Posts Tagged Article 7(2)
Stand alone cartel damages suits: The High Court in Media Saturn Holding v Toshiba on anchoring jurisdiction.
In  EWHC 1095 (Ch) Media Saturn Holding v Toshiba et al, Barling J is concerned with stand-alone damages suits following the European Commission decision in COMP/39437 – TV and Monitor Tubes. None of the Defendants was an addressee of the Decision (some of their parent companies were). The claims are, therefore, “standalone” rather than “follow-on” actions, and the Decision is not binding on the court so far as the claims against the Defendants are concerned, as it would have been had the Defendants been addressees. Nevertheless, Claimants place considerable reliance upon the evidential effect of the Decision.
Claims are strike out and summary judgment application, intertwined with challenges to jurisdiction. These essentially relate to there being no arguable claim against the “anchor” defendants, particularly Toshiba Information Systems UK ltd – TIS.
At 114: Claimants refute the suggestion that the claim has been brought against TIS on a speculative basis in the hope that something may turn up on disclosure and/or simply to provide an anchor defendant for jurisdictional purposes. They point to the Commission’s finding, at Recital 595, that the cartel was implemented in the EEA through sales of cartelised CPTs that had been integrated into the finished products.
The substantive law issue of implementation of the cartel therefore is brought in not just to argue (or refute) summary dismissal, but also to shore (or reject) the jurisdictional claim under Article 8(1) Brussels 1a.
Barling J establishes as common ground (at 90) that ‘as a matter of law an entity can infringe Article 101(1) TFEU and Article 53 EEA if it participates in relevant cartel activity, in the sense of being a party to an agreement or concerted practice which falls within that Article, or if it knowingly implements a cartel to which it may not have been a party in that sense. [counsel for defendants] submitted that there is no arguable case that TIS had the requisite knowledge. However, what is sufficient knowledge for this purpose is not common ground’.
At 300 ff the most recent CJEU authority is discussed: C-724/17 Vantaan kaupunki v Skanska of March 2019.
This leads to a relevant discussion on ‘implementation’ of the cartel, which mutatis mutandis is also relevant to Article 7(2) (locus delicti commissi). At 117-118:
‘TIS [similar arguments are discussed viz other defendants, GAVC] was involved in activities which were important to the operation of the cartel from the Toshiba perspective. These included the manufacture of CTVs using the cartelised product acquired from an associated company which itself was one of the established cartelists, and the onward sale of the transformed product. TIS also had direct commercial dealings with the Claimants relating to bonuses on sales of, inter alia, the transformed products. In my judgment there is an arguable case that those activities amounted to the actus reus of participation in and/or implementation of the cartel. The available material is sufficient to preclude the summary disposal of that issue.’
At 139 ff much CJEU and national authority is discussed, viz a variety of the defendants, on the issue of ‘implementation’ for summary dismissal on substantive grounds, a discussion which then at 259 ff is applied to the jurisdiction issue. Reference is made to Brownlie v Four Seasons, to C-103/05 Reisch Montage and of course to C-352/13 CDC. At 273 Barling J distinguishes excellently in my view between predictability as part of the DNA of CJEU Brussels Ia case-law on the one hand, and its treatment (and rejection) as a stand-alone criterion on the other hand:
‘[argument of counsel] is in danger of treating the statement of the CJEU in Reisch Montage as adding a free-standing and distinct criterion of foreseeability to the preconditions of application expressly set out in Article 8(1). If that criterion were to be applied generally, and without reference to those express pre-conditions, there would be a risk of the EU law principle of legal certainty being compromised, instead of respected as Reisch Montage expressly requires. That case states that the special rule in Article 8(1) must be interpreted so as to ensure legal certainty. The special rule’s express precondition is that “the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments…” Therefore, by virtue of Reisch Montage, it is those words that must be interpreted strictly so as to respect legal certainty and thereby ensure foreseeability. In other words, foreseeability is inextricably linked to the closeness of the connection between the two sets of claims, and the criterion will be satisfied if a sufficiently close connection of the kind described in Article 8(1) exists.’
