Tag: Damages

Posted on

Cybercrime and jurisdiction. The CJEU in Concurrences /Samsung /Amazon.

In the flurry of judgments issued by the European Court of Justice on Super Wednesday, 21 December, spare a read for C-618/15 Concurrence /Samsumg /Amazon: Cybercrime, which dealt with jurisdiction for tort under the Brussels I Recast Regulation and the location of locus damni in the event of online sales. The foreign suffix of the website was deemed irrelevant.

To fully appreciate the facts of the case and the Court’s reasoning, undoubtedly it would be best to read Wathelet AG’s Opinion alongside the Court’s judgment.

Concurrence is active in the retail of consumer electronics, trading through a shop located in Paris (France) and on its online sales website ‘concurrence.fr’. It concluded with Samsung a selective distribution agreement (covering France) for high-end Samsung products, namely the ELITE range. That agreement included, in particular, a provision prohibiting the sale of the products in question on the internet. Exact parties to the dispute are Concurrence SARL, established in France, Samsung SAS, also established in France, and Amazon Services Europe Sàrl, established in Luxembourg. Amazon offered the product range on a variety of its websites,  Amazon.fr, Amazon.de, Amazon.co.uk, Amazon.es and Amazon.it.

Concurrence sue variously for a lift of the ban on internet sales (claiming the ban was illegal) and alternatively, an end to the  offering for sale of the elite products via Amazon. The French courts suggest they lack jurisdiction over the foreign Amazon websites (excluding amazon.fr) because the latter are not directed at the French public. Concurrence suggest there is such jurisdiction, for the products offered for sale on those foreign sites are dispatched not only within the website’s country of origin but also in other European countries, in particular France, in which case jurisdiction, they suggest,  legitimately lies with the French courts.

Pinckney figures repeatedly in Opinion and Judgment alike. Amazon submit that the accessibility theory for jurisdiction should not be accepted, since it encourages forum shopping, which, given the specific nature of national legal systems, might lead to ‘law shopping’ by contamination. Amazon seek support in Jaaskinen’s Opinion in Pinckney. Wathelet AG first of all notes (at 67 of his Opinion) that this argument of his colleague was not accepted by the CJEU. Moreover, he finds it exaggerated: the national court can award damages only for loss occasioned in the territory of the Member State in which it occurs: this limitation serves as an important break on plaintiffs simply suing in a State per the locus damni criterion ‘just because they can’.

The Court agrees (at 32 ff) but in a more succinct manner (one may need therefore the comfort of the Opinion for context):

  • The infringement of the prohibition on resale outside a selective distribution network is given effect by the law of the Member State of the court seised, so that a natural link exists between that jurisdiction and the dispute in the main proceedings, justifying jurisdiction for the latter.  It is on the territory of that Member State that the alleged damage occurs.
  • Indeed, in the event of infringement, by means of a website, of the conditions of a selective distribution network, the damage which the distributor may claim is the reduction in the volume of its sales resulting from the sales made in breach of the conditions of the network and the ensuing loss of profits.
  • The fact that the websites on which the offer of the products covered by the selective distribution right appears operate in Member States other than that of the court seised is irrelevant, as long as the events which occurred in those Member States resulted in or may result in the alleged damage in the jurisdiction of the court seised, which it is for the national court to ascertain.

With this judgment national courts are slowly given a complete cover of eventualities in the context of jurisdiction and the internet. But only slowly: for instance the issue of the geographical scope of the injunctive element of the litigation, would not seem addressed at all by the Court.

Geert.

(Handbook of) European private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.11.2

 

Posted on

TNT at the High Court. Quantification of damages for invasion of privacy.

Infringement of personality rights, including invasion of privacy, is exempt from the Rome II Regulation on applicable law for non-contractual relations. TLT at the High Court shows how distinct national laws may look upon the issue of quantification of damages very differently. Robin Hopkins reviews precedent and the case itself here, and One Crown Office Row zoom in on the case itself here. This case did not involve conflict of laws, however I thought I would highlight it anyway, for it is common knowledge that national laws assess damages in cases like these very differently.

