German Parliament extends Capital Markets Model Case Act until 31 December 2023

On 18 September 2020, following a public hearing with experts in the Committee on Legal Affairs and Consumer Protection and based on a draft bill introduced by the CDU/CSU and SPD parliamentary groups on 30 June 2020 (BT-Drs. 19/20599), the German Parliament once again extended the German Capital Investors’ Model Case Act (Kapitalanleger-Musterverfahrensgesetz – Model Case Act), which was to expire on 31 October 2020. The Model Case Act is now due to expire on 31 December 2023.

In the legislators’ opinion, this renewed extension beyond 31 October 2020 is necessary in order to be able to take into account the experience gained with the Declaratory Model Action (Musterfeststellungsklage) when finally evaluating the effectiveness of the Model Case Act. This is not yet possible because the Declaratory Model Action has only been introduced in Germany on 1 November 2018 (BT-Drs. 19/20599, S. 5).

The new evaluation period will most probably coincide with the implementation of the Directive on collective redress which was agreed upon by the European Commission, the European Parliament and the European Council in July 2020 (ST 9592 2020 INIT). This Directive, which is expected to be passed by the European Parliament and the European Council in late 2020 or early 2021, requires in particular that the Member States introduce a representative action for performance. The Member States will have two years to transpose the Directive into national law. The option to bring the representative action must be available no later than 2½ years after the Directive has come into force.

Noerr is a pioneer in defending against class actions and mass claims. With its team of specialised experts, Noerr regularly advises on defence against capital investors’ model cases, model declaratory lawsuits and representative actions as well as against claims brought by claim vehicles and against class actions. Noerr is currently defending financial institutions in four Model Case Act suits regarding liability for allegedly erroneous prospectuses for closed-end funds. In all of these cases, Noerr has been successful in the Higher Regional Courts. The cases are currently pending at the Federal Court of Justice.