And at 276
‘It is correct that the anchor defendants were not addressees of the Decision and that there were no UK addressees. However, there is no reason why this should be significant. Article 8(1) is capable of applying in a competition claim regardless of whether a Commission infringement decision exists. What matters is that there is a claim that the anchor defendant is guilty of an infringement, and that the case against the non-anchor defendant is sufficiently “closely connected” to that claim within the meaning and for the purposes of Article 8(1). The fact that neither entity is an addressee of a Commission decision (if there is one) and that neither is the subject of any other regulatory process or civil claim relating to the cartel, is, if not immaterial, then of marginal relevance.’
For all anchor defendants the conclusion is that there is an arguable claim that they participated in and/or knowingly implemented the cartel. That strongly militates against the sole purpose of the (two sets of) proceedings being to oust the jurisdiction of the other EU courts. No abuse has occurred.
At 316 a final postscript is added suggesting summarily that the Supreme Court’s Vedanta might have an impact on the ‘abuse’ issue. The judgment concerned inter alia an alleged abuse of EU law in the context of the predecessor provision to Article 8(1). The Court gave consideration to the test for the “sole purpose” issue. At 317: Barling J: ‘I can see no basis on which my conclusions in that regard are affected by this decision.’
(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 22.214.171.124.
Ashley v Jimenez: Jurisdiction upheld despite choice of court ex-EU. No locus damni, locus delicti commissi or trust jurisdiction viz EU defendant.
In  EWHC 17 (Ch) Ashley et anon v Jimenez et anon service out of jurisdiction was granted against a Dubai-based defendant, despite choice of court pro the UEA. That clause was found by Marsh CM not to apply to the agreement at issue. Jurisdiction was found on residual English PIL, which are of less relevance to this post. Forum non conveniens was rejected.
Service out of jurisdiction was however denied against the Cyprus-based (corporate) defendant in the case. Claimants had argued jurisdiction on the basis of Brussels I Recast Articles 7(2) (tort) or (6) (trust). Note Marsh CM using the acronym BRR: Brussels Recast Regulation. As I noted earlier in the week Brussels Ia is now more likely to win the day.
Claimants (“Mr Ashley” and “St James”) allege that £3 million has been misappropriated by the defendants (“Mr Jimenez” and “South Horizon”). In summary the claimants say that: (1) Mr Ashley and Mr Jimenez orally agreed in early 2008 that upon payment of the euro equivalent of £3 million, Mr Ashley would acquire, via a shareholding in Les Bordes (Cyprus) Limited, a holding of approximately 5% in the ownership of a golf course in France called Les Bordes and that the shares would be registered in the name of St James. (2) On 13 May 2008, Mr Ashley instructed his bank to transfer the requisite sum to the bank account specified by Mr Jimenez and the transfer was made. In breach of the agreement, the shares were never registered in the name of St James. (3) The agreement and/or the payment were induced by fraudulent misrepresentations made by Mr Jimenez. The claimants say that Mr Jimenez knew South Horizon did not hold the shares and was not in a position to transfer, or procure transfer, upon payment of the agreed sum and that, in representing that South Horizon held the shares, or could procure transfer, Mr Jimenez acted dishonestly. (4) In the alternative, the payment of £3 million gave rise to a Quistclose trust (on that notion, see below) because the payment was made for an agreed purpose that only permitted use of the money for securing transfer of the shares.
(At 82) qualifying strands relevant to the jurisdictional issues, are (1) representations were made by Mr Jimenez to Mr Ashley to induce him to invest in Les Bordes which he relied on; (2) an oral contract was made between Mr Jimenez and Mr Ashley in early 2008 under which Mr Ashley invested £3 million in Les Bordes; and (3) the creation of a Quistclose trust relating to the investment. Note a Quistclose trust goes back to Barclays Bank Ltd v Quistclose Investments Ltd  UKHL 4, and is a trust created where a creditor has lent money to a debtor for a particular purpose. Should the debtor use the money for any other purpose, it is held on trust for the creditor.