It is worth pointing out in this respect that infringement of personality rights is exempt from Rome II not because it is irrelevant. Rather the contrary: it is very relevant indeed and no agreement could be found on an applicable law rule.

Geert.

(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 4.

Posted on

Anchor defendants in follow-up competition law cases. Amsterdam applies CDC in Kemira.

Update 23 October 2015 As Reported by Emmanual Guinchard, the French Cour de Cassation also applied CDC in MJI v Apple Sales.

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.

Geert.

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

Posted on

Anchor defendants in follow-up competition law cases. The ECJ in CDC confirms AG’s view on joinders. Sticks to Article 5(3 /7(1). Locus damni for purely economic loss = registered office.

Update 29 May 2018 on economic loss: Bobek AG would seem to take a similar view (that the CJEU’s finding on registered office is at odds with its case-law on Article 7(2) in his Opinions in Barclays and  flyLAL.

Update November 2017. For a contrary ruling on the scope of arbitration agreement, see Dortmund 13 September 2017, reviewed here.

In Case C-352/13 CDC, in which the ECJ held last week, at issue is among others the use of Article 6(1) of the Brussels I-Regulation (8(1) in the recast) when the claim against the anchor defendant has been settled before the trial is well and truly underway.

I reviewed JÄÄSKINEN AG’s opinion here.  The ECJ’s overall approach to Article 6 is not to take into account the subjective intentions of plaintiff, who often identify a suitable anchor defendant even if is not the intended target of their action. Like its AG, the Court does make exception for one particular occasion, namely if it is found that, at the time the proceedings were instituted, the applicant and that defendant had colluded to artificially fulfil, or prolong the fulfilment of, Article 6’s applicability. I had expressed reservation vis-a-vis this suggestion, obviously in vain. In cases such as these, where tort is already clearly established (via the European Commission’s cartel finding), the intention of ECJ and AG seem noble. Collusion to defraud is disciplined by the non-applicability of Article 6. However this arguably serves the interests of the parties guilty of the other type of collusion involved: that of defrauding not procedural predictability, but rather consumers’ interest. 

Next, the referring court enquired about the application of Article 5(3)’s special jurisdictional rule in the event of infringement of competition law, where that infringement concerns a complex horizontal agreement, spread over a long period of time, and with varying impact in various markets. The AG had suggested dropping application of Article 5(3) (now 7(1)) altogether, both with respect to locus delicti commissi and locus damni. Here the Court disagreed. Difficult as it may be, it is not to be excluded that locus delicti commissi can be established. At 50: one cannot rule out ‘the identification, in the jurisdiction of the court seised of the matter, of a specific event during which either that cartel was definitively concluded or one agreement in particular was made which was the sole causal event giving rise to the loss allegedly inflicted on a buyer.’

For locus damni, the Court again has no sympathy for either mozaik effect of Article 5(3), or indeed the often great difficulties in establishing locus damni, flagged by the AG. At 52: ‘As for loss consisting in additional costs incurred because of artificially high prices, such as the price of the hydrogen peroxide supplied by the cartel at issue in the main proceedings, that place is identifiable only for each alleged victim taken individually and is located, in general, at that victim’s registered office.‘

Registered office as the locus damni for purely economic loss, lest my memory fails me, has not been as such confirmed by the ECJ before. It is also currently pending in Universal. The Court is in my view a bit radical when it comes to justifying registered office as the Erfolgfort: at 53: ‘That place fully guarantees the efficacious conduct of potential proceedings, given that the assessment of a claim for damages for loss allegedly inflicted upon a specific undertaking as a result of an unlawful cartel, as already found by the Commission in a binding decision, essentially depends on factors specifically relating to the situation of that undertaking. In those circumstances, the courts in whose jurisdiction that undertaking has its registered office are manifestly best suited to adjudicate such a claim.‘ Update 29 May 2018 Bobek AG would seem to take a similar view (that the CJEU’s finding on registered office is at odds with its case-law on Article 7(2) in his Opinions in Barclays and  flyLAL.

