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ADVICE ATTORNEY-GENERAL IN ABN AMRO BANK CASE

Amsterdam Enterprise Court decision should be annulled

Today, the Attorney-General provided the Dutch Supreme Court with his advice on the ABN AMRO Bank case (LaSalle). In his opinion, the Supreme Court should annul the decision rendered by the Amsterdam Enterprise Court (‘Ondernemingskamer Hof Amsterdam’).

The advisory opinion can be summarized as follows (source):

This lawsuit focuses on the question whether the board of directors of ABN AMRO Holding (BoD) was allowed to sell its US subsidiary LaSalle without the prior approval by the general meeting of shareholders (GMS). This sale took place on the moment the BoD was involved in exclusive negotiations with Barclays regarding a share merger. Before the sale of LaSalle, a consortium of three banks had announced its intention to acquire the shares in ABN AMRO Holding.

VEB (a Shareholders Association) has requested the Enterprise Chamber of the Amsterdam Court of Appeal to set up an enquiry (‘enquêteverzoek‘) into the conduct of business in relation to the sale of LaSalle. In addition, VEB has requested the Enterprise Chamber for preliminary injunctions (‘voorlopige voorzieningen‘). VEB requested, amongst others the opportunity for the GMS to vote on the LaSalle transaction.

In brief, the Enterprise Chamber has ruled as follows:

• it has not (yet) been established that the sale of LaSalle was executed in order to frustrate a competitive bid of the consortium;
• however, in view of the resolution by the BoD and of the supervisory board to seek an acquisition candidate, the sale of LaSalle exceeded the “conduct of business area that is reserved to the board of directors and the supervisory board “;
• in view of this rule and the circumstances of the case, it would be unacceptable (‘onaanvaardbaar‘) if the GMS of ABN AMRO Holding would not be allowed to “express its views” on the sale of LaSalle;
• it is not necessary to establish whether section 2:107a of the Dutch Civil Code (DCC) applies directly;
• the principles of reasonableness and fairness, laid down in section 2:8 DCC as well as section 2:107a DCC applied analogically, require that the execution of the sale of LaSalle must be suspended until the GMS has approved the transaction.

The advisory opinion starts with a comparative law study, in which the Attorney-General pays attention to English and German law, as well as to the law of the State of Delaware. The Attorney-General then focuses on the meaning and background of section 2:107a DCC and the principles of reasonableness and fairness laid down in section 2:8 DCC.

Subsequently, the Attorney-General reviews the decision of the Enterprise Chamber. The Attorney-General distinguishes two separate questions in this matter:

• Did the BoD act unlawfully with respect to its shareholders by selling LaSalle, especially in view of the interest of the consortium for ABN AMRO including LaSalle?
• May section 2:8 DCC grant the GMS an approval right in relation to the LaSalle-transaction?

The Attorney-General is of the opinion that in the present case, question b. cannot be answered affirmatively. Only in very special circumstances, the principles of reasonableness and fairness may establish authority of a corporate body. Such authority – which is not derived from the law or the articles of association – must be founded on a widely accepted legal conviction, which is not the case in the present matter. Herewith the Attorney-General takes into account the sections 2:107a DCC and (not yet effective) 2:359b DCC. For this reason, the Attorney-General recommends the Supreme Court to reverse the decision of the Enterprise Chamber.

In the advisory opinion, the Attorney-General does not express his opinion on the question whether the BoD has acted unlawfully with respect to its shareholders by selling LaSalle (the above mentioned question a). The Attorney-General only concludes that, under Dutch company law, the transaction does not require the approval by the GMS pursuant to section 2:8 DCC.

The Office of the Attorney-General of the Supreme Court of The Netherlands can only comment on a case through its advisory opinion. In most cases, the Supreme Court’s decision is in accordance with the advice given by the Attorney-General.

The Attorney-General’s advice is fully in line with the Dutch common opinion of law. The principles of reasonableness and fairness (a general concept) should be applied with certain restraint. This restraint is also in line with case-law. Only in specific circumstances the principles of reasonableness and fairness may constitute the ground for a legal obligation which is not yet in any statute.

Karel Frielink
Curacao-based Attorney (lawyer) / Partner