The first verdict on the damage caused by providers of CFD products who lure customers with fake advertisements is well known. The Limburg District Court declared itself competent to hear the case on 3 June 2020. This means that the victims do not have to go to Cyprus to litigate.
Click here for the verdict (in Dutch)
The provider of the CFD products whose value evaporated in a short time had stated in the fine print of the contract that the courts in Cyprus have exclusive jurisdiction. However, the client of our office had brought the case before the court in her hometown, Maastricht. Central to the case is the question of whether the victim can invoke a rule from the European Brussels I-bis Convention, which states that a consumer can always go to his own court. Even if the fine print of the contract says otherwise.
The victim had started out as a retail investor, but was “upgraded” to a professional account by the CFD broker. The broker argued that for that reason the victim had lost its consumer status and had become a professional investor, who had to go to court in Cyprus. In our view, this is a trick that has been applied in all cases that are now before the court (in which a decision has yet to be made). The question was therefore whether the judge would classify our client (who works in education and is not an entrepreneur) as a consumer or as a professional investor (we had signed up for this).
Because the broker questioned the jurisdiction of the Dutch court, the court first ruled on this on June 3, 2020. The Limburg District Court assesses the nature of the agreement and comes to the conclusion that it concerns a consumer case. The court sets aside the so-called “choice of forum clause” in the contract and declares itself competent. The procedure is now continuing in the Netherlands. More judgments on jurisdiction are expected from other courts in the Netherlands in the coming weeks.
It was also announced this week that the license of this broker in its home country Cyprus has been temporarily withdrawn by regulator Cysec due to violation of all kinds of rules. This happened at the initiative of the British regulator FCA, which has put pressure on the Cysec to tackle this broker, among other things. The FCA has banned the broker from operating in the UK any longer. In our country, the AFM has tightened up its warning; the AFM now openly uses the word “fraud” on its website. Reports in foreign media suggest that the CFD providers are using software from an Israeli company that functions as a sort of money transfer machine.
Published by Marius Hupkes