Tag: follow-on

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Stichting FX Claims v Natwest Markets. Amsterdam court rejects anchor, locus delicti commissi and forum necessitatis jurisdiction ia viz UK defendants in FOREX Cartel damages claim.

In FX Claims v Natwest Markets ECLI:NL:RBAMS:2023:1789, the first instance court at Amsterdam has rejected jurisdiction against the non-Dutch incorporated defendants (from the UK, the US, and Switserland) in a follow-on cartel damages case triggered by the European Commission’s decisions re manipulation of Forex Trading (known as Three Way Banana Split, Essex Express, and Sterling Lads, after the chatrooms in which the rigging was organised).

Stichting FX Claims was established by the US law firm that acts as third party litigation funder.

[6.3] the jurisdictional analysis takes place under Brussels IA for the Dutch-incorporated anchor defendant, Lugano II (referred to by the court as EVEXII) for the Swiss-incorporated defendant, and residual Dutch rules for all the others. However other than for the anchor defendant, the test is always the same (Dutch residual PIL instructs (see the Dutch Supreme Court in ‘Moldavia’) the courts to assess the claims using EU rules and CJEU authority): whether the claims against all defendants are so closely connected so that the sound administration of justice suggests it is expedient to hear them together, unless the claim is solely brought for the purpose of taking the defendant concerned away from their natural, domicile jurisdiction. Claimant resorts ia to the economic unit theory from EU competition law (see eg CJEU ENI) to support its anchoring unto a Dutch corporate vehicle of Natwest.

However [6.19] the Dutch Natwest SPV at the time of the infringements was not a direct daughter of the Natwest vehicle to whom the EC Decisions were addressed, and the claimant’s attention to the anchor defendant’s activities in their claim, is far underdeveloped [6.20]. With both the legal and the factual circumstances of anchor defndant being so radically different to those of the other defendants, the court finds [6.23] that the claims against it or not ‘closely related’ let alone so closely related so as to trigger expediency of joinder.

[6.31] Claimant’s argument that the cartelists’ activities concerned the whole of the EEA, including The Netherlands, is found not to suffice to identify Handlungsort (locus delicti commissi) in The Netherlands, neither [6.36] to locate locus damni Erfolgort in The Netherlands (here the court referred to CJEU CDC, flyLAL, and Volvo Trucks: damage needs to be shown for each individual claimant) other than for 3 of the parties represented in the claim, who have their corporate domicile in The Netherlands.

[6.37] a call upon the effet utile of the Damages Directive 2014/104 is rejected for that Directive is held not to include jurisdictional rules.

Finally the Stichting [6.43] attempts to establish jurisdiction under the Dutch forum necessitatis rule, referring to the practical challenges in suing outside the EU, the impossibility for non-EU, including UK courts to refer if need be to the CJEU (compare, in subsidiary fashion, Butcher J in Mercedez-Benz), the high costs involved in claiming in the UK, and, again, the effet utile of the Damages Directive. None of these impress the court which, referring to the need to apply forum necessitatis strictly, referring to there not being a serious suggestion that no fair trial will be guaranteed in the UK, and to the absence in EU statutory law or CJEU authority of a rule that EU competition law claims ought to always be judged by a court in the EU.

The judgment illustrates that much as the anchor defendant mechanism offers interesting opportunities, it cannot be used opportunistically.

Geert.

EU Private International Law, 3rd ed. 2021, Heading 2.2.13.1.

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Mercedez-Benz v Continental Teves. Post Brexit, follow-on cartel damages claims may well (and do) crash on forum non conveniens grounds.

In Mercedes-Benz Group AG & Anor v Continental Teves UK Ltd & Ors [2023] EWHC 1143 (Comm)  Butcher J set aside permission for service out of the jurisdiction (against EU-incorporated defendants) in a follow-on damages claim following the European Commission’s Hydraulic Braking system cartel findings.

