German KapMug

By Mike Lange, Securities Litigation Counsel, Financial Recovery Technologies and Andrew Lasky, Legal Product Specialist, Financial Recovery Technologies

The KapMug is a legal mechanism in Germany by which courts manage collective actions through model case proceedings including their potential settlement. Among other types of matters, the KapMug covers civil suits seeking damages for harm caused by false, misleading and/or materially omitted information in the capital markets. It is currently being used in the mass litigation against Volkswagen (VW) in the wake of its emissions scandal.

This post details the history and process for the device including claim registration which is currently the primary way by which investors who have not previously filed suit in German can still protect their rights.


In 2005, the Capital Markets Model Case Act (Kapitalanleger- Musterverfahrensgesetz or “KapMuG” for short) was enacted as way to consolidate and deal with more than 1600 individual suits filed against Deutsche Telekom AG in 2002. It was intended as a temporary fix – a 5-year experiment – to overcome the challenges of adjudicating so many direct actions. However, in 2010, the KapMug procedure was extended through 2012 as the Deutsche Telekom case had not been resolved despite 8 years of proceedings. In June that same year, the German Parliament adopted a bill reforming and extending the use of the KapMug through 2020.

How it works

At the preliminary stage, claimants file individual actions in the German District Court. They then apply for a KapMug on the grounds that their suit has significance for other cases based on common legal and factual questions and evidence. The District Court announces the KapMug request in a claim register, which starts a six month window of time for others to file suits and KapMug requests with the District Court. If at least nine more do so, the minimum threshold is met and assuming the District Court finds adequate basis, the matter is transferred to the German Higher Regional Court which must accept the KapMug for it to become effective.

The Higher Court confirms the KapMug requirements have been met and chooses one of the plaintiffs that previously filed suit to serve as the main (or lead) plaintiff in the model case.

The District Court stays all other actions while the model case proceeds. In this way it resembles a declaratory judgment proceeding in the US. The Court rules on the questions of law and fact common to all claimants and those decisions are binding in the stayed matters. When the model proceedings are finished, the District Court turns to the final stage of the KapMug process: the adjudication of individual questions and issues in each of the individual cases, including loss causation and damages.

During the course of the KapMug proceedings, the model plaintiff and defendants can negotiate and enter into the settlement. The settlement will bind plaintiffs in the other actions unless they opt-out or exclude themselves. In short, the KapMug starts as an opt-in proceeding and after settlement, becomes an opt-out one. However, as a practical matter, using a KapMug for settlement is problematic given the sheer number of plaintiffs and the high likelihood of many will opt-out.


KapMug registration in the Volkswagen (VW) case

The Higher Court’s acceptance of the KapMug also opens a six-month window of time for claimants that have not previously filed suit to register their claims with the District Court. Registration does not perfect those claims, which can only be done by filing suit, but it preserves any time remaining on the limitations period – the time within which the law requires claims to be brought or lost. That tolling, or suspension, of the limitations clock continues until completion of the KapMug proceedings, which can take years.

For VW, cases are proceeding in two German District Courts: in Braunschweig for VW common and preferred stock investors and in Stuttgart for Porsche preferred investors. In Braunschweig, the KapMug has been accepted by the Higher Court and the six-month registration window is set to close on September 8, 2017. As a result, organizers asking interested investors to provide their necessary paperwork within the next week or so to allow sufficient time for registration. The Stuttgart KapMug has not been yet been accepted by the Higher Court so the six month registration period has not opened there.

About FRT


Founded in 2008, Financial Recovery Technologies (FRT) is a leading technology-based services firm that helps the investment community identify eligibility, file claims and collect funds made available in securities and other class action settlements. Offering the most comprehensive range of claim filing and monitoring services available, we provide best-in-class eligibility analysis, disbursement auditing and client reporting, and deliver the highest level of accuracy, accountability and transparency available. For more information, go to

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This communication and the content found by following any link herein are being provided to you by Financial Recovery Technologies (FRT) for informational purposes only and does not constitute advice. All material presented herein is believed to be reliable but FRT makes no representation or warranty with respect to this communication or such content and expressly disclaims any implied warranty under law. Opinions expressed in this communication may change without prior notice. Firms should always seek legal and financial advice specific to their unique situation and objectives.

Mike Lange