Posts Tagged Locus delicti commissi

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

 

 

 

 

, , , , , , , , , , , , , , , , ,

Leave a comment

Unilever. Court of Appeal summarily dismisses CSR jurisdiction against mother company, confirming High Court’s approach. Lex causae for proximity again left undiscussed.

The Court of Appeal in [2018] EWCA Civ 1532 has confirmed the High Court’s approach in [2017] EWHC 371 (QB) AAA et al v Unilever and Unilever Tea Kenya ltd, holding that there is no good arguable case (the civil law notion of fumus boni iuris comes closes, as Bobek AG notes in Feniks) against Unilever, which could then be used to anchor the case in the English jurisdiction.

Pro memoria: jurisdiction against Unilever is clear, following Article 4 Brussels I Recast. That Regulation’s anchor mechanism however is not engaged for Article 7(1) does not apply against non-EU based defendants. It is residual English private international law that governs this issue.

Appellants appeal in relation to the High Court’s ruling that neither Unilever nor UTKL (the Kenyan subsidiary) owed the appellants a duty of care. Unilever has put in a respondent’s notice to argue that the judge should have found that there was no duty of care owed by Unilever on the additional ground that, contrary to her view, there was no proximity between Unilever and the appellants in respect of the damage suffered by them, according to the guidance in Chandler v Cape Plc. Unilever and UTKL also sought to challenge that part of the judgment in which the judge held that, if viable claims in tort existed against Unilever (as anchor defendant) and UTKL, England is the appropriate place for trial of those claims. Unilever also cross-appealed in relation to a previous case management decision by the judge, by which she declined an application by Unilever that the claim against it should be stayed on case management grounds, until after a trial had taken place in Kenya of the appellants claims against UTKL.

The legal analysis by Sales LJ takes a mere five paragraphs (para 35 onwards). Most of the judgment is taken up by an (equally succinct) overview of risk management policies within the group.

At 35 Sales LJ notes ‘Having set out the relevant factual background in relation to the proximity issue (i.e. whether the appellants have any properly arguable case against Unilever in the light of Chandler v Cape Plc and related authorities), the legal analysis can proceed much more shortly. It is common ground that principles of English law govern this part of the case.

– the ‘common ground’ presumably being lex loci incorporationis.

This is an interesting part of the judgment for I find it by no means certain that English law should govern this part of the case. In one of my chapters for professor Vinuales’ en Dr Lees’ forthcoming OUP book on comparative environmental law, I expand on that point.

The long and the short of the argument is that Unilever did not intervene in the affairs of its subsidiary in a more intensive way than a third party would have done. Reference at 37 is made to the contrasting examples given by Sir Geoffrey Vos in Okpabi, ‘One can imagine … circumstances where the necessary proximity could be established, even absent the kind of specific facts that existed in Vedanta … Such a case might include the situation, for example, where a parent required its subsidiaries or franchisees to manufacture or fabricate a product in a particular way, and actively enforced that requirement, which turned out to be harmful to health. One might suggest a food product that injured many, but was created according to a prescriptive recipe provided by the parent. …’

and, at 38, to the raison d’être of mother /daughter structures,

“… it would be surprising if a parent company were to go to the trouble of establishing a network of overseas subsidiaries with their own management structures it if intended itself to assume responsibility for the operations of each of those subsidiaries. The corporate structure itself tends to militate against the requisite proximity …

– subject evidently to proof of the opposite in the facts at issue (a test seemingly not met here).

Geert.

(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 8, Heading 8.3.

, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Leave a comment

Jurisdiction for libel over the internet. Haaretz v Goldhar at the Canadian SC.

When I reported the first salvos in Goldhar v Haaretz I flagged that the follow-up to the case would provide for good comparative conflicts materials. I have summarised the facts in that original article. The Ontario Court of Appeal in majority dismissed Haaretz’ appeal in 2016, 2016 ONCA 515. In Haaretz.com v. Goldhar, 2018 SCC 28, the Canadian Supreme Court has now held in majority for a stay on forum non conveniens grounds. Both the lead opinion, the supporting opinions and the dissents include interesting arguments on forum non conveniens. Many of these, as Stephen Pitel notes, include analysis of the relevance of obstacles in enforcement proceedings.

If ever I were to get round to compiling that published reader on comparative conflicts, this case would certainly feature.

