On the Beach v Ryanair. A clairvoyance stretch in assessing an Article 30 ‘related actions’ stay.

Another overdue post following up on earlier Twitter flag. In On the Beach Ltd v Ryanair UK Ltd & Anor [2022] EWHC 861 (Ch) is a competition law ‘stand-alone’ damages suit. OTB  is an online travel agent. It claims against Ryanair on the basis of abuse of dominant position. Ryanair have claimed against ia OTB in Ireland, on the basis among others of infringement of intellectual property rights. (Ryanair prefer to sell directly to consumers and  do not generally co-operate with online or other travel agents). OTB suggest the Irish claim is effectively warehoused and that an Irish court will soon hold the claim be dismissed for want of ‘prosecution’.

Nugee LJ considered in particular whether in assessing the relatedness of proceedings, the judge can indeed may have to take into account what is likely to be pleaded by way of defence in both actions (here: OTB is likely to plead competition law arguments should the case continue in Ireland). He held [52] he can:

the better view is that where an application for a stay is made at a stage when the defence to an action has not yet been pleaded, the Court can have regard to the substance of a defence that it can confidently predict is likely to be pleaded.

However [53] ff on the facts he then sided with OTB which argued

that the Court can hardly proceed on the basis that OTB is likely to plead any particular matter by way of defence in the Irish OTB proceedings as if its motion to dismiss the action for want of prosecution succeeds, there never will be a defence. At that point any chance of the two actions being related will disappear.

This is where the reasoning becomes contradictory. The judge [54] concedes that he ‘was not asked by either party to form any view of the likely outcome of OTB’s motion to dismiss, and I would in any event be very reluctant to do so as this is self-evidently a matter for the Irish court’ . However [55] he says that

if one looks at the Irish proceedings as they stand, with no competition issues yet raised, there does not seem to me much overlap between the claims there made and Ryanair’s prospective defence in England which will be focused very largely on competition issues.

This I believe amounts to a form of judicial and litigation clairvoyance which goes too far, even in the wide remit which Article 30 gives to the judge assessing relatedness and the appropriateness of an Article 30 stay.

[57] ff Nuggee LJ holds obiter that had the cases been related, he would have exercised his discretion not to stay.

Geert.

EU Private International Law, 3rd ed. 2021, 2.521 ff.

Dutch court finds Seafarers ‘Dockers’ clause falls within European competition law ‘Albany’ collective bargaining exception.

Many thanks Ruwan Subasinghe for alerting me to the judgment: Early July the courts at Rotterdam held in ITWF, Nautilus International and FNV v Marlow Navigation Netherlands BV et al that the International Transport Workers Federation (IT(W)F) Non Seafarers’ Work Clause, also known as the Dockers’ Clause, falls within the CJEU ‘Albany’ exception of EU competition law. The case was brought against a number of shipowners who disregarded the clause.

In the interest of full disclosure, I should note I acted as expert witness for the ITWF.

The dockers’ Clause, negotiated between trade unions and employers, forms an integral part of a set of agreements primarily entered into by ITF and the Joint Negotiation Group (JNG – represent maritime owners from across the world) . In short  the clause amounts to a ban on ships’ crews carrying out work relating to securing and releasing the load on a ship (often: containers), collectively known as ‘lashing’ /’unlashing’ work. Tiredness and fatigue are some of the biggest risks for seafarers, who are expected to rest in the ports, not carry out the specialised and dangerous work of dockers. 

The Dockers’ Clause, together with the other employment conditions, was the result of an intensive and multi-year period of negotiations between a large number of social partners. Exemptions are possible under conditions.

Collective agreements of course are prima facie suspect under EU competition rules. The Albany ‘exception’ of the Court of Justice of the European Union concerns the core criteria which the CJEU employs in its competition law assessment of the activities carried out by organisations that organise social protection for workers in a given sector. The Court held (at 60) that

It therefore follows from an interpretation of the provisions of the Treaty as a whole which is both effective and consistent that agreements concluded in the context of collective negotiations between management and labour in pursuit of such objectives must, by virtue of their nature and purpose, be regarded as falling outside the scope of Article 85(1) of the Treaty.

