Class Actions in Context
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Class Actions in Context How Culture, Economics and Politics Shape Collective Litigation

How Culture, Economics and Politics Shape Collective Litigation

Edited by Deborah R. Hensler, Christopher Hodges and Ianika Tzankova

In recent years collective litigation procedures have spread across the globe, accompanied by hot controversy and normative debate. Yet virtually nothing is known about how these procedures operate in practice. Based on extensive documentary and interview research, this volume presents the results of the first comparative investigation of class actions and group litigation ‘in action’, in the Americas, Europe, Asia and the Middle East.
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Chapter 14: The L & H case: Belgium’s internet bubble story

Stefaan Voet

Extract

Most Belgian mass claim cases from the last ten years have one common feature: they were criminal cases and were brought before a criminal court. Contrary to common law jurisdictions, the victim of a Belgian criminal case is not absent from the criminal trial. He or she is a formal party to the proceedings and has standing to plead. With respect to his or her civil claim, the victim can piggyback on the evidence brought forward by the Public Prosecutor in order to prove a civil fault. The victims only have to prove individual causation and their damages. The Belgian Lernout & Hauspie (L & H) case was one of the largest corporate scandals in European history. L & H had developed advanced Automatic Speech Recognition software and persuaded thousands of people to invest in the company. Some invested all their savings. However, L & H went downhill as quickly as it shot uphill. Allegations of fictitious clients, artificially inflated revenue, forgery, insider trading, abuse of confidence and other similar charges led to the bankruptcy of the company and a criminal investigation. Ultimately, 21 individuals and companies were sued before the Criminal Court of Appeal in Ghent. During the trial, more than 15,000 victims filed civil claims. Three years later the Court issued its ruling. L & H’s founding fathers and most former directors were convicted. The deep-pocket defendants Dexia Bank and KPMG, respectively L & H’s bank and statutory auditor, were acquitted.

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