Have a good start to the working-week (lest it started yesterday in which case: bonne continuation).

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.14.5.

, , , , , , , , , , , , , , , , , , ,

Leave a comment

JSC BTA Bank v Khrapunov. UK Supreme Court confirms the conspiracy itself, not its implementation, as locus delicti commissi under Lugano. Does not entertain locus damni.

The UK Supreme Court held in [2018] UKSC 19 JSC BTA Bank v Khrapunov late March. Defendant is based in Switzerland, hence triggering the Lugano Convention. Addleshaw Goddard have the history of the case and I am happy to refer for those facts. Suffice to say that at the core is a claim in tort of conspiracy, alleging that Mr Khrapunov and his father in-law Mr Ablyazov conspired to injure the Bank by preventing it from enforcing its judgments against Mr Ablyazov’s assets.

First let’s have a look at was not discussed at the SC: domicile and locus damni. As for the former, domicile once held but now fleed from was correctly rejected by Teare J as establishing domicile under Lugano (or indeed Brussels). The argument that jurisdiction should, nevertheless, be taken still to be domiciled in England because defendant was in breach of an obligation under the worldwide freezing order prohibiting him from leaving the jurisdiction, was likewise rejected. An interesting proposition though.

Now, for the location of the locus damni. At 29 the SC refers to the Bank’s argument at the High Court and Court of Appeal stage. The Bank’s argument was that the damage occurred in England. This was based on the contention that its worldwide freezing order and its judgments against Mr Ablyazov were located here and had been reduced in value by the alleged conduct in relation to assets in other jurisdictions. The High Court and Court of Appeal considered that the element of damage proximate to the harmful event was the Bank’s inability or reduced ability to execute against those assets in the places where they were located.  Another fine example of the difficult implications of Bier and not one which the CJEU has hitherto had the occasion to review. (But current case will not reach it).

As for locus delicti commissi, the Bank submit that the event giving rise to the damage was the conspiracy itself, which was hatched in England. At the High Court Teare J rejected this submission, because he considered that the cause of the damage was not the conspiracy but its implementation: a suggestion I like in the context of competition law, as readers of the blog will be aware. Teare J was not followed by the Court of Appeal though, which identified the place where the conspiratorial agreement was made as the place of the event which gives rise to and is at the origin of the damage.

The SC refers to CJEU authority to conclude with CDC and at 41 it reiterates the CA’s core reasoning: ‘As Sales LJ explained (at para 76), in entering into the agreement Mr Khrapunov would have encouraged and procured the commission of unlawful acts by agreeing to help Mr Ablyazov to carry the scheme into effect. Thereafter, Mr Khrapunov’s alleged dealing with assets the subject of the freezing and receivership orders would have been undertaken pursuant to and in implementation of that agreement, whether or not he was acting on instructions from Mr Ablyazov.’

The Supreme Court concludes that the making of the agreement in England should be regarded as the harmful event which set the tort in motion. 

The judgment keeps open many issues, however. For starters, to have a sole birthplace of conspiratorial agreement is handy in the case at issue however it is likely not often to be so clearly the case (as Dan and Tom point out, particularly not in a digital context). Moreover, for those instances where Mr Khrapunov were not to be acting on instructions from Mr Ablyazov, questions of ultra vires so to speak and hence of a separate tort would arise.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.11.2

, , , , , , , , , , , , , , , , ,

Leave a comment

Fly lal: Locus delicti commissi for anticompetitive agreements. And application of Article 7(5)’s extension to branch domicile.

Bobek AG opined about a little while ago in C-27/17 flyLAL. (Readers may also find my recent posting on NBK useful, re Article 7(5)).

AB flyLAL — Lithuanian Airlines (‘flyLAL’) operated flights from Vilnius airport in Lithuania until it was put into liquidation. According to flyLAL, its demise was caused by predatory (that is, below cost) pricing by the Latvian airline Air Baltic Corporation A/S (‘Air Baltic’). That predatory pricing was, it is alleged, part of an anticompetitive strategy agreed between Air Baltic and the operator of Starptautiskā lidosta Rīga (Riga international airport in Latvia, ‘Riga Airport’). Thus, Riga Airport and Air Baltic agreed to drastically reduce the prices paid by Air Baltic for services at Riga airport. The savings were then used by Air Baltic to finance the predatory pricing that drove flyLAL out of the market in Vilnius, Lithuania.

