European Commission’s role in antitrust enforcement does not rule out future action in damages – Cruz Villalón AG in Otis

Cruz Villalón  AG’s  Opinion in Case C-199/11, European Union v Otis et al, suggests that the EC’s role in antitrust enforcement does not rule out future action in damages by the same institution, also on behalf of others, provided safeguards are met.

The impact of the case should probably not be overestimated, as it is one of those ‘peculiar’ cases: the European Commission (‘EC’), representing the EU,  is suing Otis et al for damages in a Brussels Court (the seat of the EU), damages sustained following cartel behaviour in the elevator market, which the Commission itself had previously found to be illegal under EU antitrust rules. Defendants argued in Brussels (subsequently referred to the Court in Luxembourg) that the EC’s prior involvement meant that it could not be both judge and party in the ‘same’ case. Reference was made in particular to the ‘equality of arms’ principle and the principle of right to a fair trial, under the Charter of Fundamental Rights, and the European Convention on Human Rights – ECHR.

The AG’s view, perhaps not surprisingly, is that the Commission’s decision in the anti-trust case is of course subject to judicial review with the European Courts (and indeed it is being appealed), hence safeguarding the companies’ right to fair trial etc.: the Belgian court may be well advised (although not necessarily obliged) to halt proceedings until the Court of Justice has ruled on that appeal. He also suggest that no data obtained by the EC in their competition investigation, and which have not been openly communicated to the companies, are being relied upon in the damages action (consequently arguably also suggesting a bar on such use): both parties are hence equally armed.

Geert.

 

Postscript: the ECJ in November 2012 confirmed the Opinion. See here.

Questions referred:

Questions referred
(a) The Treaty states in Article 282, now Article [335], that the European Union is to be represented by the Commission; – Article 335 of the Treaty on the Functioning of the European Union, on the one hand, and Articles 103 and 104 of the Financial Regulation, on the other, state that, in administrative matters relating to their operation, the institutions concerned are to represent the European Union, with the possible result that [it] is the institutions, whether or not exclusively, … which may be parties to legal proceedings; – there is no doubt that receipt by contractors, etc., of payment … of inflated prices as a result of collusive practices comes within the concept of fraud; – in Belgian national law there is the principle of ‘Lex specialis generalibus derogat‘; – to the extent [to which] that principle of law also finds acceptance in European law, is it then not the case that the initiative for bringing the claims (except where the Commission itself was the contracting authority) was vested in the institutions concerned?
(b) (Subsidiary question) Ought the Commission not at least to have been conferred with authorisation by the institutions to represent them for the purpose of safeguarding their legal rights?
(a) Article 47 of the Charter of Fundamental Rights of the European Union and Article 6(1) of the European Convention on Human [Rights] guarantee every person’s right to a fair trial as well as the related principle that no one can be the judge in his or her own case; – is it reconcilable with that principle if the Commission, in an initial phase, acts as the competition authority and penalises the conduct complained of – namely, the formation of a cartel – as a breach of Article 81, now Article 101, of the Treaty after it has itself conducted the investigation in that regard, and subsequently, in a second phase, prepares the proceedings for seeking compensation before the national court and takes the decision to bring those proceedings, while the same Member of the Commission is responsible for both matters, which are connected, a fortiori as the national court seised of the matter cannot depart from the decision imposing penalties?
(b) (Subsidiary question) If the answer to Question 2(a) is in the [negative], (there is irreconcilability), how then must the victim (the Commission and/or the institutions and/or the European Union) of an unlawful act (the formation of the cartel) assert its entitlement to compensation under European law, which is likewise a fundamental right …?

Maritime pollution: France’s highest court to annul Court of appeal ‘Erika’ judgment on the basis of absence of jurisdiction?

‘Avocat général’ Didier Boccon-Gibod at the French Cour de cassation, issued his opinion on 24  May, in the Erika case. On 12 December 1999 the Erika broke in half 40 miles off the coast of Brittany. More than 10 000 tonnes of heavy fuel oil were spilt, evidently leading to an ecological disaster of serious proportions. As is not unusual in cases with so much at stake, litigation is still ongoing.

Of some relevance in the case at issue (thank you to prof Philippe Delebecque at Sorbonne for pointing that out to me), the injured parties decided to hinge their wagon unto the criminal prosecution. This saves resources, as the bulk of the procedure is left to the prosecution service to pursue. However it has the obvious disadvantage that the injured parties lose some of their hold on the course of the arguments run, and, even more importantly, that the case in the main turns into a criminal prosecution, with an accidental (no pun intended) civil angle to it. Criminal law determines the outcome.

The ‘Avocat général’, to I understand loud criticism, advises the Court to annul the Court of Appeal’s conviction of the defendants (including Total and the classification society, Rina). His grounds for doing so are based on his analysis of relevant international treaties, leading him to conclude that France has no jurisdiction criminally to prosecute oil spills occurring in its exclusive economic zone (even if the consequences were felt firmly on French soil). The ship having Malta as its flag State, Malta should have taking the helm.

It has been pointed out over at the UK human rights blog that it seems awkward that the result of the Opinion, if followed, would be that ‘France cannot prosecute a French-controlled company for devastating French beaches via an oil spill in the French EEZ.’

An excellent summary of the consequences and reasoning may be found here, in French. I do not have a weblink to the Opinion however I do have an E-copy in French – interested readers, just send me a mail.

Geert.

Waste not want not – Dr Caroline Jackson’s ideas for EU waste law compliance

I have often thought that the collective memory lost in Members of the European Parliament leaving the Institution, is both a policy and a legal pity. A policy pity, as one assumes politicians, too, learn though trial and error, therefore improving the quality of their regulatory output over the years. A legal pity, for when applying statutory law such as EU Directives, the object and purpose of what is written in Gazettes (in the case of the EU, the Official Journal), can only assist to a certain degree. The preparatory works of EU law are readily accessible via Oeil and Prelex, yet these do not tell the whole story. One often needs the view of the fly on the wall to appreciate what the law really means.

I expressed this thought specifically at a conference in Brussels some years ago, where Dr Jackson, then MEP (for 25 years!) and close to retire from Parliament, also spoke. She displayed exactly the qualities which are apparent in a recent paper for the IEEP, co-authored with Emma Watkins: a keen eye for legal detail and a genuine concern for the quality of the legislative process a the EU.  In ‘EU Waste Law: The Challenge of Better Compliance‘, the pair review the problems associated with waste law compliance, and suggest ways of improvement.I will not even attempt to summarise, the genuine article does a much better job at that.

One of the concerns expressed in the paper, is the trend of intransparency surrounding both first reading agreements between Parliament and Council, and conciliation agreements. That is of concern to those of us who like to dig deep into EU travaux préparatoires. I for one certainly hope that Dr Jackson will continue to write on her long experience as a European lawmaker.

Geert.

Of rocks and hard stones for national courts – Villalon AG in Mühlleitner: No need for restrictive approach to the protective jurisdictional grounds for consumers in Brussels I

Villalon AG has opined in Case C-190/11 Mühlleitner [Opinion as yet not available in English].

Article 15 of the Brussels I ‘Jurisdiction’ Regulation, offers protective jurisdictional rules for consumers, provided one or two conditions are met. Article 15(1)(c) [statutory law likes its subdivisions) offers the generic criterion for application:

‘Article 15

1.      In matters relating to a contract concluded by a person, the consumer, for a purpose which can be regarded as being outside his trade or profession, jurisdiction shall be determined by this Section, without prejudice to Article 4 and point 5 of Article 5, if: (…)

(c)      in all other cases, the contract has been concluded with a person who pursues commercial or professional activities in the Member State of the consumer’s domicile or, by any means, directs such activities to that Member State or to several States including that Member State, and the contract falls within the scope of such activities.’

In Pammer /Alpenhof,   Alpenhof had argued amongst others that that its contract with the consumer is concluded on the spot and not at a distance, as the room keys are handed over and payment is made on the spot, and that accordingly Article 15(1)(c) of Regulation No 44/2001 cannot apply. The Court of Justice had answered this with the very paragraph which has now tempted the Oberster Gerichtshof – Austria, into the preliminary review, para 87:

‘ In that regard, the fact that the keys are handed over to the consumer and that payment is made by him in the Member State in which the trader is established does not prevent that provision from applying if the reservation was made and confirmed at a distance, so that the consumer became contractually bound at a distance.’

This paragraph seemed to suggest ‘at a distance’ as the trigger for the application of Article 15(1)(c) which in turn led to the preliminary question:

Does the application of Article 15(1)(c) [   ] presuppose that the contract between the consumer and the undertaking has been concluded at a distance?

Villalon AG replied on 24 May, making specific reference to the history of Article 15, in particular with reference to the old text, under the Brussels Convention. That old provision seemed to imply that where the consumer’s contracting party had encouraged him to leave his Member State of domicile so as to conclude the contract elsewhere, the consumer could not make recourse to the protective regime. Other changes to the relevant title, too, suggested if anything that Council and Commission’s intention with the new provisions was definitely not to limit their scope of application: had they intended to do so, the AG suggests, the Institutions would have limited Article 15’s scope to contracts concluded at a distance. Court of Justice case-law hints at the same need for a wide approach [in particular, Ilsinger, where the Court of Justice held that the scope of Article 15(1)(c) appears ‘to be no longer being limited to those situations in which the parties have assumed reciprocal obligations.’]

The AG concludes with the suggestion that the reference to ‘distance’ in para 87 of Alpenhof refers to a factual circumstance, rather than a condition for application.

To many the conclusion may seem obvious, and the issue covered by acte clair (meaning the national court could have referred to the arguably obvious meaning of the provision, not to have to refer to the Court of Justice). In particular, the COJ has repeatedly emphasised the relevance of the consumer title in the Jurisdiction Regulation. On the other hand, however, the same Court has been quite anxious to give national courts detailled and specific instructions on the application of tiny details in the Regulation, making application of the acte clair doctrine quite difficult: many things one thought were clear, have been answered by the Court in unexpected ways.

National courts therefore are caught between the proverbial rock and the hard stone. Either they refer profusely, thereby feeding the cycle of micromanagement. Or they make extended use of acte clair, thereby risking unequal application of the Regulation (and potentially European Commission irk). On the issue of Article 15(1)(c) at least, the former would seem to prevail: in Slot, Case C-98/12 (hitherto still pending), the German Bundesgerichtshof has asked essentially the same question.

Geert.

 

Once more unto the breach – German action against Commission Decision on the Toy safety Directive provides a master class in EU law

Pre-script: this case is now known as Case T-198/12, and on 15 May 2013 the Court by way of interim measure ordered the Commission to grant approval to the German measures in full, at least until such time as a judgment on the substance has been issued. It made specific reference to the precautionary principle. The ECJ eventually held in May 2014.

 

I have always thought of legislation on, and trade in, toys, as a perfect illustration for many regulatory mechanisms worldwide. Prof Francis Snyder’s work (see e.g. here) is a perfect illustration of same.

This is no different for the general workings, and finer mechanics, of EU law. Once more, the sector hands teachers and practitioners of EU law a perfect illustration of harmonisation techniques, exhaustion (pre-emption) arguments, and judicial review.

On 1 March 2012, the European Commission only partially (and temporally) granted Germany approval for upholding stricter limits on limit values for lead, barium, arsenic, antimony, mercury, nitrosamines and nitrosatable substances in toys (for the decision, see here)  [As an aside, it is often said that one should never watch laws and sausages being made. Reading that list of substances, prima facie (only) one might want to add toys to that list]. Germany has announced it will appeal that decision with the Court of Justice of the EU.

I can think of one or two areas for discussion: risk management and migration limits v bioavailability (or the cheese and chalk argument); limits to pre-emption; application of the ‘environmental and health guarantee’ of Article 114 TFEU, including the principle of proportionality. Expect that future judgment to feature in core readers of EU law.

Geert.

West Tankers ripples again and again – Tribunal corrected for rejection of its jurisdiction on damages for breach of obligation to arbitrate

The West Tankers v Allianz litigation continues to ripple. The continuing process must also I fear excuse the rather long title of this post. I reported earlier on the confirmation by the Court of Appeal of the High Court’s recognition of the West Tankers award. This opened up the prospect of this judgment travelling through the EU as a ‘judgment’ under the Brussels I Regulation (which might thwart the ongoing Italian proceedings).

At the request of West Tankers, the High Court has now ruled that the panel was wrong in assuming that the Court of Justice’s finding in West Tankers, circumscribed its jurisdiction to award damages for breach of an obligation to arbitrate, by virtue of the right of the Respondents to bring proceedings under Article 5(3) before the Italian courts. The tribunal essentially held (as summarised in the current judgment) that like the English court, it was bound by the principle of effective judicial protection not to interfere with or deprive the Respondents of that right in European law. Flaux J, seeking support in Kokott AG’s very opinion in West Tankers (and the  Court of Justice’s absence of disagreement on that point), held that the jurisdiction Regulation, as is evident from the Judgment in West Tankers, curtails the English courts in their power to issue anti-suit injunctions. However it does not curtail the jurisdiction of the arbitral panel.

Leave to appeal was granted. The judgment therefore is unlikely to be the last instalment.

Geert.

 

WTO Appellate Body in Clove Cigarettes – Faites vos Jeux

Postscript 8 January 2016: the Advocate General of the WTO referred to the WTO case, in a challenge to the EU’s ban on menthol cigarettes, suggesting the EU wouldbe in WTO trouble had it not banned their sale.

The WTO Appellate Body’s Report in ‘Clove cigarettes’  was issued on 4 April. It is a dream ‘Trade and public health’ case and therefore generally a superb ‘trade and regulatory autonomy’ case. Under appeal were a number of the findings of the Panel in first instance. The WTO summarises the dispute as follows:

‘(the case) concerns Section 907(a)(1)(A) of the Federal Food, Drug and Cosmetic Act (“FFDCA”), which was added to the FFDCA by Section 101(b) of the Family Smoking Prevention and Tobacco Control Act.  This measure bans the production and sale of clove cigarettes, as well as most other flavoured cigarettes, in the United States.  However, the measure excludes menthol-flavoured cigarettes from the ban.  Indonesia is the world’s main producer of clove cigarettes, and the vast majority of clove cigarettes consumed in the United States prior to the ban were imported from Indonesia.’

Discrimination, necessity, the link between the Agreement on Technical Barriers to Trade (TBT – new under the WTO) and the General Agreement on Tariffs and Trade (applied since 1947 and with a richer case-law history), the possibility of employing regulatory objectives to decide upon ‘likeness’ between products: these and other issues are all dealt with by both Panel and AB. Per usual and not surprisingly (the same holds for many courts, nationally and internationally), the jury is out on many of the topics addressed. This leaves uncertainty of a similar ilk as after the Brasil Tyres case, the consequences of which I have analysed for JEL here.

Geert.

Compulsory licensing – India move will test room for manoeuvre under WTO and TRIPS

India’s ‘Controller of patents’ has granted Natco a ‘compulsory license’ (‘CL’) for Bayer’s Sorafenib Tosylate (marketed as Nexavar). The drug extends the lives of terminal liver and kidney cancer patients. Put differently: the controller has forced Bayer to grant a license to Natco, to produce the drug, specifying inter alia a (low) sales price and royalties to be paid to Bayer.  Natco is an Indian pharmaceutical company (no surprise there), with an increasing portfolio in pharmaceutical R&D. In other words reportedly not a typical ‘generics’ company.

The ruling is of course subject to appeal. It is also the subject of intense debate under the WTO, in particular the TRIPS Agreement. TRIPS (Articles 30-31) leaves room for a CL system and prima facie leaves a lot of room for manoeuvre to WTO Members to grants such licenses. However underneath Article 30-31’s surface lies quite a bit more than might be assumed. Moreover, even if one takes Members’ discretion in applying these Articles at face value, the articles must not be applied stand-alone. In other words they do not give carte blanche for introducing requirements leading to CL which might otherwise be WTO inconsistent.

Watch this space: this case is a nugget for, yet again, disciplining regulatory autonomy (see here and here) under the WTO.

Geert.

‘Exorbitant’ head of jurisdiction of Article 14 Code Civil (France) is not unconstitutional. Probably.

On 29 February last, the French Cour de Cassation decided not to grant leave for the constitutionality (or not) of Article 14 of the French Code Civil to be reviewed by the French Constitutional Court. Article 14 is an ‘exorbitant’ rule of jurisdiction. These are jurisdictional grounds in national law which rest on very weak of even spurious grounds, and which by virtue of Articles 3 and 4 of the Brussels I Regulation may not be invoked against those domiciled in one of the EU Member States. However they do regain full force as against those not domiciled in any of the EU Member States.

Article 14 Code Civil grants jurisdiction in civil cases to French courts, on the simple ground that plaintiff be a French national. A similarish provision in French criminal law was recently and famously invoked (but failed) in the prof Joseph Weiler litigation (French version here and unofficial English translation here).

The alleged unconstitutionality lies in the perceived ‘unfairness’ of such trials vis-a-vis the (non French, indeed by virtue of the Brussels I Regulation the non EU) defendants. The Cour de Cassation saw no merits in the arguments, arguably mostly on the ground of the diminishing practical impact of the provision. The Cour’s decision means that for the time being at least , the issue will not be sub judice in the French Constitutional  Court, however that does not mean of course that it might not end up at the European Court of Human Rights before long.

Geert.

Patent infringement and the Brussels I Regulation – Cruz Villalon AG revisits some old chestnuts in Solvay

Solvay, Case C-616/10, offers a great opportunity for the European Court of Justice to revisit a number of old chestnuts in the application of the Brussels I Regulation (the Jurisdiction Regulation or ‘JR’): the exclusive ground of jurisdiction with respect to intellectual property rights, of Article 22(4); multipartite litigation in Article 6 JR; and finally provisional measures, referred to in Article 31. Cruz Villalon AG’s Opinion was issued on 29 March.

Solvay SA, a company established in Belgium and holding a European patent, valid in more than one Member State [don’t ask – European patent law is less harmonised than one might hope and even a ‘European’ patent does not necessarily and automatically cover all Member States], brought an action in the Rechtbank ’s-Gravenhage in the Netherlands for infringement of several national parts of the patent, in particular against three companies originating from two different Member States, Honeywell Fluorine Products Europe BV, established in the Netherlands, and Honeywell Belgium NV and Honeywell Europe NV, established in Belgium, for marketing a product manufactured by Honeywell International Inc. that was identical to the product under the above patent.  In the course of the proceedings, Solvay lodged an interim claim against the defendants in the main proceedings, seeking provisional relief in the form of a cross-border prohibition against infringement for the duration of the main proceedings.

Firstly, with respect to the multipartite jurisduction element: Article 6(1) allows the applicant to sue several defendants before the court where any one of them is domiciled, provided the claims are’ so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings’. Per Roche Nederland, the Court had controversially held that parallel actions for infringement in different Member States, which, in accordance with Article 64(3) of the Munich Convention, must be examined in the light of the national law in force, are not in the context of the same legal situation and hence any divergences between decisions cannot be treated as contradictory – leaving no room for application of Article 6(1) to the benefit of holders of European patents vis-a-vis actions for infringement in different Member States. Cruz Villalon AG proposes to distinguish, not to overturn, Roche Nederland on the ground that in the case at issue, the objectionable behaviour concerned more than one undertaking, domiciled in more than one Member State, however accused of the same behaviour in the same Member State. If Article 6(1) were not to be applicable, the courts concerned would hence hold on the basis of the same lex loci protectionis (that of the Member State in which the alleged conduct is said to have taken place) and hence the risk of irreconcilable judgments great.

The AG then turns to the application of Article 22(4), dealt with previously in particular in GAT. Here (as helpfully summarised by the AG) , the referring court asks, in essence, whether the fact that a defence of invalidity of a patent has been raised in interim proceedings for a cross-border prohibition against infringement, in parallel to main proceedings for infringement, is sufficient, and, if so, under what formal or procedural conditions, for Article 22(4) to become applicable. Applicability of Article 22(4)’s exclusive ground for jurisdiction is highly relevant: firstly, the court dealing with the case has to decline jurisdiction for the main proceedings on the basis of Article 25 (when an exclusive ground of jurisdiction is at stake, all other courts have to declare themselves without jurisdiction) and, secondly, as a consequence, it is then required to consider its competence to adjudicate on the interim proceedings on the basis of Article 31’s jurisdictional ground for provisional measures. After careful consideration in which the AG gives a brief ‘tour d’horizon’ of the various procedural realities that might exists, he advises that Article 22(4) is not applicable when the validity of a patent is raised only in interim proceedings, ! in so far as the decision likely to be adopted at the end of those proceedings does not have any final effect. Whether the latter is the case depends on the applicable law (see my comment above, re incomplete harmonisation of EU patent law).

I wonder whether the Court would be put off by the AG’s sidestep into what he calls ‘procedural reality’ (not a criterion which the Court generally is happy to entertain in the application of the JR) and whether, similarly, the criterion ‘final effect in accordance with the applicable law’ would offer enough legal certainty (which the CoJ definitely craves in the application of the JR).

One final consideration in the AG’s opinion is the application of Article 31’s jurisdictional ground for provisional measures (this question will only feature in the eventual judgment, should the Court reject the AG’s view on Article 22(4)). Article 31’s scope is limited. Amongst others, the measures within its scope must be of a ‘provisional’ nature, that is to say, per Reichert, be intended to preserve a factual or legal situation so as to safeguard rights the recognition of which is sought elsewhere from the court having jurisdiction as to the substance of the matter: that is a ratione temporis limitation.  In Van Uden, the court added a limitation ratione loci: there has to be a ‘real connecting link’ between the subject-matter of the provisional measures sought and the territorial jurisdiction of the Member State of the court seized. The AG suggests that applied to intellectual property rights (but with wider ramification), this condition does not imply that the measure must not have any ‘extraterritorial’ effect: rather, that for Article 31  to apply, there has to be a  minimum territorial localisation of the provisional measure sought. The existence of such real connecting link should be considered chiefly in the light of the enforcement procedures of the Member State of the court seized.

Not all of the considerations of the AG are likely to be entertained by the Court. Neither do they cover all aspects of the troublesome application of Article 22(4) [not much of which has made it into the review of the JR].

Geert.

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