Article 85(1) is what is now Article 101 TFEU, and by ‘such objectives’ the Court (at 59) means ‘social policy objectives’.

Note, for conflicts lawyers, the application of Article 4-4 Rome I, and, viz some of the defendants, Article 4(1) Rome II, to conclude application of Dutch law.

The Court at Rotterdam held that the seafarers clause fits squarely within the Albany exception: it is ‘entered into in the framework of collective bargaining between employers and employees’, and it improves the employment and working conditions of workers’. Note at 4.38 the reference to these agreements necessarily involving a ‘package deal’ which implies that the interest of all involved will be weighed and that as a result of the collective bargaining, some of those concerned will get a better deal than others. However both the CJEU and the Court at Rotterdam leave that assessment to the negotiation process.

Further arguments based ia on free movement of workers, services, establishment  were rejected. (A narrow Covid19 exception was accepted for a narrow set of circumstances).

An important judgment for those interested in competition law and collective bargaining.

Geert.

Samsung Electronics. A forum non conveniens assessment of claims re the settlement of follow-on competition law damages, closes with a PS on transparency in EU antitrust findings..

Samsung Electronics Co. Ltd & Ors v LG Display Co Ltd & Anor [2022] EWCA Civ 423 concerns follow-on damages claimed against non-EU based defendants. The European Commission had earlier found the existence of a cartel. The Court of Appeal confirms the refusal of service out of the jurisdiction on forum non conveniens grounds, holding, like the first instance judge, that England & Wales are clearly not the appropriate forum (Taiwan and /or South Korea are).

I report the case for it contains an interesting Ps on the confidentiality of the EC finding: Males LJ:

The parties were united in urging upon us that the Commission Decision is confidential and that reference to its recitals should not be made in open court. I have to say that, as a general proposition, this seems paradoxical. I find it hard to see how a Decision can at the same time be both confidential and binding in public follow-on proceedings. To that extent it appears that any requirement of confidentiality may be in tension with the fundamental constitutional principle of open justice. Moreover, this particular Commission Decision deals with events which are now in the distant past and has been extensively litigated in the years since it was made. It is hard to think that there is any real confidentiality left.

Nevertheless I have been careful to confine my citation from the Decision to what is necessary to explain the submissions made to us and the conclusions which I have reached. I have referred only to recitals which were alleged to explain and support the operative part of the Decision (cf. Emerald Supplies Ltd v British Airways Plc [2015] EWCA Civ, [2016] Bus LR 145 at [68]) and have omitted any reference to other participants in the cartel who were not represented before us.

This invites interesting reflections on the principles of open justice in EU competition law findings – a discussion I shall leave to others.

Geert.

ValueLicensing v Microsoft. The High Court, in rejecting forum non conveniens, puts great emphasis on only English courts determining the course of English law post Brexit.

In JJH Enterprises Ltd (Trading As ValueLicensing) v Microsoft Corporation & Ors [2022] EWHC 929 (Comm) Picken J makes a debatable point in his discussion of a forum non conveniens application by defendants, Microsoft.

In the proceedings ValueLicensing claim damages arising from alleged breaches of competition law by Microsoft. The claim is a ‘stand alone’ one, not a ‘follow-on’ one. There is no underlying infringement decision of the European Commission (or any domestic competition regulator) on which ValueLicensing can rely to establish that an infringement of competition law has been committed.

Some of the Microsoft entities firstly seek summary dismissal of the case against them, arguing they cannot be held liable for an alleged infringement of either Article 101 or 102 TFEU as a result of an overall Microsoft ‘campaign’ in which they did not demonstrably take part. Here [31] ff there is interesting discussion ia of Provimi (Roche Products Ltd. & Ors v Provimi Ltd [2003] EWHC 961 (Comm)), which held that an entity that implements an agreement in breach of A101 to which a member of the same undertaking is a party can be held liable for the infringement even though the implementer itself does not know of the infringement. Specifically, whether Provimi was wrongly decided following from Cooper Tire Europe Ltd v Bayer Public Co Ltd [2010] EWCA Civ 864  – this is an issue for which CJEU referral is not possible post Brexit.

