rechtsanwalte believe that enough funds exist or the repayment structure is such that it is prudent and reasonable for shareholders to pursue claims against Wirecard through the insolvency proceedings. Lawyers from DRRT have opined shareholders may see up to 2% recovery on their losses. Thus, Germany appears to be making strides in being a jurisdiction that firstly, has created a class action procedure to allow investors to pursue claims against companies, secondly, seems ESG claim-friendly and appears to be redressing grievances that are tied to ESG principles, and lastly, has afforded shareholders the opportunity to pursue claims in insolvency proceedings when a company avoids other punitive fines by declaring bankruptcy.



In comparison, the Netherlands has for some time been a jurisdiction friendly to securities class actions and has given investors multiple opportunities to address fraudulent behavior by companies. Likewise, the Netherlands has become another jurisdiction which facilitates securities class actions against bad actors within the ESG space.

1.) Ground-breaking Environmental Action

The Netherlands, like Germany, has facilitated litigation against many companies and provided relief to shareholders in cases such as Royal Dutch Petroleum Company, Royal Imtech, Converium Holding, and Ageas S.A. (formerly Fortis S.A./N.V.).

In May 2021, judgment was delivered in Milieudefensie et al. v. Royal Dutch Shell plc and Shell was ordered to reduce its net carbon dioxide emissions by 45% by 2030, in line with the Paris Agreement. The Hague District Court found that Shell’s inadequate climate policy constituted a breach of its legal duty of care towards Dutch citizens. Shell was held to owe an “obligation of result” and a “significant best-efforts obligation” to reduce CO2 emissions generated worldwide. The case shows that whilst the Netherlands may be ahead of other European countries in ESG-related litigation, it is also having an influential role in inspiring innovative investor claims in other jurisdictions, such as with the ClientEarth action against Shell in England discussed above, which followed this seminal ruling.

2.) Recent Challenge to Steinhoff’s Poor Governance Standards

The Netherlands has also become the site of many lawsuits against Steinhoff (along with Germany and South Africa). Steinhoff, like Wirecard, involves severe accounting irregularities and falls under the governance prong of ESG. The company started as a small South African outfit but became a multinational retailer in the European discount furniture retail industry.  The fraud resulted from corrupt leadership involving the CEO, Markus Jooste, and several top executives that at least had knowledge of the company’s wrongdoing.

The Steinhoff International Fraud lasted for eight years; the financial fraud resulted from intercompany loans that misrepresented the profits the company made.

The complexity of the Steinhoff organization helped the fraud continue since the perpetrators were using the intercompany loans to increase revenues and decrease expenses.  Steinhoff moved money through its numerous retail brands which inflated its numbers.  “The transactions identified as being irregular are complex, involved many entities over a number of years and were supported by documents including legal documents and other professional opinions that, in many instances, were created after the fact and backdated,” Steinhoff said.  Ultimately, the company inflated its profits by $7.4 billion which is an extreme example of financial statement fraud.  The fraud resulted in significant losses for shareholders and a $12 billion valuation write-down for the company.

Steinhoff has now agreed to a “global” settlement to resolve all claims once and for all. Litigation proceedings filed in the Netherlands helped trigger this global settlement and shows the receptiveness of this jurisdiction to addressing ESG concerns and violations and giving redress to affected shareholders. In 2019, an Inquiry Petition was filed with the Enterprise Chamber of the Amsterdam Court of Appeal in the Netherlands and in December 2019, a damages complaint was filed in the Amsterdam District Court.   In September 2021, the District Court of Amsterdam approved a settlement for the benefit of shareholders in the amount of approximately $1.1 billion.  This settlement amount was voted on by the South African court and the global settlement totaling €1.4 billion (approximately USD $1.6 billion) became effective on February 15, 2022, with a deadline to file all claims by May 15, 2022. Steinhoff is therefore an example of yet another successful challenge to a fraudulent company with poor governance standards in the Netherlands.

3.) The Netherlands Chosen as Jurisdiction to File Action Against Airbus

Perhaps because of the Netherlands being such a friendly jurisdiction to address ESG grievances against companies, it has become the site of another recent filing based on ESG violations, a claim against Airbus. Airbus is a global provider of civilian and military aircraft based in France.  Investors’ allegations in the recent proceedings initiated against Airbus state that the company failed to disclose a corruption scandal which resulted in investors purchasing shares at a falsely inflated price. Airbus allegedly schemed to use third-party business partners to bribe government officials, including Chinese officials to obtain and retain business including contracts to sell aircraft.

