1 September 2015
Practice Group(s):
Antitrust,
Competition & Trade
Regulation
Commercial Disputes
ECJ Interprets Rules of Jurisdiction for Cartel
Damages Claims
By Tatiana Siakka and Neil Baylis
The European Court of Justice (“ECJ”) has recently handed down a landmark judgment
in the Hydrogen Peroxide case, confirming that cartel victims may jointly sue cartelists for
damages in an EU Member State where only one of the cartelists is domiciled. Moreover,
the Court held that cartel victims may choose to bring their damages actions at the courts
of either the Member State where the cartel agreement was concluded, or of the Member
State where they are domiciled. The judgment creates a favourable jurisdictional regime
for follow-on damages claims, which together with the newly-adopted EU Damages
Directive, may result in an increased number of damages claims in the European Union.
Background
The case stems from a reference for a preliminary ruling made by a German Court
regarding the interpretation of the Brussels Regulation in the context of a complex and
lengthy cartel.
In March 2009, CDC Hydrogen Peroxide SA (“CDC”) brought a follow-on damages claim
in Germany against six chemical companies, which had been sanctioned by the
European Commission for operating an EEA-wide cartel in the production of hydrogen
peroxide. As the cartelists were established in various Member States, CDC sought to
establish the German court’s jurisdiction in respect of all the defendants by reason of one
of them, Evonik Degussa, being a German domiciled company (the "anchor defendant”).
In September 2009, CDC withdrew its action against the anchor defendant following an
out-of-court settlement.
The issue which then arose was whether the German court maintained international
jurisdiction in respect of the non-German domiciled defendants, in circumstances where
the anchor defendant was no longer a party to the proceedings and in light of
jurisdictional clauses in supply contracts between the remaining defendants and the
claimants, conferring jurisdiction to the courts of Member States, other than Germany.
The German Court referred the following three questions to the ECJ, essentially asking
the Court to interpret how the jurisdictional provisions of the Brussels Regulation should
apply in the context of a follow-on cartel damages claim.
The questions referred and the Court’s ruling
First Question: One jurisdiction against multiple defendants
• Can Article 6(1) of the Brussels Regulation be used to bring a follow-on damages
claim against multiple defendants domiciled in different Member States in the court of
the Member State where the anchor defendant is domiciled? If so, does that court
maintain jurisdiction against the non-domiciled defendants, in the event the anchor
defendant is dropped from the claim?
The Court confirmed that Article 6(1) may apply in follow-on cartel damages claims.
Therefore it is, in principle, permissible for claimants to establish a centralised jurisdiction
ECJ Interprets Rules of Jurisdiction for Cartel Damages
Claims
against multiple defendants. The Court considered that a centralised jurisdiction is
appropriate in order to avoid the risk of irreconcilable judgments, which would otherwise
arise if a victim brought damages actions in several Member States.
Moreover, the Court held that withdrawal of the claim against the only domiciled cartelist
does not affect the international jurisdiction of the court seised in respect of the remaining
non-domiciled cartelists. However, it emphasised that this provision must not be applied
abusively. That would be the case here if it were to be established that the parties
purposefully delayed the formal conclusion of an out-of-court settlement until proceedings
had been instituted, for the sole purpose of securing the jurisdiction of the court seised as
against the other cartelists.
Second Question: Place where the harmful event occurred
• Is it possible to bring a damages claim at “the place where the harmful event
occurred”, as per Article 5(3) of the Brussels Regulation?
The ECJ confirmed that “the place where the harmful event occurred” encompasses both
the place where the damage occurred and the place of the event giving rise to the
damage. Importantly, the Court clarified that in the context of a cartel damages claim,
where the loss consists in additional costs as a result of artificially inflated prices (the so
called overcharge), the place where the damage occurred must be identified separately
for each victim and is located at that victim’s registered office. The victim can therefore
choose to bring an action at the courts of either the Member State where the cartel
agreement was concluded or the Member State where the victim is domiciled.
It should be pointed out that the Court did not follow the opinion of the Advocate General
in connection with this question. Advocate General Jääskinen had advised that Article
5(3) should remain inoperable in cases involving complex cartel arrangements affecting
the market of multiple Member States. In such cases the jurisdiction of the court should
be based on Articles 2(1) and 6(1) of the Brussels Regulation so that the cartelists can be
sued in the courts of the Member State where any of them is domiciled. Had the Court
agreed with the opinion of the Advocate General in excluding Article 5(3) as a basis for
jurisdiction, it would have significantly restricted the ability of cartel victims to pursue their
claims at the courts of the most favourable jurisdictions.
Third Question: Arbitration and jurisdiction clauses
• Should jurisdiction clauses in supply contracts between the cartelists and the alleged
victims be taken into account in establishing jurisdiction for a cartel damages claim?
The Court held that contractual jurisdiction clauses do not extend to disputes arising from
tortious liability, unless the victim was fully aware of the cartel arrangements and the loss
it suffered. In practice, claimants are unlikely to have such knowledge given the secretive
nature of cartel arrangements.
Conclusion
This is the first time that the ECJ has provided guidance on the application of the
Brussels Regulation in competition law damages claims. Given the particular importance
of jurisdiction for follow-on damages claims, the judgment is a milestone in private
enforcement. On a practical level, a centralised jurisdiction is likely to facilitate litigation
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ECJ Interprets Rules of Jurisdiction for Cartel Damages
Claims
throughout Europe, since cartel victims can choose the most claimant-friendly jurisdiction
in which to bring their claim. On a political level, the judgment endorses the European
Commission’s efforts to introduce an effective redress regime for competition damages in
Europe. Together with the Damages Directive, the judgment will be likely to facilitate
cartel damages claims in the European Union.
Authors:
Tatiana Siakka
Tatiana.Siakka@klgates.com
+44.(0).20.7360.8138
Neil Baylis
Neil.Baylis@klgates.com
+44.(0).20.7360.8140
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