Posts Tagged ECJ

Anchor defendants in follow-up competition law cases. The High Court in Vattenfall et al v Prysmian et al.

Thank you Brick Court and Stewarts, among other, for flagging Vattenfall et al v Prysmian et al in which the High Court dismissed a call for summary judgment on the grounds of lack of jurisdiction.

A classic case of follow-up damages litigation in competition law, here in the high voltage power cables cartel, fines for which were confirmed by the CJEU early July. Core to the case is the application of Article 8(1)’s anchor defendants mechanism. Only two of the defendants are UK incorporated companies – UK subsidiaries of companies that have been found by the European Commission to have infringed EU competition law.

Authority cited includes of course CDC, Roche Nederland and Painer, and Cooper Tyre (sale of the cartelised products can amount to implementation of the cartel). Vattenfall confirms that for the English courts, ‘knowingly implementing’ the cartel has a low threshold.

At 89 ff the Court refers to the pending case of (what I now know to be) C-724/17 Skanska Industrial Solutions e.a.: Finnish Courts are considering the application for cartel damages against parent companies on acquiring cartelist subsidiaries, had dissolved them. Relevance for Vattenfall lies with the issue of knowledge: the Finnish courts wonder what Article 101 TFEU has to say on the degree of knowledge of the cartelist activities, relevant for the liability of the parent company. An application of fraus, or abuse in other words. Elleray DJ however, did not consider the outcome of that reference to be relevant for the case at hand, in its current stage of procedure.

Geert.

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

 

 

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Smith v Meade. Horizontal direct effect under the spotlight yet again.

Motor insurance cases in Ireland keep on giving the CJEU opportunity to refine and re-emphasise the lack of horizontal direct effect of Directives. This time it is C-122/17 Smith v Meade.

I apologise to the readers if this sounds gobbledygook: [EU law tutorial] in short: one of the issues of the penetration of EU law into national legal orders, is whether individuals can, against other individuals (hence ‘horizontal’ relations), call upon rights given to them by EU ‘secondary’ law (as opposed to primary law, which mainly consists of the Treaties), particularly in the case of Directives, which unlike Regulations require Member States’ implementing measures.

The CJEU’s long-standing case-law answers this question in the negative (Marshall): mostly because it argues that any other conclusion would cancel out the Treaty-sanctioned difference between Regulations and Directives. The Court does do it utmost to assist individuals seeking to rely on EU law against national law: Directives can be called upon against the Member State and ’emanations from the state’ and the latter notion is stretched as much as possible (that was also the issue in Farrell); national law needs to as much as possible be interpreted to reflect the intention of the EU Directive, even if this requires setting aside long-standing interpretation of national law (Marleasing) – but this does not extend to interpretation contra legem (ex multi: Dominguez);  and if all else fails, the State owes its citisens compensation (Frankovich).  [EU law tutorial ends].

In the case at hand, the CJEU recalls all of the above succinctly, and confirms the absence of an overall possibility of relying on a directive in the sphere of relationships between private persons. EU law does not oblige a national court (question to EU institutional law experts: may a Member State ‘gold plate’ and do so anyway, even if this route might be unavailable to individuals in other Member States) to set aside in a horizontal relationship, national provisions that are incompatible with the Directive, and the contractual provisions between private individuals as a result of that national law.

The Irish Court’s referral to Luxembourg may seem odd given the established principles. Yet the Court of Justice does stretch its own case-law on these issues, ever so slowly while sticking to the Marshall principle. As a result national courts feel encouraged to ask the Court just where the boundaries lie.

Geert.

The answer of the Court in full:

EU law, in particular Article 288 TFEU, must be interpreted as meaning that a national court, hearing a dispute between private persons, which finds that it is unable to interpret the provisions of its national law that are contrary to a provision of a directive that satisfies all the conditions required for it to produce direct effect in a manner that is compatible with that provision, is not obliged, solely on the basis of EU law, to disapply those provisions of national law and a clause to be found, as a consequence of those provisions of national law, in an insurance contract.

In a situation such as that at issue in the main proceedings, a party adversely affected by the incompatibility of national law with EU law or a person subrogated to the rights of that party could however rely on the case-law arising from the judgment of 19 November 1991, Francovich and Others (C‑6/90 and C‑9/90, EU:C:1991:428), in order to obtain from the Member State, if justified, compensation for any loss sustained.

 

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Docherty: Asbestos litigation and the application ratione temporis of Rome II.

