To reply to this question, it is necessary to review the three cumulative conditions that must
be met for someone’s civil liability to be incurred; the fault, the damage and the causal link.
Specifically, the greatest difficulty facing disappointed investors trying to claim compensation
for their damages lies more often on the impact of the misleading information rather than on its
accuracy or its misleading nature that is relatively easy to gauge. Therefore, it is deliberately
that this contribution does not address the issue of the fault of disinformation that we consider
as proven for the purpose of this analysis.
For the sake of clarity, let us imagine a case of civil liability incurred due to disinformation
regarding public stock. Suppose I purchased stock issued by a company in order to partially finance
a capital increase raised to acquire another company. Shortly afterwards, my investment has lost
almost half its value because of the subprime crisis resulting in doubts about the issuer’s
financial capacity and value. May I claim compensation from those who are responsible for the
content of the prospecus related to the transaction, for having provided information deemed
unbalanced about the issuer’s exposure to the subprime crisis?
1. In this context, proving the causal link between fault and damage is difficult
Under Belgian civil liability’s law, in addition to the necessity to show that the fault and the
damage conditions are met, such action would also require the proof of the causal link between the
fault and the damage. In other words, the financial loss incurred by the investor has to be the
direct result of the misstatements in the information provided by the issuer.
Yet, as illustrated in the example above nothing is less certain. Indeed, in order to show the
existence of a causal link between the fault and the damage, two questions arise. Firstly, would I
have bought the shares in the absence of the alleged misstatements in the prospectus. Secondly, are
the misstatements in the prospectus the direct cause of the loss of value of my shares or does my
damage also result from the overall instability of the financial markets?
Undoubtedly, this dual demonstration is likely to raise difficulties as a share price responds to
various variables. First, how can it be sure that the investor took its investment decisions based
on the inaccurate or misleading information provided in the prospectus? Maybe did he simply follow
the advice of a friend? Secondly, how can it be proven that the shares have seen a drop in their
value due to the disclosure of the disputed information? Perhaps the fall in the share price was
the result of instability of the financial market as a whole?
The Prospectus Law of 16 June 2006 is responding to the first question by irrebutably presuming
that an investor takes his investment decision on the basis of information disclosed by the issuer
regardless of whether he had real knowledge of the disputed information or not. In fact, this
assumption is nothing more than the application of the efficient market hypothesis that assumes
that all information available on the market is instantly reflected in the stock price. Therefore,
regardless of whether or not the investor has taken its investment decision on the basis of the
disputed information, the investor will be considered as harmed just because he purchased stock at
a market price above its real value, thereby incurring a loss.
However, the Prospectus Law does not cover the second question raised above. As a matter of fact,
the investor who, according to the Prospectus Law, is exempted from showing the decisive influence
of the misleading information on its investment decision, must still prove the impact that had the
disclosure of the misleading information on the evolution of the stock price. In the context of a
civil liability claim brought against an issuer, the investor will not be entitled to compensation
for its full loss as long as he cannot prove that the share drop is exclusively due to the
disclosure of the misleading information and not to the instability of the financial market as a
Hence, the issuer does not have to fully compensate an investor for its damages and this,
understanding that in some cases, if the investor had not purchased at all the disputed stock, he
would not have incurred any loss on its investment (not even losses due to financial market
instability). In a nutshell, he would have had the chance no to incur any financial loss at
2. Will the loss of chance theory bring a solution?
It is generally in the medical sector that courts have used the loss of chance theory that
allows victims to grant fair compensation. Although the medical fault is not the unique reason
explaining the health condition of the patient, it has at least contributed to decrease his chances
of health improvement.
Can we adopt a similar reasoning in the field of financial markets? Although the misleading
information is not the only reason explaining the drop of the stock value, it has in any case
compromised the chances of the investor of not investing, and so, not to run the risk to incur a
The admission of the loss of chance theory, located at the border between the causal link and the
damage, is framed by the Supreme Court’s jurisprudence that is under Belgian law a source of high
In a first decision of 2004, the Supreme Court excluded the possibility to claim compensation for a
damage that consisted in the loss of chance not to incur a damage that has occurred. The loss of
such a chance appeared to be an imagined damage interspersed between the fault and the real damage
in order to establish a clear causal link.
