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Provision to Curb “Torpedo Actions” also Applies to Asymmetrical Jurisdiction Agreements

In summer 2021, the German Federal Court of Justice ruled on a dispute between the insolvency administrator of the airline Air Berlin and its main shareholder Etihad Airways over millions in damages that had been going on for several years.

From a procedural point of view, the Federal Court’s findings on so-called “torpedo actions” are of particular importance, further limiting the scope of application of this litigation tactic.

A torpedo action is essentially an action that pre-empts an expected action by the other party in order to block it. A torpedo action is usually filed in a jurisdiction that promises either favorable case law or a particularly long duration of proceedings. This can considerably delay a legal dispute.

This is made possible by the principle of priority that applies to cross-border disputes and the jurisdiction of different courts. According to this principle, an action brought first before a competent court blocks all subsequent actions with identical subject matter before another court. If this torpedo action is brought in a less efficient jurisdiction with notoriously slow-working courts, the opponent’s action can be delayed by several years in some cases.

In order to put a stop to this abuse of rights, the

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D&O Insurances and Acting Board Members have the Same Burden of Proof in Direct Proceedings with the Injured Company

In a recent decision, the Higher Regional Court of Cologne dealt with the extremely topical issue of the distribution of the burden of proof in a direct lawsuit brought by a company against its D&O insurer.

The Decision of the Higher Regional Court of Cologne

In the case decided by the Higher Regional Court of Cologne, a limited liability company (GmbH) insured its managing director with a D&O insurance policy. After an event occurred which was presumed by the GmbH to be covered by insurance (involving inadequate fire insurance taken out by the managing director), the company did not take action against its managing director itself but had the claim of the insured managing director against the D&O insurance assigned to it and instead made a claim against the insurance on the basis of the assigned right.

The Higher Regional Court of Cologne now had to deal with the question of whether the same burden of presentation and burden of proof applies to the suing GmbH and the defending D&O insurance, compared to the imagined case that the injured GmbH would have initially made in a claim against its managing director.

In the latter case, the burden of proof would

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Executive Board and Managing Directors Not Personally Liable for Anti-Trust Fines Imposed on Company

In summer 2023, the Higher Regional Court of Düsseldorf ruled that board members and managing directors are not personally liable for fines imposed on a company.

The Decision of the OLG Düsseldorf

The case in question concerned recourse claims by two stainless steel companies against their former board member due to his involvement in a stainless steel cartel.

After official investigations revealed that a board member of both companies had been involved in the exchange of competitively sensitive information for several years, the German Federal Cartel Office imposed a fine of EUR 4.1 million on one of the companies. In addition, a further fine was imposed personally on the board member himself.

Besides the reimbursement of the fine, the suing companies also demanded compensation for the legal defense costs incurred in connection with the fine proceedings.

The Higher Regional Court of Düsseldorf rejected the recourse claims of the companies against their managing director in its entirety and, with regard to the fine imposed on one of the companies, determined that recourse against the acting body was not eligible.

The Higher Regional Court of Düsseldorf justified its decision by stating that in the alternative the assessment under antitrust law would be

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