The Asset Tracing And Recovery Review - 6th edition - Luxembourg Chapter 2018

I OVERVIEW

Luxembourg is a civil law jurisdiction and has experience in fraud cases. Its entities are often involved in international groups of companies, making Luxembourg vulnerable to company fraud and other fraudulent schemes that make use of complex legal set-ups. Its mature banking and funds industry also attracts white-collar crime. Some major international frauds, such as the Madoff scandal, have hit the Grand Duchy, and many fraud cases have been tried before the courts in Luxembourg.

II LEGAL RIGHTS AND REMEDIES

Claimants will have to rely on a wide range of criminal and civil remedies to conduct successful proceedings for recovery or compensation. Although the Criminal Code (CrimC) and other statutes regulate certain peculiar cases of fraud, there is, strictly speaking, no specific compensation for fraud victims other than restitution of the victims' defrauded property and the common civil liability rules to recover damages.

I Civil and criminal remedies

Civil remedies

A fraud victim will usually pursue compensation through a liability suit for the recovery of damages that have been caused by an act of wrongdoing. A claimant will be required to establish an act of wrongdoing (or fault), damages and causality.

Fraud victims can use contractual liability and tort2 to allege, inter alia, breaches of contract, contractual fraud3 and serious misconduct. In some cases, an abuse of right4 may also support a fraud claim.

If the fraud was carried out by directors of a company in which the victim is a shareholder, the claimant may choose to base its liability suit on the provisions for directors' liability of the amended Law of 10 August 1915 on commercial companies (LCC) if it can show corporate mismanagement or a violation of the LCC, accounting rules or the company's articles of incorporation. In most cases, the company will have to file suit. In a société anonyme, a société européenne, a société en commandite par actions and a société par actions simplifiées, it is possible for a shareholder or a group of shareholders holding at least 10 per cent of the voting rights to bring shareholder derivative suits against company directors.

A claimant is only entitled to lawful, certain, direct and personal damages. Punitive and symbolic damages are generally excluded. If the suit is based on a breach of contract, the alleged damages should also have been foreseeable at the time of conclusion of the contract. Other civil-law remedies can be used...