The UK parties are the anchor defendants. Pre-Brexit, the case against the non-UK defendants would have been brought under A8(1) Brussels Ia and the abuse threshold per CJEU CDC would have undoubtedly not been met.

The attractive UK discovery rules were mentioned by claimants as an important reason to anchor the case in the UK. On that point [25] the judge held per Spiliada‘s instruction [as a general rule, the court will not be deterred from granting a stay or refusing permission to serve out simply because the claimant will be deprived of a ‘legitimate personal or juridical advantage’, such as damages on a higher scale or a more generous disclosure regime, unless it is shown through cogent evidence that there is a risk that substantial justice will not be done in the natural forum] that substantial justice could not be done in Germany, if it was an available forum.

Butcher J overall [26] held that Germany is an available forum (in the case of the German defendants by reason of both A4 and A7(2) [locus delicti commissi] Brussels Ia, and in the case of the UK defendant by reason of the German forum connexitatis rules), with which the dispute has its closest and most real connexion, and which may be described as the natural forum for the present dispute.

The nature of the infringing conduct, causation and damage all overwhelmingly took place in Germany, witnesses largely have German as their mother tongue. [51] counsel for claimants makes an interesting point that matters of convenience ought not to weigh in favour of cartelists (essentially a nemo auditur application), however, the judge holds that ‘in relation to the matters which will be in issue, there has been no finding that Mercedes are right, or the Defendants wrong.

Further and importantly [albeit only as an additional argument: [57]: ‘I should state, however, that I do not regard this factor as decisive. My conclusion on the natural forum would have been the same without it’], [56] the judge with respect to applicable law points to the disadvantage of England and Wales given the impossibility to refer to the CJEU

While the courts of England and Wales are obviously very used to applying EU law, and until recently did so as being directly applicable, it is the case that since the UK’s withdrawal from the EU, UK courts cannot make preliminary references to the CJEU in respect of questions of the interpretation of EU law. While the Claimants say that a reference to the CJEU in respect of the interpretation of a Settlement Decision would be unusual, it cannot be said to be unprecedented.

Conclusion [58]

I am of the clear view that the forum with which the dispute has its closest and most real connexion is Germany, which is the natural forum for the dispute. The case has, in reality, very limited connexions with England and Wales, and it is not one, unlike very many which come before this court, where the parties have consensually chosen England and Wales as the forum for their disputes. The case has, by contrast, strong (and certainly much stronger) connexions with Germany.

Geert.

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Stichting Claim Gran Petro. Dutch court holds that use of the anchor mechanism merely to avoid tardy Brasilian proceedings in follow-on damages claim, constitutes abuse of process.

Regular readers will be aware that disciplining the use of the anchor defendant mechanism is not an easy task for a court to undertake (I have linked to one post yet the search tag ‘anchor’ will take you to plenty). The CJEU takes a restrictive view. Although in the case at issue Article 8(1) Brussels Ia does not formally apply (the mechanism does not apply to defendants domiciled outside the EU), instruction in Dutch residual rules is that they be applied as A8(1) would.

In Stichting Claim Gran Petro v Shell Netherlands, Shell Brasil and Raizen ECLI:NL:RBDHA:2023:7099, the Hague court of first instance did though refuse jurisdiction against the one Brazilian defendant (Raisen), anchored unto two Dutch Shell entities (Shell now having moved domicile exclusively to England was held [5.2] not to have relevance on account of the perpetuatio fori principle), citing abuse of the anchor defendant mechanism.

Shell have a majority share in Raisen. The claimants in essence called upon the corporate structure of Shell and, pro inspiratio, hoped to convince the court that the presumption of involvement of mother corporations in their daughter’s anti-competitive shenanigans might be enough to justify the relatedness of the claims. Such assumption exists in EU competition law (see eg CJEU ENI) however the court finds that claimants have not been able to prove a Brazilian equivalent.

The court refers ia to CJEU CDC v Azo Nobel et al to emphasize the condition that the anchor mechanism must not be intended merely to remove the defendant at issue from its natural domicile forum. [6.7] the court reports that the claimants acknowledge that Dutch jurisdiction is sought for reasons of  general tardiness of Brazilian proceedings. There is no suggestion that Raizen will not be willing to meet any future damages. Seeing as no presumption under Brazilian law of mother corporation involvement exists, and seeing as no proof of factual involvement of the Shell mother entities was furnished, [6.16] the court concludes that the anchor mechanism at issue is an abusive application and must not lead to jurisdiction.

Geert.

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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.

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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.

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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.

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Tibor v DAF: CJEU confirms markets affected by cartel as locus damni for end-users.

Update 1 April 2020 for the excellent CDC review of the judgment see here.

In C-451/18 Tibor v DAF Trucks the CJEU has confirmed its CDC case-law on locus damni for end-users affected by a cartel. Truck distribution arrangements were such that Tibor (of Hungary) could not buy directly from DAF Trucks NV (of The Netherlands), one of the truck manufacturers held by the EC to have infringed Article 101 TFEU. Rather, it had to go via local Hungarian dealers (and leasing companies).

Tibor-Trans claims that the Hungarian courts derive their international jurisdiction from Article 7(2) Brussels Ia per CDC according to which, in the case of an action for damages brought against defendants domiciled in various Member States as a result of a single and continuous infringement of Article 101 TFEU and of Article 53 of the EEA Agreement, which has been established by the Commission, in which the defendants participated in several Member States, at different times and in different places, each alleged victim can choose to bring an action before the courts of the place where its own registered office is located.

DAF Trucks submits, first, that the collusive meetings (hence the locus delicti commissi) took place in Germany, which should entail the jurisdiction of the German courts and, second, that it never entered into a direct contractual relationship with Tibor-Trans, with the result that it could not reasonably expect to be sued in the Hungarian courts.

The Court dismisses the latter argument: those infringing competition law must expect to be sued in markets affected by anti-competitive behaviour (at 34, with reference to fly-LAL). That Tibor did not have a contractual relation with DAF Trucks is irrelevant as the increase in price clearly has been passed on by the frontline victims of the cartel: the dealers (at 31).

The case does leave open the unresolved issue of the CJEU’s identification of registered office as locus damni (see my comments in my review of CDC). Given that Tibor Trans would seem to have purchased all its trucks in Hungary, neither does not the judgment shed light on the distributive impact of locus damni or my suggestion [update 13 March 2020 for my paper on same see here] that for competition law, markets where the anti-competitive behaviour is rolled-out should qualify as locus delicti commissi (alongside the place of the meetings where infringement of competition law is decided).

Geert.

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

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Stand alone cartel damages suits: The High Court in Media Saturn Holding v Toshiba on anchoring jurisdiction.

In [2019] EWHC 1095 (Ch) Media Saturn Holding v Toshiba et al, Barling J is concerned with stand-alone damages suits following the European Commission decision in COMP/39437 – TV and Monitor Tubes. None of the Defendants was an addressee of the Decision (some of their parent companies were). The claims are, therefore, “standalone” rather than “follow-on” actions, and the Decision is not binding on the court so far as the claims against the Defendants are concerned, as it would have been had the Defendants been addressees. Nevertheless, Claimants place considerable reliance upon the evidential effect of the Decision.

Claims are strike out and summary judgment application, intertwined with challenges to jurisdiction. These essentially relate to there being no arguable claim against the “anchor” defendants, particularly Toshiba Information Systems UK ltd – TIS.

At 114: Claimants refute the suggestion that the claim has been brought against TIS on a speculative basis in the hope that something may turn up on disclosure and/or simply to provide an anchor defendant for jurisdictional purposes. They point to the Commission’s finding, at Recital 595, that the cartel was implemented in the EEA through sales of cartelised CPTs that had been integrated into the finished products.

The substantive law issue of implementation of the cartel therefore is brought in not just to argue (or refute) summary dismissal, but also to shore (or reject) the jurisdictional claim under Article 8(1) Brussels 1a.