The judge however refers to the broader concept of ‘undertaking’ in the A101-102 sense following eg CJEU C-882/19 Sumal SL v Mercedes Benz Trucks Espana SL. Sumal, Picken J holds [44], is relevant authority both pre and post Brexit.

Quite how parties see a difference in the lex causae for the competition law infringement pre and post Brexit is not clear to me. Pre Brexit it is said to be ‘English law’ (held to include 101-102 TFEU prior to Brexit), full stop, while post Brexit that law is said to be determined by (retained) Article 6 Rome II, which for same of the claim will be English law as being one of the ‘affected markets’ per A6 Rome II.

It is in the forum non application that the judge posits [78] that an important consideration of England as the more appropriate forum, is

it is clear that Microsoft UK’s position at trial will be that in certain material respects English law has taken a divergent path from EU law. In such circumstances, it would be wholly inappropriate, and certainly undesirable, for a court in Ireland to be determining whether Microsoft UK is right about this. On the other hand, there would be no difficulty with the Court here applying EU competition law, either as part of English law (in respect of the pre-Brexit period and, if that is what the Court determines is the case, also in respect of the post-Brexit period) or as part of the laws of other EU/EEA member states, since the Court here is very experienced in doing just that.

If it is true that under forum non, only English courts can be held properly to determine the direction of English law post Brexit, the hand of many a claimant in forum non applications will surely be strengthened.

Geert.

Volvo Trucks. The CJEU unconvincingly on locus damni in follow-on damages suit for competition law infringement.

Update 12 November 2021 see the Spanish SC confirming (Marta Requejo Isidro review of the case and link to the judgment), it seems, the limited approach which I discuss below), meaning: the Mozaik approach no longer applies when the buyer has not purchased the goods affected by the collusive arrangements within the jurisdiction of a single court, territorial jurisdiction lies with the courts of the place where the undertaking harmed has its registered office.

The CJEU held yesterday in C-30/20 Volvo Trucks. I reviewed Richard de la Tour AG’s Opinion here.

After having noted the limitation of the questions referred to locus damni [30]  (excluding therefore the as yet unsettled locus delicti commissi issues) the CJEU confirms first of all [33] that Article 7(2) clearly assigns both international and territorial jurisdiction. The latter of course subject to the judicial organisation of the Member State concerned. If locus damni x has no court then clearly the Regulation simply assigns jurisdiction to the legal district of which x is part. However the Court does not rule out [36] per CJEU Sanders and Huber that a specialised court may be established nationally for competition law cases.

The Court then [39] applies C‑343/19 Volkswagen (where goods are purchased which, following manipulation by their producer, are of lower value, the court having jurisdiction over an action for compensation for damage corresponding to the additional costs paid by the purchaser is that of the place where the goods are purchased) pro inspiratio: place of purchase of the goods at artificially inflated prices will be locus damni, irrespective of whether the goods it issue were purchased directly or indirectly from the defendants, with immediate transfer of ownership or at the end of a leasing contract [40].

The Court then somewhat puzzlingly adds [40] that ‘that approach implies that the purchaser that has been harmed exclusively purchased goods affected by the collusive arrangements in question within the jurisdiction of a single court. Otherwise, it would not be possible to identify a single place of occurrence of damage with regard to the purchaser harmed.’

Surely it must mean that if purchases occurred in several places, Mozaik jurisdiction will ensue rather than just one locus damni (as opposed to the alternative reading that locus damni jurisdiction in such case will not apply at all). However the Court then also confirms [41 ff] its maverick CDC approach of the buyer’s registered office as the locus damni in the case of purchases made in several places.

Here I am now lost and the simply use of vocabulary such as ‘solely’, ‘additionally’ or ‘among others’ would have helped me here. Are we now to assume that the place of purchase of the goods is locus damni only if there is only one place of purchase, not if there are several such places (leaving a lot of room for Article 7(2) engineering both by cartelists and buyers); and that, conversely, place of registered office as locus damni only applies in the event of several places of purchase, therefore cancelling out the classic (much derided) Article 7(2) Mozaik per Shevill and Bier – but only in the event of competition law infringement? This, too, would lead to possibility of forum engineering via qualification in the claim formulation.

I fear we are not yet at the end of this particular road.

Geert.

EU Private International Law, 3rd ed. 2021, Heading 2.2.12.2.8.

Advocate General Richard de la Tour in Volvo Trucks on the location of damage, in competition law follow-on damages suits, and on national CPR rules varying Brussels Ia.

I apologise I could not find a snappier title to this post however Richard de la Tour AG’s Opinion in C-30/20 Volvo Trucks yesterday (no English version had been published at the time of writing) does cover a lot of issues.

Applicant ‘RH’ brings a follow-on action, based on the EC finding of a cartel in the truck manufacturers market. Volvo contest Spain as the locus delicti commissi under A7(2) BIa, however that element is neither referred to the CJEU nor picked up by the AG. That is unfortunate for there is in my view most certainly scope for clarification as I discuss here.

There is also discussion whether A7(2) assigns international jurisdiction only, or also territorial jurisdiction. The referral decision in the end only refers the latter question to the Court. The Advocate General engages with quite a few more and I am not sure the CJEU itself will be inclined to entertain them all.

On that issue of territorial jurisdiction, the AG refers in particular to CJEU Wikingerhof to confirm with some force that A7(2) assigns both international and territorial jurisdiction. Other cases (and in particular AG Opinions) eg in CJEU Löber v Barclays already suggested the same and the overwhelming majority of scholarship has the same view, even if not always explicitly expressed. The AG in current Opinion refers ia to ratio legis, and the clear contrast in formulation between eg A4 and A7.

Next the AG discusses at length locus damni. CDC and Tibor-Trans (markets affected) are the core judgments which the discussion is anchored upon. The discussion here is  rounded up at 94 with the suggestion by the AG that in principle it is the location where the goods (here: the trucks) are purchased, which qualifies as the locus damni. He then revisits the awkward (see my handbook at 2.458) identification of registered office as locus damni, as it has been put forward by the CJEU in CDC. flyLAL further picked up on that discussion and the AG here, too, reviews that judgment. He concludes in the case at issue at 110 that the place of registered office of the claimant should be a fall-back option in case the locus damni does not correspond to the place where that claimant carries out its activities. None of this makes the application of A7(2) any more straightforward, of course.

Finally, the AG concurs with the view expressed by a number of Member States and the EC that the Member States should be able to employ their internal CPR rules to vary the principled territorial consequence of A7(2), which could to lead to a specialised court in the specific case of competition law. Here I disagree, despite the suggested limitation of not endangering effet utile (ia per CJEU Joined Cases C‑400/13 and C‑408/13 Sanders and Huber) and I do not think the justification (at 127 ff) for competition law specifically, justifies special treatment different from say intellectual property law, consumer law, environmental law etc. Claimants will be encouraged to dress up claims as relating to competition law if the centralised court is their court of choice, which will further endanger predictability.

A most rich Opinion and as noted I wonder how much of it the CJEU will be happy to engage with.

Geert.

EU Private International Law, 3rd ed. 2021, Heading 2.2.12.2.8.

Vestel v Philips. Court of Appeal rejects attempt to ground jurisdiction on a claim requalified from abuse of dominance to patent DNI.

In Vestel Elektronik Sanayi Ve Ticaret A.S. & Anor v Access Advance LLC & Anor [2021] EWCA Civ 440 – also known as Vestel v Philips, the Court of Appeal has rejected an attempt to establish jurisdiction for the Courts of England and Wales in a stand-alone competition law damages case.

Hacon J had earlier rejected jurisdiction in the claim which at first instance was formulated as an abuse of dominance claim. That claim was now reformulated with Birss LJ’s permission [30], with the relevant tort being the tort of patent infringement, and in effect the claim a negative declaration relating to that patent. That a claim for declaration of non-liability in tort (‘a ‘negative declaration’) may be covered by A7(2) BIa, was confirmed by the CJEU in C-133/11 Folien Fischer. In the case art issue, it would require Vestel to show it had not infringed a valid IP right. However Birss LJ holds that Vestel’s claim, aimed at obtaining a FRAND declaration for the patented technology (Vestel needs a licence for the technology patented by Philips, and wants it at FRAND terms: Fair, Reasonable and Non-Discriminatory).

