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Beverly Chandler, Opalesque London: In a Client Briefing, law firm Clifford Chance reports that the Court of Rotterdam recently nullified a binding instruction given by the Dutch Central Bank relating to the application of the prudent person rule. DNB had instructed a pension fund to reduce its investments in gold from 13% to 3% of its total investments. The Court also ruled that it will investigate whether DNB is liable for losses incurred by the pension fund, said to be estimated at approximately €10 million ($13m).

Clifford Chance explains that the prudent person rule under the Dutch Pension Act governs the investment policies of Dutch pension funds. The firm says: "It is an open standard which in short implies, among other things, that pension assets: (i) must be invested in the best interests of participants and beneficiaries and in such a manner as to ensure the security, quality, liquidity and profitability of the portfolio as a whole; and (ii) must be properly diversified".

However, there is limited Dutch case law to assist with the interpretation of this open standard. "Apart from the "gold case", there is only one other case regarding a DNB binding instruction relating to the prudent person rule. That case however, which was upheld in Court, gives limited guidance for interpretation of the prudent person rule".

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