Don’t worry, Porsche is not attacking Ferrari or Lamborghini. An “Italian torpedo” is lawyer slang for when someone files a lawsuit in a certain court while the other party does the same in a different country. Italian courts can take years to decide on jurisdiction, so the case stalls; hence the term.
That’s exactly what Porsche has done, filing a lawsuit against the Pendragon fund in the Regional Court of Stuttgart 11 days before Pendragon filed its own lawsuit against the company in London.
This is one of many cases in both Europe and the U.S. of shareholders suing Porsche for damages over its failed attempt to take over VW in 2008. Filing the lawsuit in Stuttgart may also be an attempt on Porsche’s part to keep the case in Germany, if the court decides it has jurisdiction, thus avoiding litigation in third countries.
“European Union rules say the venue where a party files an action first prevails and bars another country’s court to assume jurisdiction over the same issue”, explained to Bloomberg News, Christoph Thole, a law professor in Tubingen, Germany. “The London judge would have to stay his case until the Stuttgart court rules that it doesn’t have jurisdiction.”
The plot thickens as the lawsuit is both against Pendragon’s London-based fund manager as well its parent company in the Cayman Islands.
“If the Pendragon fund is located on the Cayman Islands and outside of EU, then the jurisdiction rules don’t apply”, said Thole. “I’m not sure this is mended by the fact that Porsche is suing a second plaintiff, the fund manager, located in the UK.”
Meanwhile, former Porsche CEO Wendelin Wiedeking and ex-CFO Holger Haerter, who led the company at the time, were charged by Stuttgart prosecutors with market manipulation.
“The investigation found the suspects in February 2008 at the latest made the decision to increase Porsche’s share in Volkswagen to 75 percent in the first quarter of 2009 to prepare a takeover”, said spokeswoman for Stuttgart prosecutors Claudia Krauth.
Krauth added that, between March 10 and October 2, 2008, Porsche denied at least five times that it planned to increase its VW stake to 75 percent, influencing VW’s share price as investors sold shares and increased short positions.
Anne Wehnert and Hanns Feigen, lawyers for Wiedeking and Haerter, issued the following statement: “We’re astonished to note the prosecution with this indictment wants to side with unknown short sellers, of all people, who made highly speculative and irrational bets against the VW stock.”
Porsche representative Albrecht Bamler said that the charges apply solely to the two men, who are no longer part of the company, and wouldn’t comment any further.
By Andrew Tsaousis
Story References: Bloomberg News
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