On Article 7(2), the High Court held that a breach of trust is properly seen as a tortious claim for the purposes of Brussels Ia. As for locus delicti commissi, the Court notes the question of where the harmful event occurred is less straightforward. Claimants rely on the Cypriot defendant, South Horizon, having paid away the investment money it received in breach of the relevant trust. That event took place in Cyprus where the bank account is based. There might be an obligation to restore the money in England, yet that does not make England the locus delicti commissi: at 128: ‘It seems to me, however, that the claimants in this case are seeking to conflate the remedy they seek with the tortious act which was paying away the investment. The obligation to make good the loss is the result of the wrong, not a separate wrong.‘
The High Court does not properly consider the locus damni strand of the claim against South Horizon. Given the test following from Universal Music, England’s qualification as locus damni given the location of the bank accounts is not straightforward yet not entirely mad, either. The Court did consider England to be the locus damni in its application of English residual rules for the claim between Ashley and Jimenez (who is domiciled in Dubai): at 101: ‘the dealings between Mr Ashley and Mr Jimenez concerning an investment of £3 million in Les Bordes took place in England in the early part of 2008. Loss was sustained in England because the payment was made by Mr Ashley from an account held in England’ (reference made to VTB capital).
On (a rare application of) Article 7(6): are any of the claims relating to the Quistclose trust claims brought against “… the trustee … of a trust … created orally and evidenced in writing” and which is domiciled in England and Wales?: Marsh CM at 129-130:
‘Article 7(6) does not assist the claimants. They need to show that there is (a) a dispute brought against a trustee of a trust (b) the trust was created orally and was evidenced in writing and (c) the claim is made in the place where the trust is domiciled. The difficulty for the claimants concerns the manner in which the trust came into being. As I have indicated previously, although the oral agreement between Mr Ashley and Mr Jimenez gives rise to the circumstances in which the Quistclose trust could come into being, there was (i) no express agreement that the investment would be held on trust and (ii) South Horizon was not a party to the agreement. The trust came into being only upon the payment being made by Mr Ashley to South Horizon at which point, and assuming South Horizon was fixed with knowledge of the agreement, the investment was held upon a restricted basis.
I also have real difficulty with the notion of the Quistclose trust having a domicile in England. It seems to me more likely that the domicile is the place of receipt of the money, because that is where the trust came into being, rather than the place from which the funds were despatched.’
(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 2, Heading 126.96.36.199.
Griffin v Varouxakis: (obiter) rejection of jurisdiction on the basis of indirect damage, ditto discussion of Brussels I’s insurance title.
In  EWHC 3259 (Comm) Griffin v Varouxakis, Males J gives an obiter masterclass in the (ir)relevance of indirect damage for the establishment of jurisdiction.
Objections to jurisdiction where formally dismissed on the basis that they were made late according to the relevant CPR rules. Yet Males J went on to discuss at length and obiter whether, if such objection had been made timely, it would have been successful. He suggest it would partially have been successful, for those parts of the claim based on indirect damage, and directed against a Greece domiciled defendant.
(Of immediate note is the contrast with Four Seasons v Brownlie: here indirect damage was not immediately dismissed as a jurisdictional trigger however in that case jurisdiction was to be assessed on the basis of residual English rules; Brussels I did not apply).
Claimant insurance company (“Griffin”) contends that as a result of the defendant’s conduct it has lost the right to claim general average contributions which were payable and would have been paid in London, so that the damage it has suffered was suffered in the London jurisdiction. The defendant disputes this analysis, contending that the damage in question was suffered either in the place where the underlying contract was broken or alternatively in Guernsey where Griffin is domiciled and where it would ultimately have received any general average payments. Alternatively he contends that Griffin’s claim is a “matter relating to insurance” within the meaning of Section 3 of Chapter II of the Regulation so that, in accordance with Article 14, he can only be sued in the courts of Greece where he is domiciled.
The Court reviews relevant case-law on Article 7(2) and applies it to two separate claims (particulars of which are in para 28 and para 29): for one of them only, direct damage would have been suffered in England; for the other, in Oman.