The bribery scheme resulted in a false reported boosted profit of more than $1 billion.  It is interesting to note that the company is based in France but litigators chose to file this action in the Netherlands via a Stichting foundation and under a special purpose vehicle due to the Netherlands being a more friendly jurisdiction to redress these wrongful acts. The case has already been litigated by prosecutors in the United States, the United Kingdom (UK), and France pursuant to criminal law statutes; the litigation in the Netherlands is on behalf of impacted shareholders as opposed to a criminal prosecution.

Again, this scandal and ensuing lawsuit exemplifies the governance component of ESG and how important it is to invest in strategies and avenues of redress. Corporations must thoroughly adopt policies and practices that lead to effective governance to avoid severe accounting irregularities and any implications of bribery or fraud. In this case the bribery, as opposed to the accounting fraud in Steinhoff, was carried out by middle management employees rather than executives.  Regardless, the CEO, Tom Andrews, despite his lack of involvement in the wrongdoing, resigned out of a sense of obligation since the bribery occurred while he was the company’s CEO.

The mid-level employees utilized shell companies to enact the bribery so it could not be traced directly back to them.  Although the company’s employees clearly and consciously engaged in bribing public officials, they avoided even heavier penalties in the criminal prosecutions by turning themselves into the authorities.  We will continue to monitor the Airbus proceedings and to observe how the resolution of this case may further illustrate the importance of governance impacting investors’ decision to invest in a company.



Denmark, as a European jurisdiction to protect shareholders and address violation of ESG principles, has proved to be a less friendly jurisdiction compared to the Netherlands and Germany.

1.) Recent action against Danske Bank for violation of good governance practices

Currently, Danske Bank is proceeding through the courts in Denmark. Danske Bank, like the cases described above, also involved the violation of good governance practices as Danske Bank’s central management members were alleged to have knowledge of its Estonian branch’s money laundering activities since late 2013.  The company’s central management took nearly two years to mitigate these activities and engaged in a cover-up to keep the truth from financial regulators in Estonia and Denmark, and from its investors.  An independent investigation uncovered that an exorbitant $234 billion flowed through the bank as part of the money laundering scheme from 2007 to 2016.  Once the fraud was publicly disclosed, Danske’s stock lost over $12.8 billion in value.  Shareholder litigation against Danske Bank was pursued in the United States but ultimately was dismissed. However, investors continue to pursue numerous ongoing securities class action litigations in Denmark and at least six criminal and regulatory investigations are pending in Estonia, Denmark, France, the UK, and the United States.

Danish courts have so far shown their slight arguable bias toward Defendant companies by way of their interlocutory rulings during the litigation against Danske Bank. As the case has progressed through the Danish courts, there have been challenges almost every step of the way. In 2019, Danske Bank challenged the status of certain plaintiffs on the basis that they owned trusts in common law jurisdictions (the Danish legal system does not recognize trusts as being legal entities in their own right).  Danske Bank also asked for all plaintiffs outside of Denmark to post security for adverse costs with the Court, which the Court ultimately granted in February 2021, even though the plaintiffs’ attorneys argued that this was in violation of EU law as being discriminatory against non-EU plaintiffs.  Even after three years in Court, the High Court in Denmark is yet to select the test cases (similar to model case proceedings in Germany) on which to try the merits of the case for a test case ruling.  The repeated attempts to delay and obstruct this case from proceeding and the court’s ruling in favor of the Defendant on several of these issues is foreboding and does not signal a jurisdiction willing to enable harmed investors to seek redress.

2.) Governance action against Novo Nordisk

Likewise, Novo Nordisk was pursued by investors before the Danish courts. The Novo Nordisk claim revolved around allegations of ever-increasing insulin prices and the resultant impact on revenues.  Novo Nordisk assured investors that the company was not subject to these pressures surrounding insulin prices and that its sales and profits would continue to grow.  This was not the case, however.  Shareholders therefore took Novo Nordisk to court over these misleading statements and originally demanded 11.78 billion Danish krone as compensation for their loss.  The Denmark Court placed a heavy burden on shareholders in terms of providing evidence and corporate documentation to support their claims. Even after three years of litigation in which the shareholder plaintiffs provided all of the required documentation and overcame other challenges made by the Defendant Company, the case settled essentially in Novo Nordisk’s favor where they ultimately paid no compensation to plaintiffs and were able to settle with no admission of liability or wrongdoing.  In contrast, the parallel litigation pursued by investors against Novo Nordisk in the United States was settled for $100 million.  The Danish courts therefore appear to be less willing to facilitate shareholders’ ability to hold companies accountable for violations of good governance via securities class actions.



1.) Recent governance action against Swedbank

Like its Danish peer, the Danske Bank claim, a more recent example of a company addressing its governance issues emerges with the claim against Swedbank in Sweden. Although the Swedbank scandal emerged two years ago and the chief executive, Birgette Bonnesen, was fired during that time, the chief executive was only recently charged with fraud, market manipulation, and the unauthorized disclosure of inside information in January 2022.  Birgette Bonnesen repeatedly denied that the bank had any issues with its anti-money laundering processes in Estonia; her statements later emerged as false.  The chief prosecutor, Thomas Langrot, alleged that Bonnesen either intentionally or with gross negligence continued to spread misleading information about the bank’s anti-money laundering measures.  As far back as 2014, an external report commissioned by Swedbank detailed several warnings about individuals accepted as clients without proper identification.  Despite these and other warnings, company leadership did not take sufficient measures to prevent or address any money laundering, resulting in a share price collapse which negatively impacted shareholders.  The scandal, which emerged at the end of 2018, illustrates yet again the huge significance that governance plays in the security and stability of these companies and their stock prices. In 2019, state broadcaster SVT reported that a Norwegian law firm hired to investigate Swedbank’s Estonian unit, concluded that as much as $23 billion in potentially suspicious flows passed through that branch every year between 2010 and 2016.  The company was fined 4 billion Swedish Krona ($390 million) for its anti-money laundering deficiencies by the Swedish financial watchdog, Finansinspektionen.  Although at least one law firm investigated the possibility of pursuing a shareholder class action against Swedbank in Sweden, this inquiry ultimately ended due to the law firm conceding it was not viable. Lawyers from Grant & Eisenhofer have discussed that Sweden is not an easy or friendly jurisdiction in which to pursue securities class actions.

2.) Recent securities class action against Ericsson

More recently, a different law firm has indicated that it is considering filing a securities class action in Sweden against Telefonaktiebolaget LM Ericsson pursuant to the Swedish Tort Liability Act. Ericsson is a company based in Sweden which provides communication infrastructure, services and software solutions in multiple countries including Iraq.

An internal company report was leaked to the media describing a widespread pattern of corruption in Iraq between 2011 and 2019.  Allegedly, Ericsson sought permission from the terrorist group, ISIS, to work in ISIS-controlled cities and that the company paid protection money to smuggle equipment through ISIS-held zones.  These revelations led to a financial and legal hailstorm. The Swedish prosecutor, Gorts, has announced an investigation into whether this same type of activity was occurring in China.

In February 2022, Ericsson’s CEO told a Swedish newspaper that the company may have made payments to ISIS to gain access to certain transport routes in Iraq. Class action lawsuits are underway in the United States.  In April 2022, Robbins Geller Rudman & Dowd LLP announced that shareholders that suffered significant losses could serve as lead plaintiff in a U.S. action against the telecommunications company. More importantly, there is a funder and law firm pursuing an action against the company in Sweden, a country not known for being a friendly jurisdiction (as noted above) to these types of litigations. ISS Securities Class Action Services will continue to monitor this case as it progresses to note whether Sweden joins other countries in Europe in providing redress to investors for companies’ violations of governance practices.



European jurisdictions, compared to the United States, still lag behind in terms of the quantity and availability of securities class actions, investor-friendly class action procedures being established by the legislature, and the ease and efficiency with which shareholders can obtain redress. Nonetheless, European countries such as the Netherlands and Germany appear to be frontrunners in facilitating small and large investors’ access to such cases, as they appear ready to grant relief to investors and punish companies that act fraudulently and fail to maintain healthy governance standards.

The English courts are also increasingly willing to take active steps in securities litigation to enable shareholders to litigate more efficiently and obtain redress for losses suffered at the hands of Defendant issuers. Recent case management decisions will hopefully facilitate the management of large claimant groups, making such cases more cost effective to run, which we expect will only add to the ever-increasing volume of securities cases before the English courts.

Courts in Denmark and Sweden have supported procedures that allow investors to take Defendant issuers to court, but we have yet to see whether they will issue a ruling in favor of investors.

Overall, and from an investor-claimant perspective, Europe seems to be finding its way onto the securities litigation “world stage,” third to Australia and the United States.  However, it is clear that European courts, including the English courts, are taking steps to facilitate actions brought by investors against Defendant issuers who have been implicated in breaching ESG standards. It is crucial that this trend continues to increase the chances of poor corporate conduct being kept in check and ultimately being replaced by good corporate conduct, thereby resulting in real positive change in the ESG space.


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Jeffrey Lubitz, Managing Director, ISS Securities Class Action Services

Elisa Mendoza, Esq., Associate Director, ISS Securities Class Action Services

Production & Design: Justin Lustre, Associate, ISS



Andrew Hill, Partner

Anisha Patel, Senior Associate

Sam Tarrant and Olwen Mair, Associates



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