Finally, on the issue of choice of court in the agreements between the victims of the cartel, and those guilty of the cartel, the Court follows the AG’s lead. Such clauses are not generally applicable to liability in tort (the clause would have to refer verbatim to tortious liability). Neither do they in principle bind third parties, lest of course there be subrogration (Refcomp). (The referring national court has given very little detail on the clauses at issue and hence the ECJ notes that it could not reply to all questions referred).

In the end, it is the finding with respect to economic loss for which the judgment may be most remembered.

Geert.

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

Posted on

The use of anchor defendants in follow-up competition law cases. JÄÄSKINEN AG in CDC questions i.a. arbitration clauses in competition cases.

Postscript 5 July 2016  Rotterdam held in DGL (involving the lift cartel) that arbitration clauses do indeed in general not apply in follow-up damages cases. Thank you Stibbe for reporting.

A particularly sticky point in competition cases, are follow-up suits for damages. I have already reported on (private international law aspects of) the issue of the piercing of the corporate veil, and on the use of a related undertaking as an anchor. [I report more extensively on competition law and conflicts in Jacques Steenbergen’s liber amicorum here. I hope to translate it into English some time soon].

In Case C-352/13 CDC (Cartel Damage Claims, in effect private anti-trust enforcement), at issue is among others the use of Article 6(1) of the Brussels I-Regulation when the claim against the anchor defendant has been settled before the trial is well and truly underway.

JÄÄSKINEN AG [whose Opinion at the time of writing was not available in English; indeed the absence of English translation of quite a few important Opinions is becoming a bit of a pattern. (That’s an observation. not an accusation)] suggests in his Opinion that only the time of service of the suit is relevant to assess the criteria of Article 6(1). This suggestion in my view finds support in the ECJ’s overall approach to Article 6: the subjective intentions of plaintiff, who often identify a suitable anchor defendant even if is not the intended target of their action, does not feature in the application criteria of Article 6. While this may lead to abuse of procedural power, establishing malicious intent is all but impossible. All but impossible: but not totally excluded. For that reason the AG does suggest that if one can prove that plaintiff and anchor defendant (in the case at issue: Evonik Degussa) had secretly agreed to settle, prior to the introduction of the suit, such collusion should be punished by non-applicability of Article 6(1), for in that case the conditions of Article 6 arguably are no longer met.

I am not sure the ECJ should follow the latter suggestion, particularly not in cases such as the one at issue, where defendants have been found to have acted illegally under EU competition law. (Misdemeanor or indeed criminal act therefore has already been established). In a way it would be an application of nemo auditur propriam turpitudinem allegans not to reward those who infringe EU competition law in the way the AG suggests. (This may be different in the event of as yet unsubstantiated claims of tort, in which case one may argue the defendant should not routinely have to defend the claims in a court other than the one identified by Article 2).

Next, the referring court enquired about the application of Article 5(3)’s special jurisdictional rule in the event of infringement of competition law, where that infringement concerns a complex horizontal agreement, spread over a long period of time, and with varying impact in various markets. One can probably not at all establish a locus delicti commissi for the tort as a whole: for such behaviour often takes shape in a variety of meetings, electronic correspondence et al. For locus damni, too, the picture would be one of a complex patchwork. Predictability and manageability of the ensuing suits would be impossible to establish in some coherent way, thus endangering some of the very foundations of the Brussels regime. In conclusion therefore the AG suggests not to apply Article 5(3) at all to current scenario, and to stick with application of Article 2, often then in conjunction with Article 6.