Finally at 92 ff and equally obiter Males J concludes that the litigation is not a “matter relating to insurance” within the meaning of Section 3 of Chapter II of the Recast Brussels Regulation. At 96: ‘Not all claims brought by a claimant who happens to be an insurer comprise matters relating to insurance.’ at 98: ‘neither of Griffin’s claims are matters relating to insurance. The fact that Griffin is an insurer forms part of the background to the claim and explains why the harm which Griffin has suffered is the loss of an ability to enforce a subrogated right (although insurers are not the only people who sometimes have the benefit of rights of subrogation), but that is all. In all other respects the nexus between the claim in tort and the policy is tenuous. Determination of the claim requires no consideration of the terms of the policy, which was scarcely looked at during the hearing.’ This latter suggestion goes along the Granarolo etc. judgments on the distinction between contract and tort.
(Handbook of) EU Private international law, 2nd ed. 2016, Chapter 2 Heading 188.8.131.52, Chapter 4, Heading 4.4 .
Inversiones v Cancun. The Dutch Supreme Court on counterclaims and locus damni for diluted shareholdings.
This post can be classified under ‘better late than never’. Thank you Irina Timp for flagging in December, Inversiones v Cancun at the Dutch Hoge Raad. The case concerned alleged dilution of one company’s (Inversiones) shareholding in another as a result of increased emission of shares orchestrated by another shareholder (Cancun). Note that exclusive jurisdiction under Article 24(2), justifiably, was not suggested.
The Hoge Raad focused on the discussion concerning (now) Article 8(3)’s provision for counterclaims: courts even if not the court of domicile of the defendant have jurisdiction ‘on a counter-claim arising from the same contract or facts on which the original claim was based, in the court in which the original claim is pending;’ C-185/15 Kostanjevec is the main reference. Of particular note was the language issue: the Dutch version of the text employs ‘rechtsfeit’: suggestion a narrower interpretation than the English version (‘facts’) just quoted. The Hoge Raad justifiably followed the linguistic implications of the majority of language versions (e.g “facts”, “Sachverhalt”. “fait”) and held in favour of jurisdiction on the basis of a counterclaim.
The result of that finding is that it did not further entertain the consequences of Universal Music on the location of the locus damni for diluted shareholdings: what other factors are needed to have the shareholder’s corporate domicile qualify for same?
IM Skaugen v MAN. Relevance and location of indirect damage in case of misrepresentation, and forum non conveniens in Singapore.
I shall be posting perhaps tomorrow on yesterday’s CJEU judgment in Löber v Barclays (prospectus liability – see my review of Bobek AG’s Opinion here), but as a warming-up for comparative purposes, a note on  SGHC 123 IM Skaugen v MAN. I have not been able to locate copy of the judgment (I am hoping one of my Singaporean followers might be able to send me one) so I am relying entirely on the excellent post by Adeline Chong – indeed in general I am happy largely to refer to Adeline’s post, she has complete analysis.
The case concerns fraudulent misrepresentation of the fuel consumption of an engine model sold and installed into ships owned by claimants (Volkswagen echo alert). Defendants are German and Norwegian incorporated companies: leave to serve out of jurisdiction needs to be granted. Interesting comparative issues are in particular jurisdiction when only indirect damage (specifically: increased fuel consumption and servicing costs with downstream owners who had purchased the ships from the first owners) occurs there; and the relevance of European lis alibi pendens rules for forum non conveniens purposes.
On the former, Singaporean CPR rules would seem to be prima facie clearer on damage not having to be direct for it to establish jurisdiction; a noted difference with EU law and one which also exercised the UK Supreme Court in Brownlie. Note the consideration of locus delicti and the use of lex fori for same (a good example in my view of the kind of difficulties that will arise if when the Hague Judgments project bears fruit).
On forum non conveniens, Spiliada was the main reference. Of interest here is firstly the consideration of transfer to the Singapore International Commercial Court (SICC); and the case-specific consideration of availability of forum: the Norwegian courts had been seized but not the German ones; Germany had been identified by the Singaporean High Court as locus delict: not Norway; yet under the Lugano Convention lis alibi pendens rule, the German courts are now no longer available.
In this post I, unusually, offer questions rather than tentative answers. I hope you’ll enjoy the pondering and of course I have ideas of my own on all of these issues. Thank you Michiel Poesen for alerting me to Carles Puigdemont et al’s case in the Belgian civil courts.
