Due to the unprecedented health crisis brought about by COVID-19, many economic actors are facing the impossibility of fulfilling their contractual obligations or do not wish to honour them because they are no longer commercially viable. In the absence of specific material adverse change clauses, one possibility offered by Luxembourg law is the legal concept of force majeure. This article looks at the lessons which can be learned from the available case law in this respect.
In a notable case, the Luxembourg District Court ruled on the requirements for bringing minority actions and whether a broad interpretation thereof is possible. The judgment exposes the common lack of legal recourse available to shareholders who hold equal parts in a company. Whereas majority shareholders can impose their will at general assemblies and minority shareholders can commence minority actions, the possibility for equal shareholders to take similar action would lead to a problematic stalemate.
In Luxembourg, several time limits apply with regard to prescription periods. Notably, the inclusion of specific prescription periods in the Law of 10 August 1915 on Commercial Companies does not preclude the application of prescription periods as provided for in the Civil Code. The Luxembourg District Court recently reiterated this position in a judgment regarding prescription periods for invalidating shareholder decisions.
The Luxembourg District Court recently ruled on the equivalence of suretyships and autonomous guarantees. Although the court interpreted agreements using the traditional rules, this decision illustrates its pragmatic approach of analysing commitments to qualify guarantees.
In a 2018 decision, the Luxembourg District Court found a liquidator liable for damages which the plaintiffs had suffered as a result of the early closure of the liquidation while legal proceedings were still ongoing. The court held that since the liquidator had personally received the document instituting the proceedings, he should not have ignored any claims that might have arisen from the ongoing dispute. Notably, the court went even further by also holding the liquidation auditor liable.