A note on the Shell Settlement
Yesterday, Royal Dutch Shell Plc’s (Euronext, LSE, NYSE: RDSA, RDSB) announcement that it had reached a settlement with non-US investors in relation to its recent oil reserves overstatements had hit the wires and headlines. (press release) An extensive post on the settlement will follow, for now just a brief note.
The settlement reached is unlike that of a US class action; technically there is no such thing as a Dutch class action procedure, but one party or several parties collectively may sue, or enter into talks without a suit having been filed, on behalf of itself or themselves and once a settlement has been reached, the Court is asked to declare the settlement binding on a class.
That is the case here too: Shell, on behalf of its two predecessor entities, had not been sued by a class outside the US (as it has been within it) but had held talks with a group of investors and investor associations. On the day of the announcement, the parties filed an application with the Amsterdam Court of Appeals to request such declaration to bind the proposed class. As it currently stands, the settlement agreement’s validity is thus contingent upon the Dutch Court confirming the agreement and the US Court, before which the class action is pending, declining jurisdiction over these non-US claims.
The settlement amount as well deserves greater scrutiny: the most widely reported figure of $352.6 million is not the whole settlement amount and it itself consists of two separate amounts. Elements of the total recovery, including previously paid sums, may cover both non-US and US shareholders.
The above and more, including how to participate in this settlement, will be discussed in-depth in a follow-up post. (In order not to miss any future posts on cases such as this one, please subscribe.)