The case is not about trying to employ the Belgian courts to have a Spanish Supreme Court judge removed from the case. (Contrary to what De Standaard report in their title – in an otherwise informative piece). Pablo Llarena had commented on the case (specifically: rejecting an argument raised by the defence) at an academic conference. Rather, as I understand the case (public detail is scant), applicants suggest the alleged violation of impartiality infringes their right to such impartiality which in Belgium at least, is a civil right, constitutionally guaranteed.
The case therefore is one in tort. The exact request to the court is as yet unknown: provisional measures? damages? One assumes the very finding by a Belgian court of a finding of partiality and hence infringement of fundamental rights, will be employed in any future trials in Spain.
So far a little context. Here are the questions:
- What kind of law is engaged here?: is this private international law? Is it public international law? (see prof Hess’ contribution to the Recueil, on the private /public divide).
- Are the proceedings ‘international’ enough to trigger the application of private international law; are they simply ‘Spanish’ and what impact does that have on the jurisdiction of the Belgian courts;
- Are such proceedings ‘civil and commercial’ within the meaning of the Brussels regime; specifically, what is the impact of a Supreme Court judge spending much of their time engaging in what has to be considered a ‘public’ function, now speaking at an academic conference. (Think Kuhn, Fahnenbrock etc.).
- If the Brussels I regime is triggered, what type of provisional measures is possible?
- If the Brussels I regime is triggered, how does Article 7(2) apply; where is the locus delicti commissi and where the locus damni; how does e-Date apply if at all;
- Along similar lines: how does applicable law apply given that defamation is exempt from Rome II; (see Belgium’s regime in Articles 99-100 WIPR in particular); and
- What is the impact, if any, of chances of enforcement of the judgment in Spain.
These are the issues I suspect will be of some relevance in the conflicts field. Happy pondering.
Sometimes I post a little late. Rarely outrageously overdue. Yet Four Seasons Holdings Inc v Brownlie  UKSC 80 needs to be reported on the blog for it is rather important, firstly, with respect to the topical interest in pursuing holding companies for actions (or lack of them) committed by affiliated companies. And secondly, for jurisdiction in tort, to what degree jurisdiction on the basis of injury sustained abroad, can qualify as lasting damage in the UK. Findings on the latter issue were obiter therefore they need to be treated with caution.
All five judges issued a judgment, with a 3 to 2 majority eventually holding (again: obiter) that jurisdiction in tort in England against non-England based defendants, can go ahead on the basis of indirect damage – albeit in such cases it might still falter on forum non conveniens grounds.
Sumption J, outvoted on the indirect damage issue, wrote the most lengthy judgment.
I tweeted the ruling mid December. Students of international law will of course appreciate the personal background to the case, particularly if you have ever had the chance to be taught by prof Sir Ian Brownlie – Philippe Sands’ obituary is here.
Sir Ian died in a car accident while on holiday with his family in Egypt. His wife was also injured. She brought proceedings seeking: (i) damages for her own personal injuries, (ii) damages under the Law Reform (Miscellaneous Provisions) Act 1934 as Sir Ian’s executrix, and (iii) damages for her bereavement and loss of dependency under the Fatal Accidents Act 1976.
The First Defendant, Four Seasons Holdings Inc (“Holdings”), is the holding company of the Four Seasons hotel group. It is incorporated in British Columbia. The Second Defendant, Nova Park SAE (“Nova Park”) is an Egyptian company which was identified by Lady Brownlie’s solicitors as the owner of the hotel building. The case falls outside the Brussels I Recast Regulation therefore. However reference to Brussels and particularly of course to Rome II is made in the various judgments, for even though the English Courts do not decide jurisdiction on the basis of Brussels, they do have to apply Rome I or II if the suit qualifies as one in contract cq tort.
The Court of Appeal [ EWCA Civ 665] had held that the jurisdictional gateways were not satisfied. There was no contract with Four Seasons Holdings, and given that Holdings was not the owner, there could be no claim in tort for vicarious liability.
David Hart QC has excellent (much more swift) analysis here and I am happy largely to refer. A few points of additional interest.