Although the last word on Article 6 needs to be said by the national court who alone is the judge of the risk of irreconcilable judgments, clearly in the AG’s mind there is a strong likelihood of such risk in the event of follow-up damages in the case of a cartel which has been found to be illegal by the European Commission and where all members to it have acted within one and the same intent (again, as established by the EC). Article 6(3) b Rome II [not applicable in the case but the AG suggests it would not hurt looking ahead] hints at such scenario where many defendants are sued in one and the same court.

Finally, the Court is asked to give input on the issue of choice of court, and arbitration clauses, in the agreements between the victims of the cartel, and those guilty of the cartel: do such clauses have any impact on the legal position of CDC, who has acquired the rights to seek damages for the cartel infringement? The AG suggests, in line with most national case-law (see more on this in my Steenbergen chapter, linked above), that such clauses cannot include follow-up damages for cartel infringement: for the latter is arguably not within the legitimate contractual expectations. This would be different for such clauses concluded after the tort has been committed: for Article 23 of the Regulation allows parties to agree on a different forum than those identified in the special jurisdictional rules. The AG finds additional support for this argument in the overall objectives of the very recent Directive 2014/104, the damages Directive. He takes the opportunity to argue that in the case of arbitration clauses, these may hinder the effet utile of Article 101 TFEU, just as choice of court clauses might, unless parties are shown beyond doubt to have consented to the clause, and provided the tribunal or court at issue, is under an obligation to apply EU competition law as matter of public policy. (Whether that is the case is subject to national law).

(It is quite likely that the Court itself will not review the last question for as the AG indicates, the referring national court has given very little detail on the clauses at issue).

This case could turn out to have quite a wide relevance for a large part of commercial practice. Or not: that depends on how far the ECJ itself will decide to entertain it.

Geert.

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

Posted on

The Alexandros resurfaces – Greek proceedings may turn out to be an expensive torpedo!

Update 19 September 2019  the relevant Greek Court of Appeal has refused to recognise the judgments awarding damages, on account of ordre public. Appeal with the Supreme Court and CJEU reference seem likely.

I have reported before on the lis alibi pendens issue in the Alexandros litigation. (The left-over claims as identified in my previous post were, I understand, dropped, and hence the need for ECJ referral subsided – Hill Dickinson have a good summary of the various proceedings here). The Court of Appeal on the 18th of July held on the now (following the Supreme Court’s intervention) remaining issue of declarations, damages and indemnities in respect of the owners’ proceedings in Greece seeking damages from the insurers, despite proceedings for sums due under the relevant insurance policies having been settled in England pursuant to a choice of forum clause. (Apologies for this all being a bit dense – reading my previous post helps). (Greek courts in fact rejected the claims in April).

The left-over issue essentially boils down to the question whether despite the ECJ’s prohibition of anti-suit injunctions for subject-matter falling within the Brussel I-Regulation, Member States courts are free to award damages to the party suing elsewhere in the EU in spite of a choice of court agreement between parties. The Court of Appeal held that they are. It justifiably, in my view, distinguished Turner v Grovit . In Turner v Grovit, the ECJ is concerned with mutual trust and allowing (and indeed trusting) the courts in the other Member States to make their own, proper application of the Regulation. Turner and Grovit does not uphold jurisdiction for the other court: it upholds the opportunity for that other court properly to apply the Regulation, which may or may not lead it to uphold jurisdiction.

The judgment of the Court of Appeal re-enforces the attraction of English courts as a destination of choice: parties wishing to torpedo (a prospect less likely in the Brussels I-bis Regulation) may or may not succeed in convincing alternative courts of their jurisdiction. English courts since Turner cannot issue anti-suit. However they may still hold party liable for having breached the choice of court agreement.

Geert.

Posted on

Ça alors! French evidence, the evidence Regulation and UK courts: The High Court in National Grid

In National Grid Electricity Transmission, the UK High Court correctly confirmed the Evidence Regulation as being subsidiary only.

