Ruling on the issue of jurisdiction only, the Frankfurt Court of Appeals (Oberlandesgericht) yesterday found in favour of a claimant who has sued Standard & Poor’s, New York, in the Frankfurt courts for damages suffered in relation to investments in financial instruments issued by Lehman Brothers Inc. The claimant had alleged that he had made these investments in reliance on ratings issued by Standard & Poor’s.
In April 2011, the Frankfurt District Court (Landgericht) had dismissed the action for lack of jurisdiction. The Court of Appeals has reversed this decision. On doing so, it applied Sec. 23 German Code of Civil Procedure (ZPO). Pursuant to this provision, a foreign party can be sued in Germany, if two conditions are satisfied. First, the foreign defendant must have assets within the jurisdiction. This requirement is stated in the Code itself. Secondly, and this requirement has been developed by the courts, the matter must have sufficient nexus to Germany – in other words, there is a minimum contact requirement.
The Court of Appeals was satisfied that both requirements are met. As the judgment is not yet published, I would be speculating as to how the court has reached this conclusion in detail. From the press release, it appears that the customer contracts of S&P with customers based in Frankfurt were seen as assets located in Germany, and that the claimant’s domicile in Germany constitutes sufficient nexus to the jurisdiction. I will post an update if and when the full judgment has become available.