The declarations sought by Vestel, after dropping the abuse of dominance plea, are in this form [49]: i) A declaration that the terms offered are not FRAND; ii) A declaration that the terms of Vestel’s counter-offer are FRAND; and  iii) Alternatively, a declaration as to the terms which would be FRAND. these, is it held, are not declarations of non-liability in tort. Vestel have not been given right to access the IPRs. They seek that right in specified terms. They cannot claim that a hypothetical right of entry can proactively ground jurisdiction on the ground that the non-existing access has not been transgressed. As Birss LJ puts it: ‘Vestel’s position is like that of a trespasser with no right to enter the property claiming that if they had permission then it would not be a trespass.’

This was a creative jurisdictional attempt. I think it justifiably failed.

Geert.

EU Private International Law, 3rd ed. 2021, para 2.198; para 2.454.

Shenzen Senior Technology Material v Celgard. On Rome II’s rule applicable law rule for unfair competition, distinguishing ‘direct’ from ‘indirect’ damage, and the Trade Secrets Directive.

Shenzhen Senior Technology Material Co Ltd v Celgard, LLC [2020] EWCA Civ 1293 concerns an appeal against service out of jurisdiction (the judgment appealed is [2020] EWHC 2072 (Ch)). Celgard allege that the importation and marketing by Senior of battery separator film involves the misuse of Celgard’s trade secrets.

Senior (of China) contend that the judge fell into error in concluding, first, that Celgard (incorporated in Delaware) had established a serious issue to be tried (here part of the jurisdictional threshold) assuming that English law applies to its claims and, secondly, that England is the proper forum to try the claims. As to the latter the core argument is that in limiting its claims to remedies in respect of acts in the UK, Celgard could not establish the requisite degree of connection to England. As for the former, they argue the law applicable to Celgard’s claims is Chinese law, which would count against jurisdiction.

Strategically, Celgard’s case against Senior is not based on breach of the NDA applicable between Celgard and one of its former employees,  Dr Zhang who, when he left Celgard, told its then COO that he was going to work for General Electric in California, which does not compete with Celgard in the field of battery separators. It later transpired that he had in fact joined Senior in China, where he was using the false name “Bin Wang”. This element of the facts triggers the question whether Senior is liable for the acts of another, even if that other is its employee.

The Celgard – Zhang NDA is governed by the law of South Carolina, application of which would also have triggered A4(3)(b) or (c) of the Trade Secrets Directive 2016/943. Celgard do rely on the NDA as supporting its case that the trade secrets were confidential. Rather Celgard claim that Senior’s employee acted in breach of an equitable obligation. This engages Rome II,  specifically Article 6(2) because Celgard’s claims are concerned with an act of unfair competition affecting exclusively the interests of a specific competitor, namely Celgard. In such circumstances, Article 6(2) provides that “Article 4 shall apply”.

Of note is that this is one of those cases that show that Rome II applies to more than just tortious obligations: as Arnold LJ notes at 51, as a matter of English law, claims for breach of equitable obligations of confidence are not claims in tort.

Celgard’s case, accepted by Trowe J at the High Court, is that A4(1) leads to English law because the ‘direct damage’ (per Rome II and CJEU Lazard indirect damage needs to be ignored) caused by the wrongdoing it complains of has occurred (and will, if not restrained, continue to occur) in the UK, that being the country into which the infringing goods (namely the shipment to the UK Customer and any future shipments of the same separator) have been (and will be) imported, causing damage to Celgard’s market here.

Senior’s case is that confidential information is intangible property and that damage to intangible property is located at the time and place it became irreversible (support is sought in extracts from Andrew Dickinson’s Rome II volume with OUP). At 58 ff Arnold LJ gives 7 reasons for rejecting the position. I will not repeat them all here. Of note is not just the (most justifiable) heavy leaning on the travaux but also the support sought in secondary EU law different from private international law (such as the Trade Secrets Directive 2016/943) as well as in the consistency between Brussels Ia and the Rome Regulations [on which Szpunar AG has written excellently in Burkhard Hess and Koen Lenaerts (eds.), The 50th Anniversary of the European Law of Civil Procedure]. This is not an easy proposition however given the lack of detail in Rome I and the need for autonomous EU interpretation, understandable.

The Trade Secrets Directive is further discussed at 65 ff for in A4(5) it makes importation of infringing goods an unlawful use of a trade secret “where the person carrying out such activities knew, or ought, under the circumstances, to have known that the trade secret was used unlawfully within the meaning of paragraph 3”. One of the possibilities embraced by paragraph 3 is (a), the person “having acquired the trade secret unlawfully”. Arnold LJ then asks: what law is to be applied to determine whether it was acquired “unlawfully”? Is A4(5) read together with A4(3)(a) an implicit choice of law rule pointing to the law of the place where the trade secret was acquired? Arnold LJ suggests this is not acte clair and may need CJEU clarification however not at this stage for his provisional view (with an eye on the jurisdictional threshold test) is that the Directive is not an implicit choice of law rule and that per Rome II, English law applies.

Plenty applicable law issues to discuss at the merits stage.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 4, Heading 4.6.2. Third ed. forthcoming February 2021.

 

 

State aid and collective waste recycling bodies. Pitruzzella AG in Société Eco TLC.

Must Article 107 TFEU be interpreted as meaning that a system whereby a private, non-profit eco-body, approved by the public authorities, receives contributions from those who place on the market a particular category of product and who enter into a contract with it to that effect, in return for a service consisting in the organisation on their behalf of the treatment of the waste from those products, and redistributes to operators responsible for the sorting and recovery of that waste, subsidies the amount of which is set out in the approval, in the light of environmental and social targets, is to be regarded as State aid within the meaning of that provision?

That is the question as phrased in C‑556/19 Société Eco TLC and on which Pitruzzella AG Opined on 28 May. TLC stands for Textiles, Lignes de maisons, and chaussures (textiles, household linen and shoes). Producers or as the case may be first importers pay a fee to the collective body in lieu of their personal commitments under extended producers responsibility per Waste Framework Directive 2008/98.

The AG of course revisits the definition of ‘State Aid’ under CJEU C-379/98 Preussen Elektra, on which more here and here. Preussen Elektra remains controversial for it would seem to give Member States quite a bit of room for manoeuvre to reach the same result as direct State Aid more or less simply by inserting a private operator who receivs funds directly from private operators however in line with direct State instructions on level and modalities of payment.  The AG opines that in the case at issue there is no State Aid however he directs further factual lines of enquiry (ia re the State control over payments by the collective body to recyclers.

Geert.

Handbook of EU Waste law, 2nd ed. 2015 OUP, para 4.116 ff.

 

Disciplining abuse of anchor defendants in follow-up competition law cases exceedingly difficult. Borgarting Court of Appeal (Norway) applies CDC in Posten /Bring v Volvo.

After the French Cour de Cassation in MJI v Apple Sales, the Brussels Court of Appeal in FIFA/UEFA, and the Court at Amsterdam in Kemira, (as well as other courts undoubtedly, too; and I have highlighted more cases on the blog), Ørjan Salvesen Haukaas has now reported an application of CDC in a decision of December 2018 by a Norwegian Court of appeal, LB-2018-136341 Posten /Bring v Volvo. The court evidently applies Lugano (Article 6), not Brussels Ia, yet the provision  is materially identical.

Norwegian and foreign companies in the Posten/Bring group (mail services) had sued companies in the Volvo group for alleged losses incurred when purchasing trucks from Volvo after certain companies in the Volvo group had been fined for participating in a price-fixing cartel. Posten/Bring also sued a Norwegian company in the Volvo group, which had not been fined for participating in the price-fixing cartel.

Borgarting Court of Appeal held that Norwegian courts have jurisdiction pursuant to Article 6(1) Lugano even if the anchor defendant is sued merely to obtain Norwegian jurisdiction. The court solely had to determine whether the claims were so closely connected that there was a risk of irreconcilable judgments, in the absence of any suggested collusion between the anchor defendant and claimants per CDC.

Geert.

(Handbook of) European Private International Law. 2nd ed. 2016, Chapter 2, Heading 2.2.12, Heading 2.2.12.1.

%d bloggers like this: