Servier Laboratories. The UK Supreme Court on the narrow window for res judicata authority of CJEU decisions.

Rather like I note in my report on Highbury Poultry Farm,  Secretary of State for Health & Ors v Servier Laboratories Ltd & Ors [2020] UKSC is another example of why the UK Supreme Court and counsel to it will be missed post Brexit.

The case in essence queries whether a CJEU annulment (in General Court: Case T-691/14, currently subject to appeal with the CJEU) of a finding by the European Commission that companies breached Article 101 and 102 TFEU’s ban on anti-competitive practices, is binding in national proceedings that determine issues of causation, remoteness and mitigation of loss. The answer, in short: no, it does not.

The case essentially revolves around the difficulty of applying common law concepts of authority and precedent to the CJEU’s more civil law approach to court decisions. For those with an interest in comparative litigation therefore, it is a case of note.

The essence in the national proceedings is whether Claimants [who argue that Servier’s breaches of EU and UK competition law led to a delay in generic Perindopril entering the UK market, resulting in higher prices of Perindopril and financial loss to the NHS) failed to mitigate the loss they claim to have suffered as a result of Servier’s (the manufacturer of the drug) infringement of the competition rules. The Court of Appeal’s judgment is best read for the facts.

In T-691/14 Servier SAS v European Commission, the General Court of the EU had annulled only part of the European Commission’s decision by which it was found that the Appellants had infringed Article 102 TFEU. In the present proceedings, Servier seek to rely on a number of factual findings made by the
GCEU in the course of its judgment and argue that the English courts are bound by those findings. The High Court and the Court of Appeal have held that the propositions on which the Appellants seek to rely are not res judicata.

Core CJEU authority discussed is Joined Cases C-442/03P and C-471/03P P&O European Ferries (Vizcaya) SA and Diputación Foral de Vizcaya v Commission.

Lord Lloyd-Jones reaches the crux of his reasoning, on the basis of CJEU authority, at 39:

The principle of absolute res judicata gives dispositive effect to the judgment itself. It is the usual practice of EU courts to express the outcome of the action in a brief final paragraph of the judgment referred to as the operative part. While this will have binding effect, it will be necessary to look within the judgment beyond the operative part in order to ascertain its basis, referred to as the ratio decidendi. (EU law has no system of stare decisis or binding precedent comparable to that in common law jurisdictions and this EU concept of ratio decidendi is, once again, distinct from the concept bearing the same name in the common law.) It will be essential to look beyond the operative part in this way in order to identify the reason for the decision and in order that the institution whose act has been annulled should know what steps it must take to remedy the situation. In a case where the principle of absolute res judicata applies, it will extend to findings that are the necessary support for the operative part of the annulling judgment.

The GC’s findings were based on a limited ground only, relating to too narrow a market definition under A102 TFEU. As presently constituted, the claim in the national proceedings is a claim for breach of statutory duty founded on alleged infringements of article 101 TFEU. No question arises in the proceedings before the national court as to the relevant product market for the purposes of A102 or the applicability of A102.

The national proceedings therefore concern causation, remoteness and mitigation of loss in the arena of article 101 TFEU. The narrow res judicata window, it was held, clearly does not apply to them and that is acte clair which needs no referral to Luxembourg.

Geert.

 

 

Qingdao Huiquan: Anti-suit injunction against a non-party to exclusive choice of forum (particularly: arbitration).

Thank you 20 Essex Street for flagging (and analysing)  [2018] EWHC 3009 (Comm) Qingdao Huiquan, granting anti-suit against a foreign litigant who is not a party to an exclusive choice of forum agreement (in particular: arbitration agreed in a settlement agreement). The third party, SDHX, is engaging in proceedings in China, and is related to one of the parties to the settlement agreement.

SDHX appeal to privity of contract is tainted by its invoking elements of the settlement agreement in the Chinese proceedings. Under relevant authority, this was ground for Bryan J to issue aint-suit against it.