Barling J establishes as common ground (at 90) that ‘as a matter of law an entity can infringe Article 101(1) TFEU and Article 53 EEA if it participates in relevant cartel activity, in the sense of being a party to an agreement or concerted practice which falls within that Article, or if it knowingly implements a cartel to which it may not have been a party in that sense. [counsel for defendants] submitted that there is no arguable case that TIS had the requisite knowledge. However, what is sufficient knowledge for this purpose is not common ground’.

At 300 ff the most recent CJEU authority is discussed: C-724/17 Vantaan kaupunki v Skanska of March 2019.

This leads to a relevant discussion on ‘implementation’ of the cartel, which mutatis mutandis is also relevant to Article 7(2) (locus delicti commissi). At 117-118:

‘TIS [similar arguments are discussed viz other defendants, GAVC] was involved in activities which were important to the operation of the cartel from the Toshiba perspective. These included the manufacture of CTVs using the cartelised product acquired from an associated company which itself was one of the established cartelists, and the onward sale of the transformed product. TIS also had direct commercial dealings with the Claimants relating to bonuses on sales of, inter alia, the transformed products. In my judgment there is an arguable case that those activities amounted to the actus reus of participation in and/or implementation of the cartel. The available material is sufficient to preclude the summary disposal of that issue.’ 

At 139 ff much CJEU and national authority is discussed, viz a variety of the defendants, on the issue of ‘implementation’ for summary dismissal on substantive grounds, a discussion which then at 259 ff is applied to the jurisdiction issue. Reference is made to Brownlie v Four Seasons, to C-103/05 Reisch Montage and of course to C-352/13 CDC. At 273 Barling J distinguishes excellently in my view between predictability as part of the DNA of CJEU Brussels Ia case-law on the one hand, and its treatment (and rejection) as a stand-alone criterion on the other hand:

‘[argument of counsel] is in danger of treating the statement of the CJEU in Reisch Montage as adding a free-standing and distinct criterion of foreseeability to the preconditions of application expressly set out in Article 8(1). If that criterion were to be applied generally, and without reference to those express pre-conditions, there would be a risk of the EU law principle of legal certainty being compromised, instead of respected as Reisch Montage expressly requires. That case states that the special rule in Article 8(1) must be interpreted so as to ensure legal certainty. The special rule’s express precondition is that “the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments…” Therefore, by virtue of Reisch Montage, it is those words that must be interpreted strictly so as to respect legal certainty and thereby ensure foreseeability. In other words, foreseeability is inextricably linked to the closeness of the connection between the two sets of claims, and the criterion will be satisfied if a sufficiently close connection of the kind described in Article 8(1) exists.’

And at 276

‘It is correct that the anchor defendants were not addressees of the Decision and that there were no UK addressees. However, there is no reason why this should be significant. Article 8(1) is capable of applying in a competition claim regardless of whether a Commission infringement decision exists. What matters is that there is a claim that the anchor defendant is guilty of an infringement, and that the case against the non-anchor defendant is sufficiently “closely connected” to that claim within the meaning and for the purposes of Article 8(1). The fact that neither entity is an addressee of a Commission decision (if there is one) and that neither is the subject of any other regulatory process or civil claim relating to the cartel, is, if not immaterial, then of marginal relevance.’

For all anchor defendants the conclusion is that there is an arguable claim that they participated in and/or knowingly implemented the cartel. That strongly militates against the sole purpose of the (two sets of) proceedings being to oust the jurisdiction of the other EU courts. No abuse has occurred.

At 316 a final postscript is added suggesting summarily that the Supreme Court’s Vedanta might have an impact on the ‘abuse’ issue. The judgment concerned inter alia an alleged abuse of EU law in the context of the predecessor provision to Article 8(1). The Court gave consideration to the test for the “sole purpose” issue. At 317: Barling J: ‘I can see no basis on which my conclusions in that regard are affected by this decision.’

Geert.

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

 

 

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