Thank you Brodies for flagging [2018] CSOH 25 George Docherty et al a while ago – I was not sure whether I might use the case for exam purposes. C-350/14 Lazar was among the precedents cited by  Lord Tyre to decide the application ratione temporis of the Rome II Regulation.

Article 31 Rome II states that the Regulation applies to “events giving rise to damage which occur after its entry into force”. The date of entry into force, according to article 32, was 11 January 2009. The reference in article 31 to “events giving rise to damage” is not necessarily easy to determine. Lord Tyre at 31 clarifies things by suggesting the Article is ‘clearly linked to the distinction drawn in article 4(1) between three separate concepts, namely (i) the event giving rise to the damage; (ii) the damage; and (iii) the indirect consequences of the event. In the present case, the damage consisted of the deceased’s illness and death. The indirect consequences are the losses suffered by the deceased’s relatives. The event giving rise to all of this was exposure to asbestos’: this occurred before the entry into force of the Regulation.

Had it occurred after, the Court would have applied Rome II for the UK has opted to apply the Regulation’s Article 25(2) provision for Member States with internal conflicts of laws, to apply the Regulation to these conflicts: The Law Applicable to Non-Contractual Obligations (Scotland) Regulations 2008 (SI 2008/404) provide (reg 3) that the Regulation shall apply in the case of conflicts between the laws of different parts of the UK as it applies in the case of conflicts between the laws of other countries. SI 2008/2986 contains an equivalent provision for England, Wales and Northern Ireland.

Accordingly what the applicable law would be under the Regulation is not addressed, neither is the pursuers’ submission that any choice of English law by virtue of article 4(1) should be displaced by applying article 4(3) and holding that the delict is manifestly more closely connected with Scotland.

Residual conflict of laws applies and at 17 ff the judge applies pre-1995 common law, leading to the lex loci delicti. However these rules do not provide a clear identification of the lex loci delicti where the harmful event occurs in one jurisdiction (Scotland) but the harm, consisting of physical injury, occurs in another (England). Reviewing authority, Lord Tyre eventually holds (at 23) that the presence of asbestos dust in an employee’s lungs does not of itself constitute injury, and (subject to the Scottish statutory provisions regarding pleural plaques) no cause of action arising out of negligent exposure arises until it does. At 24:  since injury is an essential ingredient of an actionable wrong, and since injury obviously cannot take place until after the breach of duty has occurred, the place of the harmful event (or locus delicti) is where the injury takes place and not, if different, where the antecedent negligent act or omission occurred.

Conclusion: lex causae is English law. The case is a good illustration of the difficulties that remain in applying what seem prima facie fairly understandable concepts to the average lawyer.

Geert

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Banca Turco: Popplewell J explains that worlwide freezing orders, particularly ex parte, are not extended willy-nilly.

In [2018] EWHC 662 (Comm) Banca Turco Romana, Popplewell J explained his reasons for discontinuing ex parte freezing orders, with reference among others to C-391/95 Van Uden. At 22-23 he discusses the not entirely clear application of the jurisdictional rules of Brussels I, which indicated that that Regulation was engaged either via Article 2 (now 4: domicile in Romania) or 4 (now 6): residual Member State (here: Romanian) jurisdictional rules, which go on to be sheltered under the Brussels I Regulation.

At 20 he refers to the earlier case of ICICI Bank UK plc v Diminco NV [2014] EWHC 3124 (Comm) in which he summarised the English Courts’ requirements for the issuing of ex parte freezing orders where the defendant is neither resident within the jurisdiction nor someone over whom the court has or would assume in personam jurisdiction for some other reason:

‘the court will only grant a freezing order extending to foreign assets in exceptional circumstances. It is likely to be necessary for the applicant to establish at least three things:

(a)        that there is a real connecting link between the subject matter of the measure sought and the territorial jurisdiction of the English court in the sense referred to in Van Uden;

(b)        that the case is one where it is appropriate within the limits of comity for the English court to act as an international policeman in relation to assets abroad; and that will not be appropriate unless it is practical for an order to be made and unless the order can be enforced in practice if it is disobeyed; the court will not make an order even within the limits of comity if there is no effective sanction which it could apply if the order were disobeyed, as will often be the case if the defendant has no presence within the jurisdiction and is not subject to the in personam of the English court;

(c)        it is just and expedient to grant worldwide relief, taking into account the discretionary factors identified at paragraph 115 of the Motorola case. They are (i) whether the making of the order will interfere with the management of the case in the primary court, e.g. where the order is inconsistent with an order in the primary court or overlaps with it; (ii) whether it is the policy in the primary jurisdiction not itself to make to make worldwide freezing/disclosure orders; (iii) whether there is a danger that the orders made will give rise to disharmony or confusion and/or risk of conflicting, inconsistent or overlapping orders in other jurisdictions, in particular the courts of the state where the person enjoined resides or where the assets affected are located; (iv) whether at the time the order is sought there is likely to be a potential conflict as to jurisdiction rendering it inappropriate and inexpedient to make a worldwide order; and (v) whether in a case where jurisdiction is resisted and disobedience may be expected  the court will be making an order which it cannot enforce.”

