flyLAL-Lithuanian Airlines – ECJ holds on ‘civil and commercial’, ordre public and Article 22(2)’s exclusive jurisdictional rule all in the context of competition law.

Postscript 21 December 2016: it has been brought to my attention that the Latvian Supreme Court in October 2015 ultimately held that the Lithuanian judgment would not be recognised, on the grounds of ordre public. See here for an overview of the arguments.

flyLAL seeks compensation for damage resulting, first, from the abuse of a dominant position by Air Baltic on the market for flights from or to Vilnius Airport (Lithuania) and, second, from an anti-competitive agreement between the co-defendants. To that end, it applied for provisional and protective measures. The relevant Lithuanian court granted that application and issued an order for sequestration, on a provisional and protective basis, of the moveable and/or immoveable assets and property rights of Air Baltic and Starptautiskā Lidosta Rīga. A relevant Latvian court decided to recognise and enforce that judgment in Latvia, in so far as the recognition and enforcement related to the sequestration of the moveable and/or immoveable assets and property rights of  defendants. Application by flyLAL for a guarantee of enforcement of that judgment was rejected.

Defendants submit that the recognition and enforcement of the judgment are contrary to both the rules of public international law on immunity from jurisdiction and the brussels I Regulation. They argue that the present case does not fall within the scope of that regulation. Since the dispute relates to airport charges set by State rules, it does not, they submit, concern a civil or commercial matter within the meaning of that regulation.

On the scope of application issue (‘civil and commercial‘), the ECJ held with reference to previous case-law, that the provision of airport facilities in return for payment of a fee constitutes an economic activity. (This is different from the foundation judgment in Eurocontrol, which in turn was cross-referred in Sapir (to which the ECJ in current judgment refers repeatedly): Eurocontrol is a public body and the use of its services by airlines is compulsory and exclusive). The amount of shares held by government in the relevant airlines is irrelevant.

That the exclusive jurisdictional rule of Article 22(2) may be at issue (which might have led the court with whom enforcement is sought, to refuse such) was clearly a desperate attempt to rebuke jurisdiction. The national court should not have entertained it, let alone sent it to Luxemburg. (The Court replies courteously that ‘seeking legal redress for damage resulting from alleged infringements of European Union competition law, must (not) be regarded as constituting proceedings which have as their object the validity of the decisions of the organs of companies within the meaning of that provision.’) One assumes the flimsiest of arguments might have been that the board or a director would have had to approve the actions leading to the infringement.

Finally, according to Article 34(1), a judgment is not to be recognised if such recognition is manifestly contrary to public policy in the Member State in which recognition is sought. The referring court is unsure, first, as to the consequences to be drawn from the failure to state reasons for the methods of determining the amount of the sums concerned by the provisional and protective measures granted by the judgment in respect of which recognition and enforcement are sought and, second, as to the consequences linked to the amount of those sums.

With respect to the alleged failure to state reasons, the ECJ confirms (at 51 ff) that the observance of the right to a fair trial requires that all judgments be reasoned in order to enable the defendant to understand why judgment has been pronounced against him and to bring an appropriate and effective appeal against such a judgment (see ia Trade Agency). However that was not the case at issue: there is no lack of reasoning, since it is possible to follow the line of reasoning which led to the determination of the amount of the sums at issue. Parties concerned moreover had the opportunity to bring an action against such a decision and they exercised that option.  Therefore, the basic principles of a fair trial were respected and, accordingly, there are no grounds to consider that there has been a breach of public policy.

As regards the amount of the sums, the concept of ‘public policy’ within the meaning of Article 34(1)seeks to protect legal interests which are expressed through a rule of law, and not purely economic interests. The mere invocation of serious economic consequences does not constitute an infringement of the public policy of the Member State in which recognition is sought (at 58).

Once again the Court’s emphasis is on the exceptional nature of the ordre public exception.

Geert.

 

 

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