Posts Tagged Competition law
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 22.214.171.124; Heading 2.2.9; Chapter 4, Heading 4.6.2).
Siemens: Debt arising from the unjustified repayment (by the authorities) of a fine for infringement of competition law excluded from Brussels I.
The Court held in C-102/15 Siemens just before mine and their summer break. It had escaped my attention. At issue was whether debt arising from the unjustified repayment of a fine for infringement of competition law falls within the scope of application of the Brussels I Recast. It does not. The Court distinguished flyLAL: while private actions brought to ensure compliance with competition law fall within the scope of the Regulation, a penalty imposed by an administrative authority in the exercise of the regulatory powers conferred upon it under national legislation comes within the concept of ‘administrative matters’, excluded from the scope of Regulation No 44/2001 in accordance with Article 1(1) thereof.(at 35).
An action in unjust enrichment related to the interest due, following to and fro, imposition and rescinding, ending finally in confirmation of the fine, is intimately bound up with that fine and therefore follows it in the exclusion.
A judgment of note for those who wish to keep complete overview.
(Handbook of) European private international law, 2nd ed. 2016, Chapter 2, Heading 126.96.36.199 ff.
In Philipp Plein, the court at Rotterdam held against the applicability of contractual choice of court to cases involving (alleged) unfair trading practices /infringement of competition law. (The judgment is not entirely clear on how the alleged tort needs to be qualified). I should also rephrase: I am assuming the case involves clothing chain Philipp Plein (‘PP’): this party’s name (albeit with presumably a typoo reported as ‘Philipp Klein’) is mentioned once in the judgment, probably because redacting missed this one particular reference. I find this process of anonimisation rather tiring: I fail to understand why in issues of commercial law, companies should at all be offered anonymity in public recording of the case. But I digress.
PP is domiciled at Lugano. The court is not entirely clear in its distinction between the Brussels I Recast Regulation and the Lugano Convention 2007. For the consideration of choice of court, domicile of the defendant in Switzerland was already immaterial under the Brussels I Regulation, given that one of the parties is domiciled in The Netherlands. The court applies Brussels I Recast and Lugano 2007 more or less jointly, given their similar outcome for the case at issue. Given this parallel application it is quite remarkable that no reference is made to CDC, which emphasised that extension of choice of court to non-contractual liability cannot be assumed. Instead the court here reviews how other parts of PP’s standard terms and conditions are formulated and what impact this has on the clause at issue.
It decides the choice of court clause (which read ‘“If both parties are businessmen, then the place of jurisdiction […] is Nuremberg, Germany”.’) does not extend to non-contractual liability. Parties seemingly agreed that in the event of non-applicability of choice of court, the Court at Rotterdam can hear the case on the basis of Article 5(3) Lugano 2007 (similar to now Article 7(2) Brussels I Recast).
I agree with Bas Braeken and Marianne Meijssen: A good result but an awkward way to go about it.
(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.9, Heading 188.8.131.52.
Status updated: can a ‘relationship’ be a ‘contract’? CJEU says it’s complicated in Granarolo, and complements the Handte formula.
In C-196/15 Granarolo, extensive reference is made to Brogsitter, in which the CJEU held that the fact that one contracting party brings a civil liability claim against the other is not sufficient to consider that the claim concerns ‘matters relating to a contract’ within the meaning of Article 7(1) Brussels I Recast. That is the case only where the conduct complained of may be considered a breach of contract, which may be established by taking into account the purpose of the contract, which will in principle be the case only where the interpretation of the contract which links the defendant to the applicant is indispensable to establish the lawful or, on the contrary, unlawful nature of the conduct complained of against the former by the latter.
Kokott AG Opined that there was no such contractual relationship in the case at hand: see my review of the Opinion. The Court held last week and was less categorical. It suggests a contractual relationship between the parties (which did not have a framework agreement in place: rather a long series of one-off contracts) should not be excluded: the long-standing business relationship which existed between the parties is characterised by the existence of obligations tacitly agreed between them, so that a relationship existed between them that can be classified as contractual (at 25).
What follows can be considered a CJEU addition to the rather byzantine double negative C-26/91 Handte formula: ‘matters relating to a contract is not to be understood as covering a situation in which there is no obligation freely assumed by one party towards another’. In Granarolo at 26 the Court notes
The existence of a tacit relationship of that kind cannot, however, be presumed and must, therefore, be demonstrated. Furthermore, that demonstration must be based on a body of consistent evidence, which may include in particular the existence of a long-standing business relationship, the good faith between the parties, the regularity of the transactions and their development over time expressed in terms of quantity and value, any agreements as to prices charged and/or discounts granted, and the correspondence exchanged.
These criteria obviously are quite specific to the question at hand yet it is the first time the Court, carefully, ventures to give indications of some kind of a European ius commune on the existence of ‘a contract’.
Whether any such contract then is a contract for the sale of goods or one for services, is not a call the Court wishes to make. It lists the various criteria it has hitherto deployed, with extensive reference in particular to C-9/12 Corman-Collins, and leaves the decision up to the national court.
Make a mental note of Granarolo. It may turn out to have been quite pivotal. Geert.
(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 2, Heading 184.108.40.206, Heading 220.127.116.11.9
In Brogsitter, the CJEU held that the fact that one contracting party brings a civil liability claim against the other is not sufficient to consider that the claim concerns ‘matters relating to a contract’ within the meaning of Article 7(1) Brussels I Recast. That is the case only where the conduct complained of may be considered a breach of contract, which may be established by taking into account the purpose of the contract, which will in principle be the case only where the interpretation of the contract which links the defendant to the applicant is indispensable to establish the lawful or, on the contrary, unlawful nature of the conduct complained of against the former by the latter.
At the end of December, Kokott AG Opined in C-196/15 Granarolo (even now, early April, the English version was not yet available) effectively applying Brogsitter to the case at hand: an action for damages for the abrupt termination of an established business relationship for the supply of goods over several years to a retailer without a framework contract, nor an exclusivity agreement. Ms Kokott (at 17) points out that unlike Brogsitter, there is no forceful link with the contractual arrangements between parties which would be the foundation for jurisdiction on the basis of contractual (non) performance (which there would have been had there been a framework relation between the parties). Rather, the source for a claim between the parties is a statutory provision (it is not specifically identified: however presumable it relates to unfair commercial practices) that existing business relations cannot be abruptly halted without due cause.
Article 7(2) therefore should determine jurisdiction (and Article 4 of course: domicile of the defendant), not Article 7(1).
(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 2, Heading 18.104.22.168, Heading 22.214.171.124.9
Jurisdiction rules on joinders apply regardless of whether they are brought by or against third parties. The insurance title does not apply between professional parties. CJEU in Sovag.
The CJEU has held in Case C-521/14 Sovag that Article 6(2) Brussels I (Article 8(2) in the Recast) applies regardless of whether the proceedings are brought against (which is what inter alia the English language version suggests) or by a third party.
A, the victim of a traffic accident that took place in Germany, brought an action in Finland against SOVAG, with which the vehicle responsible for the damage was insured. That traffic accident also constituting a work accident under the Law on accident insurance, If, which is established in Finland, paid A compensation for the accident in accordance with that law. After A had brought the action against SOVAG, If itself sued SOVAG before the same court of first instance.
The national court in first instance held that, in accordance with Article 8 of Regulation 44/2001, in matters relating to insurance jurisdiction may be determined by the provisions of Section 3 of Chapter II of that Regulation alone. According to SOVAG, Article 6(2) of Regulation 44/2001 is indeed not applicable because Section 3 of Chapter II of the same Regulation establishes an autonomous system for the conferring of jurisdiction in matters of insurance. On this issue, the CJEU (at 30) reminded the national court of earlier case-law that where the action at issue in the main proceedings concerns relations between professionals in the insurance sector, and will not affect the procedural situation of a party deemed to be weaker, the insurance title does not apply. The objective of protecting a party deemed to be weaker being fulfilled once jurisdiction is established on the basis of Section 3 of Chapter II of Regulation 44/2001, subsequent procedural developments concerning only relations between professionals cannot fall within the ambit of that section.
Next, the wording of several of the language versions of Article 6(2), in particular the German, French, Finnish and Swedish versions, does not prevent the court before which the original proceedings are pending from having jurisdiction to hear and determine an action brought by a third party against one of the parties to the original proceedings. However, other language versions of that provision, particularly the English language version, appear to restrict its scope to actions brought against third parties (‘a person domiciled in a Member State may also be sued: … as a third party’).
While the CJEU acknowledged that the special jurisdictional rules need to be applied restrictively, ie not going beyond their purpose, here the purpose of Article 6(2) is the harmonious administration of justice, namely minimising the possibility of concurrent proceedings and ensuring that irreconcilable judgments will not be given in two Member States. Therefore Article 6(2) must also apply where the third party brings the proceedings, not just where it is drawn into those proceedings by others.
However, the Court also sanctioned the Finnish rule of civil procedure that the right of a third party to bring an action in connection with pending judicial proceedings, is contingent on that action being linked to the original proceedings. Given that Article 6(2) does not apply where the proceedings were brought ‘solely with the object of removing’ the party concerned from the jurisdiction of the court which would ordinarily have jurisdiction to hear the case, the CJEU OK-ed the Finnish rule as being one that assist in helping to avoid abuse of the rule on joinders.
I would have thought the Court would have made that rule one of EU law, given its insistence on autonomous interpretation. (Rather than simply OK-ing a national rule). Whether there is such a European rule therefore must stay into the open a little longer.
Towards the end of July, the Court at Amsterdam applied the recent CJEU judgment in CDC, on the application of (now) Article 8’s rule on anchor defendants. The case also involved CDC – busy bees on the competition enforcement front, this time pursuing inter alia Kemira, a Finnish company, using Akzo Nobel NV, domiciled in The Netherlands, as anchor defendants.
The court referred in extenso to the CJEU’s CDC case, noting inter alia that it is not up to CDC to show that the suit was not just introduced to remove Kemira from the Finnish judge: that Kemira suggests that introduction of the suit in The Netherlands is not very logical given the absence of factual links to that Member State, does not suffice. The court also adopted the CJEU’s finding on choice of court and liability in tort. In the absence of specific proviso in a standard contractual choice of court, the application of such choice of court to extracontactual liability [such as here, for infringement of competition law] cannot be assumed.
Finally, at 2.18, the Court also referred to argument made by Kemira that Finish and Swedish law ought to apply to the interpretation (not: the validity) of the choice of court agreement. That would have been an interesting discussion. However in light of the court’s earlier judgment on the irrelevance of the court of choice, the court did not entertain that issue.