EUROPE - Pension funds and institutional investors of a securities class action against Royal Dutch Shell have won a higher compensation payout than earlier expected, following a landmark decision by the Amsterdam Court of Appeals.
Shell has been ordered to pay $450m (316m) to rectify what investors say was securities fraud - a sum more than it had said it would pay last year to settle the case.
The Stichting Shell Reserves Compensation Foundation and Royal Dutch Shell plc agreed a $352.6m (€222.69m) deal in April last year to settle compensation claims made by several large European pension funds, for what the pension funds described as the substantial misreporting of oil reserves and its subsequent financial impact.
This settlement was reached one year after the class action began in Amsterdam in April 2007, and after US courts decided non-US shareholders were not eligible for compensation under its local regime. (See earlier IPE story: Shell class action set for November hearing)
Shell said at the time that the settlement presented might mean US-based investors could receive a slightly higher payout than the 150+ public pension funds of the pan-European/global investor group, because of a technical difference in the contracts.
That situation has now been resolved and the Amsterdam Court of Appeals has now ordered Shell to begin paying into the foundation created for the benefit of claiming investors, to compensate misstatements between 1997 and 2003 regarding oil and gas reserves.
Just as importantly, this is the first such class action case to be finalised in Europe, noted Grant & Eisenhofer, the legal firm now representing the special purpose foundation and the pension funds as, unlike in the US, there is no official mechanism for filing class actions in European courts.
"It is important that investors have a proper mechanism and forum for pursuing securities claims in European courts - the Amsterdam Court of Appeals has done a tremendous service for advancing shareholder rights in its handling of the Shell case," said Jay Eissenhofer, co-managing partner of Grant & Eisenhofer.
"This was a uniquely European resolution in the context of a securities fraud, but one that can present huge implications in other disputes going forward," he added.
Pension funds and institutional investors sued Royal Dutch Shell for what investors say is "overinflation" of energy reserve figures and led the company to republish annual reports data from 2004.