Luxembourg, Luther SA updates

Litigation

Contributed by Luther SA
Luxembourg District Court rules on prescription periods for invalidating shareholder decisions
  • Luxembourg
  • 17 December 2019

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.

District court examines aspects relating to loan guarantees
  • Luxembourg
  • 29 October 2019

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.

Liquidator held liable for omitting claims arising from ongoing litigation
  • Luxembourg
  • 15 October 2019

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.

Directors' liability in event of non-compliance with company tax obligations: case law reversal
  • Luxembourg
  • 30 July 2019

Under the General Tax Law, directors are held personally liable for the fulfilment of their company's tax obligations. Prior to a case law reversal, the Administrative Court took a strict approach towards directors and systematically held that they had breached their duties by failing to withhold, declare or pay company taxes. However, in 2017 the Administrative Court of Appeal held that the wrongful character of alleged tax breaches must be demonstrated by law and factually proved by the Tax Administration.

Court of Appeal specifies consequences of rescinding contracts
  • Luxembourg
  • 21 May 2019

The buyer of an apartment signed a long-term lease and agreed to live in the apartment for at least 12 years. However, in contravention of this commitment, the buyer moved out and rented the property to a tenant. The seller sued the buyer, seeking to have the contract rescinded. In its decision, the Court of Appeal ruled that the contract had been divided into a contract of sale and a lease contract, and that the retroactive rescission principle would have a different effect on each of these.


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