The European Commission had found 20 companies to have been engaged in an extensive and sophisticated cartel regarding the supply of GIS, Gas Insulated Switchgear, which controls energy flow in electricity grids, and is therefore used as a major component in power substations. National Grid alleges that it suffered substantial losses by reason of overcharges resulting from the illegal cartel. Current judgment is an interim judgment on the issue of disclosure.  Estimating the cartel overcharge is very dependent on expert economic evidence.

Alstom and Areva are both French-domiciled defendants. They argue that providing disclosure will put them, as French companies, in breach of a prohibition under French law which attracts criminal penalties, and therefore should not be ordered. This prohibition is referred to in the High Court judgment as the ‘French Blocking Statute‘, of 1968, as amended, most notably in 1980. The prohibition is mostly meant to assist French companies in resisting excessive disclosure requests originating in the United States. Applicants had made a request under the EU’s Evidence Regulation and had served that request to the French Ministry of Justice.

The Ministry eventually refused, mostly for technical legal reasons (the request made had identified the defendants as the ones having to produce the evidence, rather than the court having to order them to do so). Alstrom and Areva subsequently argued that the only route for them to be safe from prosecution under the French law, was for the UK court to seek the assistance of a French Court under the EU Evidence Regulation.

Roth J first considered (with French expert help) the likelihood of the companies involved being prosecuted under the Act. On that point, he concluded ‘I find it virtually inconceivable that where jurisdiction over a company is exercised pursuant to an EU regulation to make it a defendant to proceedings in another EU Member State, for damages alleged to result from an established and serious violation of a fundamental provision of EU law, which proceedings serve an objective of EU policy, the public authorities of one EU Member State would in the exercise of their discretion institute criminal proceedings against that company for complying with the procedural rules of the courts of the Member State where the proceedings are brought.’

He subsequently discussed the evidence Regulation. This Regulation is of a subsidiary nature, as I have flagged once or twice before. It does not rule out national procedural rules as an alternative. Roth J correctly holds that the Regulation would not assist in this case (whether or nor it applies to disclosure proceedings between litigious parties at all is a different matter), inter alia because of the delays and because of the potential for the French courts eventually not to meet the request, thus leading to further uncertainty. He held therefore that the French Defendants should be subject to an order for disclosure in the same way as all the other defendants.

Appeal on 22 October 2013 did not lead to the findings being overturned. The French companies now face the proverbial rock and hard stone: comply with the English order but face the possibility, however remote, of prosecution under French law. Or be safe from prosecution under French law but face contempt in the UK courts.

Geert.

postscript: The Supreme Court refused permission to appeal in December 2013.

Posted on

Bird flu gives European Commission a late headache – The ECJ emphasises the discipline of the precautionary principle in Animal Trading Company

The General Court (the court in first instance) of the European Court of Justice has held against the Commission in Case T-333/10 Animal Trading Company. The English version of the judgment was not yet available at the time of writing.

The applicants seek compensation for the harm which they have suffered as a result of, first, the European Commission ban on the importation of birds caught in the wild, which entered into effect in October 2005 in the light of the avian flu phenomenon, second, the extensions of that ban, and, third, the restrictions which have been in force since 1 July 2007 on the importation of birds and which, de facto, continue the prohibition of the importation of birds caught in the wild.

Applicants’ arguments centered on firstly the executive power of the Commission  – with the General Court holding however that the Commission’s action was not ultra vires. The Court subsequently re-iterated its case-law that in looking after human and animal life and health, the European Institutions enjoy a large discretion in light of the precautionary principle. However it also held that in pursuing this wide remit, the Commission diligently has to take account of all available information, and has to follow due process in acquiring such information.

The Court held that the general import ban (and subsequent extensions) had cast the net too wide, given that no assessment was made of the risks presented by imports of birds other than in regions where avian flu had been present. The Commission had not diligently chased relevant information.

The Case is perhaps a relief from the findings in Gowan, however the judgment may be appealed to the ECJ on a point of law – which may not be that obvious for the European Commission to find.

Geert.

%d bloggers like this: