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Seek Cartel Damages against All in Forum of One Cartellist, AG Advises EC

Clara Rosales Rosado and Martha Ivanovas, PaRR, December 2014

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• Withdrawal of claim against the only Germany-based company does not affect jurisdiction

• For cartel damages, court competence based on where the harm occurred ‘inoperative’

• AG opinion clarifies procedural issues considerably, says claimant

Private cartel damages claims may be brought before the courts in an EU member state where one of the cartellists is domiciled, Advocate General (AG) Niilo Jääskinen told the European Court of Justice (ECJ) on 11 December.

The principle of forum delicti commissi is rendered inoperative when it comes to complex cartel cases throughout the EU, Jääskinen said in a non-binding opinion.
The AG is advising the ECJ on three questions referred by Germany’s Dortmund Regional Court (Landgericht Dortmund) in June 2013 in the context of a damages claim brought by Cartel Damage Claims Hydrogen Peroxide SA (CDC) against six of the seven companies fined EUR 388m by the European Commission (EC) in 2006 for operating a six-year cartel in the hydrogen peroxide and perborate market.

Evonik Degussa GmbH was the only Germany-based company of the six. CDC, which buys up claims from victims affected by cartels, brought an action against all six before the Dortmund court. In September 2009, CDC settled the case out of court with Evonik but continued proceedings against the other companies. The five remaining companies challenged the jurisdiction of the German court.
Against this backdrop, the German court is asking the ECJ how to apply to competition cases the provision contained in the EU Council Regulation “on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters” (’Brussels I’).

The Regulation sets as a general rule that persons must be sued in the courts of the EU member state where they have their domicile. When several defendants are involved in a case, a person may also be sued in the courts of the country where any one of them is domiciled.

In matters related to tort, delict or quasi-delict, Brussels I foresees that a person domiciled in an EU member state may be sued in the courts of the country where the harmful event occurred or may occur, even if that court is in a different EU member state. But this cannot “properly be applied in an action for damages arising from an infringement of the competition rules”, the AG said.

The provisions set out in the Regulation aim to limit concurrent proceedings and identify the court most closely linked to the dispute, the AG noted. But the duration of a cartel and its cross border scope and effects lead to a situation where participants and victims are spread over numerous EU member states, the AG said, adding that the rule is inoperative in the present case. The EC qualified the cartel as a single and continuous infringement and therefore the cartellists were held liable for the whole period regardless of their individual participation, Jääskinen said.

Due to the diversity of national rules governing the distribution of liability between cartel members there is a “real risk” that the cartelists might be ordered to pay different amounts of damages if courts in different EU member states were to rule separately, he added.

In such a situation, the Regulation allows proceedings to be brought before a single court against several defendants based in different EU member states, Jääskinen added.

Anchor defendant
The fact that CDC withdrew its claim against the only Germany-based company does not itself affect jurisdiction of that court to hear the arguments against the other co-defendants, as “the withdrawal took place on a later date than the date when the German court was formally notified of the case”, the AG said.

But this provision must not be applied abusively, the AG said. Such an abuse would occur if CDC and Evonik Degussa had deliberately delayed the formal conclusion of their out-of-court settlement after proceedings had been instituted, with the sole aim of establishing jurisdiction in Germany for the other cartel participants.

When challenging the jurisdiction of the Landgericht Dortmund, the sued companies argued that the supply contracts they had signed with the damaged companies contained a jurisdiction or arbitration clause setting the competent court in case of dispute.

The Brussels I Regulation allows parties to specify a jurisdiction where any disputes which have arisen in connection with a particular legal relationship are settled, the AG said.

But a jurisdiction or arbitration clause in commercial contracts can be applied to cartel damages disputes “only where the victim consented specifically to those clauses, in full knowledge of the cartel and the damage caused by it”, he noted.

“The opinion answers a number of legal questions, notably in relation to procedural issues,” said Till Schreiber, director in the Brussels office of CDC. “Should the court follow the AG opinion, then we believe this would be a fundamental judgment likely to render damages claims a lot easier,” he added.

“The judgment would likely impact pending claims, inter alia the actions related to the EC air cargo and sodium chloride cartel cases,” Schreiber noted.

“Together with the EU private damages directive the judgment could create a more favourable environment for damages claims,” he said.”This would hinge on the interplay between the material aspects set out in the directive and the procedural questions which the directive does not answer,” said Schreiber.

Earlier this year, a Dutch court had ruled that it was competent to decide on a claim brought by CDC against Akzo Nobel, EKA Chemicals and Kemira Chemicals for damages following on from the sodium chlorate cartel, as reported. In another case, Finnish company Kemira settled a damages claim linked to its participation in the hydrogen peroxide cartel with CDC in Finland, agreeing to pay EUR 18.5m.

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