On the issue of suing holding companies, Sumption J writing at 14 ff dismisses service out of jurisdiction for there is no reasonable possibility of a claim succeeding: at 15:
‘there is no realistic prospect that Lady Brownlie will establish that she contracted with Holdings, or that Holdings will be held vicariously liable for the negligence of the driver of the excursion vehicle.’ That is because (at 14) it is entirely clear ‘that Holdings is a nontrading holding company. It neither owns nor operates the Cairo hotel, which has at all material times been owned by Nova Park, a company with no corporate relationship to any Four Seasons company. A Dutch subsidiary of Holdings called Four Seasons Cairo (Nile Plaza) BV entered into an agreement with Nova Park to operate the hotel on behalf of Nova Park, although at the material times the actual operator was an Egyptian subsidiary of Holdings, FS Cairo (Nile Plaza) LLC, which assumed the contractual obligations of the operator by assignment. Other subsidiaries of Holdings supplied advice and specific services such as sales, marketing, central reservations and procurement, and licensed the use by Nova Park of the Four Seasons Trade Mark’.
Judgment in Brownlie preceded the current cases referred to it on the subject of CSR and jurisdiction (see my previous postings on that, most recently Unilever). Yet it is clear that plaintiffs have to show much more than a corporate bloodline between mother companies and affiliated undertakings, for suits to have any chance of success.
The case could have ended here for all five judges agree on this point. Yet aware of the relevance of direction, discussion was continued obiter on the topic of suing in tort. Firstly it was clear that if a claim in tort could be brought in the English courts, it would be subject to Egyptian law per Article 4(1) Rome II. In the Court of Appeal, Arden LJ had taken analogy with that Article (and the whole Regulation)’s rejection of indirect damage as relevant for deciding lex causae. And of course Rome II’s stance on this point is influenced by the CJEU’s case-law going in the same direction, but then for jurisdiction, in Marinari and the like. Sumption J cites Canadian authority (Stephen Pittel has reference to it here) and is critical of too much emphasis put on a connection between jurisdiction and applicable law, for determining jurisdiction.
Big big pat on his back; readers of the blog know (see eg here) I am not at all enthused by too much analogy between jurisdiction and applicable law).
Sumption at 22
It is undoubtedly convenient for the country of the forum to correspond with that of the proper law. It is also true that both jurisdiction and choice of law can broadly be said to depend on how closely the dispute is connected with a particular country. But there is no necessary connection between the two. The Practice Direction contemplates a wide variety of connecting factors, of which the proper law is only one and that one is relevant only to contractual liabilities. For the purpose of identifying the proper law, “damage” is limited to direct damage because article 4 of Rome II says so in terms. It does this because there can be only one proper law, and the formulation of a common rule for all EU member states necessarily requires a more or less mechanical technique for identifying it. By comparison, indirect damage may be suffered in more than one country and jurisdiction in both English and EU law may subsist in more than one country.
Lady Hale is even more to the point at 49: ‘Applicable law and jurisdiction are two different matters. There is no necessary coincidence between the country with jurisdiction and the country whose law is applicable.‘
Yet for the case at hand ultimately Sumption J does curtail the relevance of indirect damage: at 23:
There is, however, a more fundamental reason for concluding that in the present context “damage” means direct damage. It concerns the nature of the duty broken in a personal injury action and the character of the damage recoverable for the breach. There is a fundamental difference between the damage done to an interest protected by the law, and facts which are merely evidence of the financial value of that damage. Except in limited and carefully circumscribed cases, the law of tort does not protect pecuniary interests as such. It is in general concerned with non-pecuniary interests, such as bodily integrity, physical property and reputation which are inherently entitled to its protection.
At 29 ff follows Sumption’s engagement with relevant CJEU authority, leading him eventually to reject indirect damage as a basis for jurisdiction. That same authority is also discussed by Lady Hale and more succinctly by the others, however they prefer to take the English law on this point in a different direction, particularly taking the CPR (the relevant English civil procedure rules) use of the word ‘damage’ at face value, meaning including indirect damage: residual English PIL therefore not determined by CJEU authority.
As noted in my introduction, even if jurisdiction can be established on the basis of indirect damage in England, forum non conveniens may still scupper jurisdiction eventually.
(Handbook of) EU Private international law, 2nd ed. 2016, Chapter 2 Heading 184.108.40.206, Chapter 4, Heading 4.4 .