Executive board members and managing directors are not personally liable for fines imposed on the company itself. That was the verdict of Düsseldorf’s higher regional court – the Oberlandesgericht (OLG) Düsseldorf – in a judgment from July 27, 2023 (case ref.: VI-6 U 1/22).
Board members and managing directors are exposed to significant liability risks, including with respect to their own company. But they are not liable, according to the OLG Düsseldorf, for fines issued to the company in response to antitrust infringements, notes Michael Rainer, managing partner and point of contact for company law at MTR Legal Rechtsanwälte.
The defendant in the case in question served as managing director at one of the plaintiff companies, a form of limited liability company commonly referred to as a “GmbH”, as well as chief executive at the other plaintiff company, which was organized as a type of German stock corporation known as an “Aktiengesellschaft” (or “AG” for short). The two companies were affiliated with each other and operate in the steel industry, and the defendant was regularly involved in exchanging sensitive information within the sector. Germany’s Federal Cartel Office – the Bundeskartellamt – had issued a number of companies with fines for entering into illegal cartel agreements, including a 4.1 million euro fine directed at the soon-to-be plaintiff GmbH plus a separate fine that was imposed on its managing director personally. No fines were imposed on the AG.
The GmbH subsequently demanded compensation from its managing director in the amount of the fine, whereas the AG, for its part, sought reimbursement for the legal expenses and other related costs it had incurred in trying to resolve the matter. The defendant was also to be held liable for any other loss or damage resulting from the antirust infringement.
The OLG Düsseldorf ruled that the defendant managing director and chief executive was not liable for the fines imposed on the GmbH or for the costs incurred by the AG. Though it was noted that he had purposely played a part in the anticompetitive exchange of information, the court held that the GmbH had no right of recourse against him. Indeed, personal liability on the part of the managing director and executive board member for the cartel fines was out of the question. The relevant antitrust rules provide for separate fines for companies and the individuals whose actions lie behind an anticompetitive infringement, hence why separate fines were imposed here.
The court went on to state that if it were possible to take recourse against the managing director, this could potentially undermine or defeat the underlying purpose of the sanction prescribed for the company. The kind of recourse envisaged here would in practice allow companies to shirk their responsibilities. And this holds all the more true if a D&O insurance policy has been taken out for board members and managing directors, noted the OLG Düsseldorf. The court has granted leave to appeal to Germany’s highest civil court – the Bundesgerichtshof (BGH).
MTR Legal Rechtsanwälte’s expertise in company law also covers questions surrounding the liability of governing bodies.
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