Can Air Baltic and Riga Airport for damages before the courts in Vilnius? The national court and parties refer to three alleged infringements of competition law: (i) abuse of dominance consisting in the system of reductions implemented by Riga Airport; (ii) an anticompetitive agreement between Riga Airport and Air Baltic; and (iii) abuse of dominance in the form of predatory pricing by Air Baltic. Those infringements, it is argued, were interrelated, forming part of a strategy to oust flyLAL from the market in Vilnius and move passengers to Riga airport to the benefit of both Riga Airport and Air Baltic.

There is a lot in the Opinion – among others because as the AG points out, the referring court’s description of the alleged infringement of competition law is not entirely clear. Bobek therefore sets out a set of variables. The Court itself is bound not to distinguish among quite so many. Of note are the AG’s suggestions

  • that locus damni here is not place of financial loss, rather the place within the markets affected by the competition law infringement where the claimant alleges loss of sales.That suggestion in my view is helpful for neither the Regulation’s aim of predictability, nor the protection of those damaged by infringement of competition law (the latter not however a stated aim of the Regulation). Put differently: damage located in a Mozaik fashion assists the tortfeasor. The Advocate General reaches this conclusion after a thorough revisit of the initial Bier judgment (and Capotorti AG’s Opinion in same), ditto Marinari and Dumez France. Yet the continuing need to conceptualise the Court’s Bier rule illustrates again in my view the mistake made in that original judgment, to introduce a forum damni despite the utter lack of textual support for same.
  • for locus delicti commissi with full jurisdiction, the AG distinguishes between Article 101 TFEU (as regards the alleged anticompetitive agreement between Air Baltic and Riga Airport, the place of the event giving rise to the harm (that is, the loss of sales by flyLAL), is the place of the conclusion of the agreement) and 102 TFEU (alleged predatory pricing by Air Baltic, the place of the event giving rise to the harm is the place where the predatory prices were offered and applied).  With respect to Article 101 TFEU, Bobek AG suggests this is identical to the Court’s judgment in CDC . I am not too sure but I am biased. As I noted above, in my view the Court should steer clear of an application of Article 7(2) which allows those infringing competition law to forum shop by manipulating the place of decision-making. In CDC the Court held that ‘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’ cannot be ruled out. That implies that in other cases the identification of such singular event can be ruled out and that many places may be consider locus delicti commissi.  
  • finally with respect to (now) Article 7(5), the activities of a branch. The AG does not specify what must be meant by a ‘branch’ – for the national court has already concluded there is such branch. The Advocate General here is perhaps unusually deferential to the factual finding. Whether there is a sufficient nexus between the activities of the branch and the dispute, in the case of tort-based claims requires the branch participate in at least some of the actions constituting the tort (at 137). Offering the fixed prices or otherwise having been instrumental in concluding contracts for services at those prices suffices. In such cases, the branch has again participated in the commission of an act that constitutes a necessary precondition for the abuse (at 142).

A lengthy opinion. And it all started with the fairly straightforward facts of Bier…

Geert.

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

 

 

 

 

, , , , , , , , , , , , , , , ,

Leave a comment

Aristou v Tesco Personal Finance. Article 7(1) and (2) entertain the Cypriot courts.

Thank you Andreas Christofides for flagging Aristou v Tesco Personal Finance, a case which engaged Article 7(2) and, I presume, Article 7(1) Brussels I Recast: forum delicti cq forum contractus. I tried to obtain copy of judgment but failed. It might not have helped me much anyway for I assume it was drafted in Greek.

For the facts of the case please refer to the link above. From Andreas’ description of the case I am assuming the Cypriot court firstly must have decided there was a contract between claimant and the UK bank, per Handte; that this was a service contract; and that per 7(1)b second indent, that service was provided in the UK. And that for the application of Article 7(2) both locus delicti commissi and locus damni were also the UK. (The court may in doing so have referred to Universal Music: not just location of the bank account in the UK but other factors, too).

Any Greek readers, in possession of the judgment: please correct if need be.

Geert.

(Handbook of) EU Private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.11.2.7; Heading 2.2.11.1.b.

, , , , , , , , , , , ,

Leave a comment

%d bloggers like this: