Posts Tagged Anchor defendant
Thank you Tom Whitton and Helen Kavanagh for flagging Algeco Scotsman PIK SA  EWHC 2236 (Ch). Algeco has COMI in Luxembourg. This was clear when the relevant scheme of arrangement (‘SAR’) was being discussed. To manage potential problems at the jurisdictional stage, Hildyard J at 22 lists the precautions the company and the majority of the lenders took:
‘Accepted by the relevant 75 per cent or more, was first, the amendment of the governing law clause in the PIK Loan Agreement to change the governing law from New York law to English law; secondly, the amendment of the jurisdiction clause to submit the parties to the non-exclusive jurisdiction to the courts of England; and thirdly, a waiver of any restrictions under the PIK loan agreement so as to permit the company to take all steps necessary to confirm or establish sufficient connection with England including, if appropriate, to take steps to ensure that its COMI is in England.’
When the unsuspected reader sees ‘COMI’ of course (s)he is forgiven for immediately pondering application of the EU’s Insolvency Regulation – quod certe non: for it is clear (ia as a result of schemes of arrangement not being included in relevant Annex) that SARs fall under company law. Hildyard J’s jurisdictional kick-off at 43 is telling: ‘Dealing first with jurisdiction, the primary question is whether this Luxembourg company, the subject of the scheme, is a qualifying company so to be subject to section 895 of the Companies Act’. Idem at 45.
At 47 the High Court then applies the jurisdictional test viz the Brussels I Recast Regulation arguendo: if it were to apply (which the English Courts have taken no definitive stance on), would an English court have jurisdiction? Yes, it is held: under Article 8 (anchor defendants) and under Article 25 (choice of court).
Yet this in my view is where recourse to SARS in the English courts continues to be exposed: loan agreements and facilities agreements now routinely adopt choice of court and law in favour of English courts and ditto law. Yet where they do not, or did not, the ‘willing’ creditors consent to a change in the agreement in favour of the English courts, with the unwilling creditors left behind. Whether this holds scrutiny under Rome I is far from certain. As for Article 8, its use here may be seen as a form of abuse, disciplined under the Regulation.
Hildyard J considers the case one of ‘good forum shopping’ (at 57-58), with reference to Apcoa which I review here. The concerns above continue in my view to highlight weaknesses in the construction, which so far have not led to any collapse of this restructuring tourism. At 58 the High Court emphasises that there are cases of inappropriate forum shopping in this context (one of that includes haste) yet the role of Rome I in this context has so far played little of a role.
It is noteworthy that in my view (and I so testified in re Apcoa) even a wrong view of the English courts on Rome I’s impact, would not suffice for jurisdictions outside of the UK to refuse to recognise the scheme under Brussels I – all with the huge Brexit caveat evidently.
(Handbook of) EU Private International Law, 2nd edition 2016, Chapter 5.
As Bot AG put it, Joined Cases C-24 and 25/16 Nintendo v Big Ben gave the Court an opportunity to determine the territorial scope of a decision adopted by a court of a Member State in respect of two co-defendants domiciled in two different Member States concerning claims supplementary to an action for infringement brought before that court.
The case concerns the relation between Brussels I and Regulation 6/2002 – which was last raised in the recent BMW case, particularly as for the former, the application of Article 6(1) (now 8(1))’s rule on anchor defendants. And finally the application of Rome II’s Article 8(2): the identification of the ‘country in which the act of infringement was committed’. In this post I will focus on the impact for Brussels I (Recast) and Rome II.
The Landgericht held that there had been an infringement by BigBen Germany and BigBen France of Nintendo’s registered Community designs. However, it dismissed the actions in so far as they concerned the use of the images of the goods corresponding to those designs by the defendants in the main proceedings.
The Landgericht ordered BigBen Germany to cease using those designs throughout the EU and also upheld, without territorial limitation, Nintendo’s supplementary claims seeking that it be sent various information, accounts and documents held by the defendants in the main proceedings, that they be ordered to pay compensation and that the destruction or recall of the goods at issue, publication of the judgment and reimbursement of the lawyers’ fees incurred by Nintendo be ordered (‘the supplementary claims’).
As regards BigBen France, the Landgericht held that it had international jurisdiction in respect of that company and ordered it to cease using the protected designs at issue throughout the EU. Concerning the supplementary claims, it limited the scope of its judgment to BigBen France’s supplies of the goods at issue to BigBen Germany, but without limiting the territorial scope of its judgment. It considered the applicable law to be that of the place of infringement and took the view that in the present case that was German, Austrian and French law.
BigBen France contends that the German courts lack jurisdiction to adopt orders against it that are applicable throughout the EU: it takes the view that such orders can have merely national territorial scope. Nintendo ia takes the view that German law should be applied to its claims relating to BigBen Germany and French law to those relating to BigBen France.
At 52 the CJEU holds that ‘Taking into account the objective pursued by Article 6(1) of Regulation No 44/2001, which seeks inter alia to avoid the risk of irreconcilable judgments, the existence of the same situation of fact must in such circumstances — if proven, which is for the referring court to verify, and where an application is made to that effect — cover all the activities of the various defendants, including the supplies made by the parent company on its own account, and not be limited to certain aspects or elements of them.’
If I understand this issue correctly (it is not always easy to see the jurisdictional forest for the many IP trees in the judgment), this means the Court restricts the potential for the use of anchor defendants in Article 8(1): the more facts one needs to take into account, the less likely these will be the ‘same’ that matter for the alleged infringement of the anchor defendant.
As for the application of Article 8(2) Rome II, at 98 and following inter alia analysis of the various language versions of the Article, the CJEU equates the notion ‘country in which the act of infringement is committed’ with the locus delicti commissi: ‘it refers to the country where the event giving rise to the damage occurred, namely the country on whose territory the act of infringement was committed.‘ At 103: ‘…where the same defendant is accused of various acts of infringement falling under the concept of ‘use’ within the meaning of Article 19(1) of Regulation No 6/2002 in various Member States, the correct approach for identifying the event giving rise to the damage is not to refer to each alleged act of infringement, but to make an overall assessment of that defendant’s conduct in order to determine the place where the initial act of infringement at the origin of that conduct was committed or threatened.’
At 108 the Court rules what this means in the case at issue: ‘the place where the event giving rise to the damage occurred within the meaning of Article 8(2) of [Rome II] is the place where the process of putting the offer for sale online by that operator on its website was activated’.
At 99 however it warns expressly that this finding must be distinguished as being issued within the specific context of infringement of intellectual property rights: Regulation 6/2002 as well as Rome II in its specific intention for IP rights, aims to guarantee predictability and unity of a singly connecting factor. This is a very important caveat: for while this approach by the CJEU assists with predictability, it also hands means for applicable law shopping and, were the Court’s approach for locus delicti commissi in IP infringement extended to jurisdiction, for forum shopping, too.
(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 22.214.171.124; Chapter 3.
Microsoft (Nokia) v Sony. This battery keeps on going: relatively of arbitration clauses; cartel claims contractual? anchor defendants etc.
The one sorry outcome of  EWHC 374 (Ch) Microsoft (Nokia) v Sony is that by rejecting jurisdiction, the Commercial Court did not have an opportunity to review the application of Rome II’s provisions on applicable law in the case of infringement of competition law.
The following background is by Kirsty Wright, who also alerted me to the case: the claim centred on allegations by Microsoft (who had acquired Nokia of Finland) that the Defendants had caused loss by engaging in anti-competitive conduct relating to the sale of Li-ion Batteries over a period of 12 years. In 2001 Nokia and the Sony Corporation (the mother corporation: with seat outside of the EU) concluded a Product Purchase Agreement for Li-ion Batteries. This agreement contained an English choice of law clause and required any dispute to be resolved by way of arbitration in the International Chamber of Commerce (ICC). Microsoft became the assignee of these rights following its purchase of parts of Nokia in 2013 and therefore could bring claims in contract against Sony Corporation and claims in tort against the other three Defendants. Sony Corporation is a subsidiary of Sony Europe Limited: it is the anchor defendant in this case: none of the corporations other than Sony Europe are domiciled in the EU.
Smith J in a lengthy judgment determined that the agreement between Microsoft and Sony Corporation to arbitrate in the ICC also extended to the parent company Sony Europe. Therefore proceedings against all defendants were stayed in favour of ICC arbitration subject to English law. This required him first of all to hold that under English law, the arbitration agreement (as opposed to, under EU law, for the issue of choice of court: see CDC) extends to non-contractual obligations (infringement of competition law evidently not being part of one’s contractual rights and obligations; see here for a review of the issues; in Dutch I’m afraid: must find time for an EN version) but also that the clause extended to the mother company: hence releasing the jurisdictional anchor.
Microsoft had anticipated such finding by suggesting such finding may be incompatible with EU law: its contention was that the operation of the Brussels I Regulation (Recast) must permit the effective protection of rights derived from competition law, including private law rights of action for infringement, these being rights accorded by EU law, and that an arbitration clause which caused the fragmentation of such rights of action was, for that reason, in breach of EU law (at 76). It made extensive reference to Jaaskinen AG’s call in CDC for the Brussels I Recast to be aligned with Rome II’s ambition to have one single law apply to the ensuing tort. (The jurisdictional regime as noted leads to a need to sue in various jurisdictions).
As I have noted in my review of the CJEU’s judgment, on this point the Court however disagreed with its AG. Indeed while the AG reviews and argues the issue at length (Smith J recalls it in the same length), the Court summarily sticks to its familiar view on the application of (now) Article 7(2) in competition cases; it is the CJEU’s view which the Commercial Court of course upholds.
A great case, extensively argued.
(Handbook of) EU Private International Law, Chapter 2, Heading 126.96.36.199; Heading 2.2.9; Chapter 4, Heading 4.6.2).