The use of anchor defendants in follow-up competition law cases. JÄÄSKINEN AG in CDC questions i.a. arbitration clauses in competition cases.

Postscript 5 July 2016  Rotterdam held in DGL (involving the lift cartel) that arbitration clauses do indeed in general not apply in follow-up damages cases. Thank you Stibbe for reporting.

A particularly sticky point in competition cases, are follow-up suits for damages. I have already reported on (private international law aspects of) the issue of the piercing of the corporate veil, and on the use of a related undertaking as an anchor. [I report more extensively on competition law and conflicts in Jacques Steenbergen’s liber amicorum here. I hope to translate it into English some time soon].

In Case C-352/13 CDC (Cartel Damage Claims, in effect private anti-trust enforcement), at issue is among others the use of Article 6(1) of the Brussels I-Regulation when the claim against the anchor defendant has been settled before the trial is well and truly underway.

JÄÄSKINEN AG [whose Opinion at the time of writing was not available in English; indeed the absence of English translation of quite a few important Opinions is becoming a bit of a pattern. (That’s an observation. not an accusation)] suggests in his Opinion that only the time of service of the suit is relevant to assess the criteria of Article 6(1). This suggestion in my view finds support in the ECJ’s overall approach to Article 6: the subjective intentions of plaintiff, who often identify a suitable anchor defendant even if is not the intended target of their action, does not feature in the application criteria of Article 6. While this may lead to abuse of procedural power, establishing malicious intent is all but impossible. All but impossible: but not totally excluded. For that reason the AG does suggest that if one can prove that plaintiff and anchor defendant (in the case at issue: Evonik Degussa) had secretly agreed to settle, prior to the introduction of the suit, such collusion should be punished by non-applicability of Article 6(1), for in that case the conditions of Article 6 arguably are no longer met.

I am not sure the ECJ should follow the latter suggestion, particularly not in cases such as the one at issue, where defendants have been found to have acted illegally under EU competition law. (Misdemeanor or indeed criminal act therefore has already been established). In a way it would be an application of nemo auditur propriam turpitudinem allegans not to reward those who infringe EU competition law in the way the AG suggests. (This may be different in the event of as yet unsubstantiated claims of tort, in which case one may argue the defendant should not routinely have to defend the claims in a court other than the one identified by Article 2).

Next, the referring court enquired about the application of Article 5(3)’s special jurisdictional rule in the event of infringement of competition law, where that infringement concerns a complex horizontal agreement, spread over a long period of time, and with varying impact in various markets. One can probably not at all establish a locus delicti commissi for the tort as a whole: for such behaviour often takes shape in a variety of meetings, electronic correspondence et al. For locus damni, too, the picture would be one of a complex patchwork. Predictability and manageability of the ensuing suits would be impossible to establish in some coherent way, thus endangering some of the very foundations of the Brussels regime. In conclusion therefore the AG suggests not to apply Article 5(3) at all to current scenario, and to stick with application of Article 2, often then in conjunction with Article 6.

Although the last word on Article 6 needs to be said by the national court who alone is the judge of the risk of irreconcilable judgments, clearly in the AG’s mind there is a strong likelihood of such risk in the event of follow-up damages in the case of a cartel which has been found to be illegal by the European Commission and where all members to it have acted within one and the same intent (again, as established by the EC). Article 6(3) b Rome II [not applicable in the case but the AG suggests it would not hurt looking ahead] hints at such scenario where many defendants are sued in one and the same court.

Finally, the Court is asked to give input on the issue of choice of court, and arbitration clauses, in the agreements between the victims of the cartel, and those guilty of the cartel: do such clauses have any impact on the legal position of CDC, who has acquired the rights to seek damages for the cartel infringement? The AG suggests, in line with most national case-law (see more on this in my Steenbergen chapter, linked above), that such clauses cannot include follow-up damages for cartel infringement: for the latter is arguably not within the legitimate contractual expectations. This would be different for such clauses concluded after the tort has been committed: for Article 23 of the Regulation allows parties to agree on a different forum than those identified in the special jurisdictional rules. The AG finds additional support for this argument in the overall objectives of the very recent Directive 2014/104, the damages Directive. He takes the opportunity to argue that in the case of arbitration clauses, these may hinder the effet utile of Article 101 TFEU, just as choice of court clauses might, unless parties are shown beyond doubt to have consented to the clause, and provided the tribunal or court at issue, is under an obligation to apply EU competition law as matter of public policy. (Whether that is the case is subject to national law).

(It is quite likely that the Court itself will not review the last question for as the AG indicates, the referring national court has given very little detail on the clauses at issue).

This case could turn out to have quite a wide relevance for a large part of commercial practice. Or not: that depends on how far the ECJ itself will decide to entertain it.

Geert.

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