A classic cake and eating it scenario, one could say: at 36: ‘I have had particular regard to the fact that it is clear from the Settlement Agreement that SDHX is indeed seeking to rely upon the terms of the Settlement Agreement in advancing its claims in the Chinese proceedings and that, in doing so, therefore, it has to take the burden of the arbitration clause, if an arbitration clause be a burden,..as well as the benefits that it seeks to derive from that agreement.’ (Update 19 April 2019 a principle known as equitable estoppel which was recently also applid by the South Carolina Supreme Court in Wilson ea v Willis ea 2019 WL 1549924 on wich more here).

eEvidently Brussels I Recast is not engaged.

Geert.

European private international law, second ed. 2016, Chapter 2, Heading 2.2.2.10.

Looking for PhD topic in civil procedure? How about procedural estoppel.

And I would be very happy to supervise. Thank you Nicolas Contis for flagging  Stockholm National Museum v X at the French Supreme Court /Cour de Cassation. Nul ne peut se contredire au détriment d’autrui: aka (here: procedural) estoppel. (The newly out Encyclopedia of Private international law, edited by Basedow, Ruhl, Ferrari and de Miguel Asensio, has a very good entry on it, discussing both public and private international law).

On the eve of a hearing on the ownership of an ancient artefact, a cup, defendants changed their stance and argued that the cup had belonged to their mother, for whom they were acting as representatives only. Previously, they had always presented themselves as owners. They suggested therefore that the suit was misdirected, hoping to sink it. The Court of Appeal dismissed the defendants’ motion on account of procedural estoppel. The Supreme Court disagreed: its stance means, as Nicolas summarises, that ‘to face the procedural penalty of dismissal, not only must the change of stance happen throughout the judicial proceedings (ie, notably, that a contradiction including a repeated allegation made before the launching of a suit could not pass the estoppel test), but the party at fault must also have changed its ‘pretentions’ – that is, its legal claims (meaning that changing the factual allegations presented to the courts could not pass the test either)’.

I do not see entirely clear in French civil procedure law but as I saw the case reported, the thought struck me: this would be a good topic for a PhD: a comparative study in procedural estoppel, specifically in a private international law context (especially if one were also to throw a comparison with arbitration in the mix).

Happy to discuss. Geert.

 

Pearl v Kurdistan. The DIFC on waivers of sovereign immunity.

Update 17 November 2017 For discussions in Dutch case-law (including re contractual waiver) with respect to SHAPE, see here.

Thank you Peter Smith over at Tamimi for flagging [2017] DIFC ARB 003 Pearl v Kurdistan. Peter summarises as follows:

‘In 2007, Crescent Petroleum, the oldest privately-owned oil and gas company in the Middle East, agreed with Dana Gas, one the leading publicly-listed natural gas companies in the region, to create a joint venture called Pearl Petroleum (together, “the Consortium”). The Consortium entered into an agreement with the Kurdistan Regional Government (“KRG”) for the development of the Khor Mor and Chemchemal petrochemical fields in the Kurdistan region of Iraq. The KRG were and remain engaged in a political dispute with the Federal Government of Iraq, meaning that the Consortium were unable to export gas produced by the developed fields. As a result, the KRG became liable under its contract with the Consortium to pay a minimum guaranteed price, but it failed to make the required payments in full.’

Arbitration in London under LCIA rules ensued. The contract between the Consortium and the KRG was governed by English law and provided explicitly that “the KRG waives on its own behalf and that of [The Kurdistan Region of Iraq] any claim to immunity for itself and its assets”.

Cooke J held that whilst the UAE’s recognition of other states was a matter of foreign policy which the DIFC Courts could not rule on, construing the KRG’s waiver of immunity was a question of law and not public policy. In agreeing to arbitrate, a party agrees that the arbitration shall be effective in determining the rights of the parties (at 26). The waiver of any claim to immunity for itself and its assets must mean waiver of immunity from execution (at 28): any argument on that is blocked by issue estoppel (at 36).

Sovereign immunity therefore was not a trump which could be played at the time of enforcement: whatever immunity there might or might not have been had been contractually signed away.

An interesting and well argued judgment.

Geert.