The circumstances of the case were sadly tragic, and related to a woman who had been vitriolized
by her husband. She filed complaint against her husband several times before her aggression.
According to her, if the prosecutor responded to her complaints she would not have been
vitriolized. In other words, she would have had a chance not to be vitriolized.
The Supreme Court rejected her argumentation and stated that the damage to compensate was to have
been vitriolized and not to have lost a chance not to be vitriolized. In other words, it condemned
the artificial use of the loss of chance theory of not being vitriolized. According to the Supreme
Court, the victim raised the loss of chance theory just because she could not prove that if her
husband had been presented to an investigative judge she would not have been vitriolized. Hence, it
was not certain that the investigative judge would have decided to arrest her husband.
Actually, the decision makes a distinction between two hypothesis: the one that are real cases of
loss of chance and the one where the victim tries to avoid the application of rules regarding the
causal link by using the loss of chance theory.
The case decided by the Supreme Court was one where the victim was trying to avoid proving the
causal link by using the loss of chance theory. As a matter of fact, the chance had been enjoyed
and the damage occurred. Therefore, according to the Supreme Court, the victim could not invoke the
loss of chance theory because that theory would have ended up in creating an imaginary damage
distinct from the real damages. And since the Belgian civil liability law system is an
indemnities-based law system that compensates the damage, but the whole damage and nothing but the
damage, there was no room for an imaginary damage to insert between the fault and the actual
The Supreme Court highlighted that if the chance had not been enjoyed and the prejudice did not
occur, the victim could have invoked the loss of chance theory. Hence, in that case it would not
have ended up at the creation of an imaginary damage interposed between the fault and the actual
damage. For instance, one can think to the horse that cannot take the start of the race because its
carrier is too late. In such a case, the carrier can be held responsible on the basis of the loss
of chance theory since the horse owner does not incur other damages than the one to have lost a
chance to win the race.
However, the Flemish chambers of the Supreme Court have not followed this decision. According to
them, the loss of chance can be compensated if the fault is the sine qua non condition of the loss
of chance. In other words, no matter if the damage has occurred or not, the Flemish chambers of the
Supreme Court claim that if the chance was sufficiently serious and there is a certain causal link
between the loss of chance and the fault, the victim can claim for a compensation.
Recently, two decisions of the French chambers of Supreme Court of 6 December 2013 confirmed the
decision made by the Supreme Court on 1 April 2004 that condemned the concealing over causal
uncertainty by the use of the loss of chance theory. These two decisions were about cases where the
chance had been enjoyed and the damage occurred. The Supreme Court points out that it is not
possible to use the loss of chance theory in order to avoid the requirement of a certain causal
link if the chance has been enjoyed, the damage occurred and, in some ways, the misfortune already
happened. In contrast, according to the Supreme Court, if the chance has not yet been enjoyed, the
victim can claim for compensation using the loss of chance theory.
3. What to think about those decisions?
It is true that technically speaking the loss of chance to avoid a damage that occurred can be
seen as a distinct damage that is possible to value independently from the damage itself, since
insurance companies calculate insurance premiums every day, the aim of which is to cover damages.
In other words, if one investigates the question in terms of damage, it is technically possible to
consider that the loss of chance not to incur damage has an independent economic value distinct
from the real damage.
On the other hand, if one investigates the question in terms of the causal link, one must recognize
that there is a difficulty to consider the existence of a certain causal link between the loss of
chance not to incur a damage that occurred and the fault. There is something problematic from the
causal link perspective. In fact, in some ways an artificial damage distinct from the real damage
is created, in order to show the definite causal link.
What about these decisions applied to the civil liability for disclosure violations?
The most recent decision of the French chambers of the Supreme Court confirming the 2004 decision
condemns in some ways the use of loss of chance theory to claim compensation for misstatements in a
Prospectus. In fact, it is clear that in that case the chance has been enjoyed and the damage
However, according to the decision of the Flemish chambers of the Supreme Court, an investor will
be able to use the loss of chance theory to claim for compensation of its financial loss on the
condition that the misstatement is the sine qua non condition of his damage.