In Banca Turco discontinuation was ultimately mostly based not on any slip-up of jurisdictional basis, but rather on the absence of full disclosure by the requesting party: at 45: ‘The importance of the duty of disclosure has often been emphasised.  It is the necessary corollary of the court being prepared to depart from the principle that it will hear both sides before reaching a decision, which is a basic principle of fairness.  Derogation from that basic principle is an exceptional course adopted in cases of extreme urgency or the need for secrecy.  If the court is to adopt that procedure where justice so requires, it must be able to rely on the party who appears alone to present the evidence and argument in a way which is not merely designed to promote its own interests, but in a fair and even-handed manner, drawing attention to evidence and arguments which it can reasonably anticipate the absent party would wish to make.  It is a duty owed to the court which exists in order to ensure the integrity of the court’s process.  The sanction available to the court to preserve that integrity is not only to deprive the applicant of any advantage gained by the order, but also to refuse to renew it.’

Geert.

 

 

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Ceci n’est pas un corbillard. (This is not a hearse).

Readers can file this one under ‘exotic’. The title of this piece does not quite give it away yet: this post is a serious post on customs classification.

My wife and I have a more than average size family, ditto therefore also the family car. Our previous version was black. We had parked it a few summers ago on the village square close to the home of one of my sisters in law, a sleepy French hamlet. A local lady came up to me and asked respectfully who had passed away… She mistook our car for a hearse, leading to my brother-in-law suggesting I should put some stickers up saying ‘ceci n’est pas un corbillard’.

Now, to the serious issue: in Case C-445/17 Pilato, the Court of Justice was asked (the case was triggered by a BTI: Binding Tariff Information) how to classify a hearse under the EU’s combined nomenclature: heading 8704 (motor vehicles for the transport of goods); 8705 (special purpose motor vehicles, other than those principally designed for the transport of persons or goods (for example, breakdown lorries, crane lorries, fire fighting vehicles, concrete-mixer lorries, road sweeper lorries, spraying lorries, mobile workshops, mobile radiological units); or 8703 (Motor cars and other motor vehicles principally designed for the transport of persons (other than those of heading 8702), including station wagons and racing cars).

The Italian customs authorities have classified under 8703 – the importer is appealing, I am assuming given the higher tariff attracted by that heading. Arguments are very serious and technical, as one would expect for customs classification: details on separation racks, etc.

The Court held Wednesday last: at 25: the intended use of a product may constitute an objective criterion for classification; at 30: hearses are particularly built and equipped for the transport of coffins, which contain corpses. A human body, even lifeless, cannot be treated in the same way as goods which may be the subject, as such, of commercial transactions. Therefore, the principal use of hearses is for the transport of persons. 8703 it is (the Court gives some more reasons).

Exactly the kind of case which makes trade classes a little lighter a the right time (the best case for that, ever, involved my wife having to classify a shipment of toy replica. Details on that case I fear are strictly for students of my WTO class).

Geert.

 

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Valag: Clarifying vis attractiva concursus.

This one long overdue – I am adding it to the blog for completeness’ sake. C‑649/16 Valach was held end of December 2017. The CJEU relies heavily on Tunkers and recital 6 of the (old) Insolvency Regulation: the regulation should be confined to provisions governing jurisdiction for opening insolvency proceedings and judgments which are ‘delivered directly on the basis of the insolvency proceedings and are closely connected with such proceedings’: the latter two criteria guide the CJEU.

In the case at issue, the action for liability at issue in the main proceedings is the direct and inseparable consequence of the performance by the committee of creditors, a statutory body established by Slovak law when insolvency proceedings are opened, of the task specifically assigned to them by the provisions of national law governing such procedures. Consequently, it is clear that the obligations which form the basis of bringing an action for liability in tort against a committee of creditors, such as that at issue in the main proceedings, originate in rules that are specific to insolvency proceedings (at 35-36).

