Article: Dutch Court Overturns Ruling in Petrobras Fraud Suit

By Cosmo Sanderson

Global Arbitration Review, London (June 18, 2021, 6:25 PM BST) — A Dutch court has reversed its decision to exclude certain claimants from a class action brought on behalf of investors in Petrobras who suffered losses due to the Lava Jato corruption scandal – after it emerged the Brazilian company had taken conflicting positions on the applicability of an arbitration clause.

On 26 May, the District Court in Rotterdam ruled that the Stichting Petrobras Compensation Foundation (SPCF) has standing to pursue declaratory relief against Petrobras on behalf of all the company investors it represents in the Netherlands.

After initially refusing to throw out the class action in 2018, the court issued a preliminary ruling last year that SPCF could not represent some investors who should have been aware they were bound by an arbitration clause in the articles of association of Petrobras, Brazil’s national oil and gas company.

But in its most recent ruling, the court found that Brazilian case law on this issue was not settled; and that Petrobras had failed to earlier disclose it has argued for a more restrictive interpretation of the same clause in arbitrations that have been brought under it.

In view of that new information, the court said it had to overturn last year’s ruling.

SPCF is represented in the court by Dutch firm Lemstra Van der Korst. It is also using a global counsel team including Withers in London and US litigation firm Motley Rice.

The foundation was set up in 2015 to represent the interests of investors who purchased Petrobras securities outside the United States and suffered losses because of fraud uncovered by Brazil’s Lava Jato investigation – a corruption scandal in which Petrobras executives allegedly awarded billions of dollars of contracts to construction companies at inflated prices in return for kickbacks over a 10-year period.

In 2018, Petrobras agreed to pay almost US$3 billion to settle a similar US class action relating to Lava Jato. But that settlement primarily covered investors who purchased securities in the US and not those who bought shares in Brazil or in linked European markets. Petrobras also agreed to pay over US$850 million to US and Brazilian authorities in connection with the scandal.

Read the Full Story

Contact ISAF to Determine Case Eligibility

Register your claim

Start the process to participate in the ISAF-Petrobras recovery initiatives