|Sažetak (engleski)|| |
Bernard Madoff's Ponzi scheme began to unravel in December 2008 when the general market downturn accelerated. Since then, investors of so-called “Madoff feeder funds” brought a large number of legal actions against such funds and their custodians in various jurisdictions. Managers of these funds, as well as their depositaries delegated their duties to Madoff's BLMIS which has, contrary to European rules (the UCITS Directive), led to the accumulation of their functions. None of that was mentioned in the fund's prospectus nor reported to the competent authorities.
The scandal had a huge impact on the EU mutual fund market. Diverging regulatory approaches in national laws of EU member states opened political controversies, especially those between Luxembourg and France. This paper analyzes two cases regarding Luxalpha SICAV fund, domiciled in Luxemburg as UCITS fund. These cases were decided before courts in Luxembourg and France, respectively. Two procedural problems emerged in those proceedings. One is the issue of jurisdiction: whether it is possible to establish jurisdiction towards respondent who is not resident in the member state where the claim is brought, on the basis of forum loci delicti commissi (Art 5 para 1 of the Brussels I Regulation). The other issue was whether investors, as shareholders of the fund, have right to sue custodian bank directly, even though the fund itself has legal personality.
Luxembourg court rejected investors' direct cause of action against the custodian on the grounds that investors were able to pursue their claims through the liquidator of their fund. The court found that legal personality of the fund disables investors/shareholders to pursue a direct cause against depositary, unless they prove they suffer special damage, independent of the damage of the corporation (fund). Although Luxembourg law generally grants to investors (residual) right to sue custodians if the fund is founded as UCITS common fund (i.e. the one without legal personality), the court rejected the petition to extend this right to shareholders/investors of the funds with legal personality. Relying on the principles of the company law, for the funds with legal personality, Luxembourg court rejected to grant the shareholders a direct right to sue custodian. It found that Luxembourg company law does not grant actio pro socio for shareholders against persons outside the company (custodian being marked as such).
Although the same results would have occurred under Croatian company law, in the opinion of the authors the special nature of the SICAV fund deserves slightly different treatment. Namely, an investment company with variable capital (SICAV) by definition is to be distinguished from a joint stock company because its investors/shareholders are entitled at all times to request the redemption of their units/shares. This is not the feature of the common joint stock company, while it is essential for all UCITS funds, no matter whether they have legal personality or not. Since position of SICAV shareholders is more similar to position of the investors in other UCITS (common) funds, than to position of the shareholders of joint stock company, authors see no reason not to grant the shareholders residual direct action, the one investors of the UCITS common funds have. The latter are entitled to individual action against the custodian/depositary after formal notification that the management company (who has principal right and duty to sue) has not filed a claim. The same solution is adopted in German doctrine: investors/shareholders are entitled to actio pro socio under same conditions as investors in common funds.
The authors see a second reason for granting a direct claim for shareholders of UCITS funds in the necessity to provide the same level playing field to all investors in UCITS funds, regardless of the form in which the funds have been established (contractual/statutory). This because the key feature of UCITS fund is the right to redeem the share, and investor's decision to invest in it is likely to be based on this feature and not on the legal form of the fund.
In a case before French court, the plaintiff (investor) tried to establish a jurisdiction of French court by alleging that harmful acts of promoter of the fund took place in France. The promoter (and a custodian) of the fund was a bank with a registered office in Switzerland. Plaintiff’s allegations in the first instance proceedings were that the damage occurred in Luxembourg, where subscription of SICAV shares took place. First instance court accepted the plaintiff’s claim. Upon respondent's complaint, second instance court rejected the plaintiff’s claim on the grounds that courts in France had no jurisdiction in that case, because the damage did not occur in France. In second instance proceedings, plaintiff was arguing that promotion of the fund in France was done without prior authorization and that important information were not conferred to investors during promotion campaign. Supreme Court rejected plaintiff’s attempt to sustain jurisdiction of the French court on “the place of harmful event” criterion, since it was firstly introduced in the second stage of the proceedings, and as such found it as “inadmissible novelty”. On the other hand, Art 5 para 3 of Bruxelles I Regulation (in that case Lugano convention) grants jurisdiction to the courts of the place where the harmful event occurred (or could occur), and ECJ decisions confirmed the principle of ubiquity (the place where the harmful event giving rise to the damage occurred, as well as the place where the damage itself occurred). Therefore, it is strange that French courts refused to grant jurisdiction solely on the basis of inadmissible novelty doctrine. We conclude that French investor lost the case due to his relaxed procedural strategy in the early stage of proceedings: he should have invoked the application of the principle of ubiquity already before the first instance court.
Authors conclude that “full scale” EU substantive law harmonization of UCITS funds, although many times revised, still shows serious weakness in some points. Those might seem technical and of minor importance, but only at the first glance. Leaving to national legislator the decision on the right of investor(s) to sue directly seems like the most natural solution depending on the legal nature of the fund. In the cited cases, legal nature of the fund was the principal excuse for not granting the right to sue. Investors in the Madoff’s funds were faced with difficult barriers in pursuing their claims, wondering between friendlier and less friendly EU jurisdictions. Had the UCITS funds been designed as true EU products, enabled to circulate widely within the EU, there should have been a mechanism to prevent dismissal of investors' claims based on the peculiarities of procedural laws in EU member states. In particular, this should be the case when grounds for dismissal substantially depart from universally accepted principles set in EU harmonized procedural regulations, such as the principle of ubiquity for establishing jurisdiction under Brussels Regulation I.