As for the second criterion, it is the closeness of the link between a court action and the insolvency proceedings that is decisive for the purposes of deciding whether the Brussels I Recast’s insolvency exception is triggered. That is the case here: at 38: in order to ascertain whether the liability of the members of the committee of creditors may be engaged because of the rejection of the restructuring plan, it will be necessary to analyse in particular the extent of that committee’s obligations in the insolvency proceedings and the compatibility of the rejection with those obligations. Such an analysis clearly presents a direct and close link with the insolvency proceedings, and is therefore closely connected with the course of those proceedings.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 5 Heading 5.4.1. Chapter 2 Heading 2.2.2.10.1

 

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Fly lal: Locus delicti commissi for anticompetitive agreements still has not properly landed.

Time to tackle the judgments left over from the exam queue. I reviewed Bobek AG’s Opinion in C-27/17 flyLAL here. The CJEU held early July.

Pro memoria: the AG’s suggested for locus damni not place of financial loss, rather the place within the markets affected by the competition law infringement where the claimant alleges loss of sales: damage located in a Mozaik fashion in other words; for locus delicti commissi with full jurisdiction, the AG distinguishes between Article 101 TFEU (place of the conclusion of the agreement) and 102 TFEU (place where the predatory prices were offered and applied); finally with respect to (now) Article 7(5), the activities of a branch: offering the fixed prices or otherwise having been instrumental in concluding contracts for services at those prices suffices for that branch to have participated in the tort.

The Court itself,

  • for locus damni reminds us of the findings in Marinari (which tempered the implications of Bier), implying that one needs to decide whether loss of income of the kind alleged by flyLAL may be regarded as ‘initial damage’, or whether it constitutes solely consequential financial damage which cannot, in itself, lead to a forum under Article 7(2). The Court, like the AG, opts for Mozaik, referring inter alia to its judgment in Concurrences: each place where the loss of income consisting in loss of sales occurred, that is to say, the place of the market which is affected by that conduct and on which the victim claims to have suffered those losses, opens up partial jurisdiction. As I noted in my review of the Opinion, this interpretation aids the tortfeasor: locus damni leading to shattered jurisdiction facilitates anti-competitive behaviour.
  • for locus delicti commissi, under Article 101 TFEU (cartels), with reference to CDC, the CJEU opts for courts for the place in which the agreement was definitively concluded: this truly is extraordinary for it allows for forum shopping by the cartel participants. For Article 102 TFEU (abuse of dominant position)
    • Prima facie at 52 there is one consolation for those suffering anti-competitive behaviour: the Court holds that the event giving rise to the damage in the case of abuse of a dominant position is not based on an agreement, but rather on the implementation of that abuse, that is to say, the acts performed by the dominant undertaking to put the abuse into practice, in particular by offering and applying predatory pricing in the market concerned. That would seem to suggest full jurisdiction for each of those places where the pricing is offered and applied. However in that para 52 the Court does not verbatim links this to jurisdiction: this it does do in
    • Para 53: ‘If it were to be established that the events giving rise to the main proceedings were part of a common strategy intended to oust flyLAL from the market of flights to and from Vilnius Airport and that those events all contributed to giving rise to the damage alleged, it would be for the referring court to identify the event of most importance in implementing such a strategy out of the chain of events at issue in the main proceedings.Courts holding on jurisdiction must not delve too deep into the substance of the case but still have to employ, without looking too deeply at the merits of the case, the lex causae for the anti-competitive behaviour (per Rome II) to identify that event of most importance. In para 54 too the Court emphasises the need to limit the amount of potential jurisdictions (reference here is also made to Universal Music). I cannot be sure: does the combination of paras 52 and 53 suggest that the Court does not accept jurisdiction for all places where the pricing is offered and applied?
  • Finally with respect to Article 7(5), the CJEU at 64 holds that the national courts must in particular review whether the activities carried out by the branch included actual acts of offering and applying the predatory pricing alleged and whether such participation in the alleged abuse of a dominant position was sufficiently significant to be regarded as a close link with the dispute in the main proceedings. Separate accounts are not required to conduct that exercise (at 65).

Essentially therefore the Court firmly pulls the Brussels I Recast’s ‘predictability’ card. This is in the interest of companies behaving anti-competitively. I do not read in this judgment a definitive answer however for as I suggested, the combination of paras 52 ff is simply not clear.

Geert.

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

 

 

 

 

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