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Advocate-General Kokott opined last week in Joined Cases C-672/23 and C-673/23 Electricity & Water Authority of Government of Bahrain ea v Prismiian ea .
After her Opinion in Athenian Brewery, where the CJEU itself was less claimant friendly than the AG had opined, it is the second Kokott AG Opinion on the use of anchor defendant mechanism in follow-on antitrust damages claims in quick succession.
Case C‑672/23 concerns the determination of the joint and several liability of the defendants for damage claimed as arising from an infringement of the prohibition on cartels under EU law in the form of a cartel in relation to underground and submarine cables and related products, works and services. The claim in the main proceedings is directed not only against the companies mentioned in the relevant Commission Decision but also against other companies that fall into three groups of undertakings. These have at their centre Prysmian Cavi e Sistemi Srl, ABB AB and Nexans France SAS. Of all the defendants, only Draka Holding BV, which is a subsidiary of Prysmian Cavi e Sistemi and itself holds all of the shares in the capital of Prysmian Netherlands BV, is established in Amsterdam, Netherlands. All of the other defendant companies (collectively ‘Draka and others’) each have their registered office in other locations within and outside the Netherlands. Claimants in the main proceedings in this case, the Electricity & Water Authority of the Government of Bahrain and others (collectively ‘EWGB and others’), operate high-voltage networks in the Gulf States. Damage arguably took place outside the EEA.
Case C‑673/23 likewise concerns the determination of the joint and several liability of the defendants in the main proceedings at first instance for damage which is alleged to have arisen as a result of two infringements of the prohibition of cartels under EU law, in this case not established by the European Commission, rather by the Italian national competition authority. The claim in the main proceedings at first instance was directed not only against the companies mentioned in that decision but also against other companies that fall into two groups of undertakings. These have at their centre, on the one hand, Smurfit Kappa Italia SpA, and, on the other hand, Toscana Ondulati SpA. Of those defendants, only Smurfit International BV is established in Amsterdam, Netherlands. All of the other companies (collectively ‘Smurfit and others’) each have their registered office in other locations within and outside the Netherlands.
The questions referred are very detailed indeed (see (17) of the Opinion). They essentially request from the CJEU a roadmap to determine the justifiable use of the anchor mechanism in cases like these. Particularly after Athenian Brewery, national courts arguably have enough material to make that assessment themselves, however the courts at Amsterdam had of course referred these cases prior to Athenian Brewery having been held.
The AG first of all and succinctly recalls
- the principles of an ‘undertaking’ in EU antitrust law [(30):
“in order for it to be found that the parent company and the subsidiary company form an economic unit, the claimant must not only establish the economic, organisational and legal links between these companies, but also prove that there is a specific link between the economic activity of that subsidiary company and the subject matter of the infringement by the parent company”
- and the core application of A8(1) Brussels Ia in the antitrust context (32): (A8(1)’s condition of close relatedness is
“fulfilled where several undertakings that participated in an infringement of EU competition rules, established by a decision of the Commission, are the subject of claims based on their participation in that infringement, despite the fact that they participated in that infringement in different places and at different times” (reference to CJEU CDC); and
” The same is also true of claims based on a company’s participation in an infringement of the EU competition rules which are directed against that company and against its parent company and in which it is alleged that those companies together form one and the same undertaking” (reference to CJEU Athenian Brewery).
The AG then entertains the referring court’s question on whether the prospect of success of the claim against the anchor defendant must be taken into account. ‘Prospect of success’ is a better translation than the translation elsewhere in the Opinion of the questions referred, where the Dutch term ‘toewijsbaarheid’ is translated as ‘admissibility’. The referring court clearly seeks guidance on the relevance of the merits of the claim.
The AG concludes on this section
“account is to be taken of the prospects of success of the claim against the anchor defendant, but only as an indication that the claimant has not artificially fulfilled the conditions for that provision’s applicability, which may be true in the case of a manifestly unfounded claim.”
‘Prospect of success’ must be an echo of common law CPR (a ‘real issue to be tried’), although we do not quite know: the AG, as is her MO, refers to no scholarship in her Opinion.
On this point I do not think the authorities support the conclusions which the AG draws from it. She writes (37)
“Article 8(1) of the Brussels I bis Regulation must not be abused by bringing a claim against several defendants for the sole purpose of removing one or more of them from the jurisdiction of the courts of the State in which that defendant or those defendants is or are domiciled. That would be the case if there were firm evidence to support the conclusion that the claimant artificially fulfilled, or prolonged the fulfilment of, the conditions for that provision’s applicability.” (references omitted)
References were to CJEU CDC, and what the AG writes (37) is correct.
However the AG then jumps to the claim being ‘manifestly unfounded’: (38)
“For that to be the case, however, it is not sufficient that the claim against the anchor defendant should (possibly) appear to be unfounded. Rather, the claim must be manifestly unfounded or contrived or be devoid of any real interest to the claimant at the time when it is brought.”
In the original German, the Opinion uses ‘unbegründet’, which clearly refers to substantial merit of the case, not procedural or other inadmissability (and indeed this is also how the referring court has intended its question).
In support of her position in (38) the AG refers (other than to her Opinion in Athenian Brewery and to Mengozzi AG in Freeport) to CJEU Reisch Montage para [33]. This CJEU para does not however talk about the claim being unfounded, manifest or not. Rather it is summary of the judgment, right before its operative part and it addresses procedural inadmissability (due to a pending bankruptcy proceeding). In Reisch Montage the CJEU does not address meritorious prospect of success at all.
Whether the likelihood of success of an action against a party before the courts of the State where it is domiciled (some kind of merits review, therefore) is relevant in the determination of whether there is a risk of irreconcilable judgments for the purposes of A8(1), was raised in Freeport but not answered by the CJEU, for such answer was eventually not necessary for the preliminary reference at issue.
The issue was discussed in England, pre Brexit. In the first instance judgment in Sabbagh v Khoury, Carr J’s extensive merits review hinged on the CJEU instruction ‘to take account of all the necessary factors in the case-file’ per CJEU Freeport at [41]. The Court of Appeal on majority confirmed the need for a rather extensive merits review.
I do not think this is what A8(1) either requires or indeed sanctions, and I agree with Lady Justice Gloster, who dissented in the Sabbagh appeal, [178]:
‘the operation of a merits test within Article [8](1) does give rise to risk of irreconcilable judgments, which can be demonstrated by reference to the present facts’,
and [179]
“the overwhelming tenor of the CJEU authorities is to emphasise the fundamental aim of eliminating, rather than simply reducing, a risk of irreconcilable judgments. This aim is achieved if Article [8](1) does not incorporate a merits test and is undermined if it does do so.”
Article 8(1)’s ‘so closely connected’ test clearly requires some appreciation of the facts and the legal arguments, as well as a certain amount of taking into account the defendant’s arguments, however only with a view to assessing relatedness with a view to avoiding irreconcilable judgments. This in my view does not amount to a merits test, whether a wide or a narrow (‘manifestly unfounded’) one and this remains an important difference with the common law ‘real issue to be tried’ requirement.
(40) ff the AG then zooms in on some issues related to the prospect of success (in my opinion the CJEU will not follow on prospect of success and, practising judicial economy, will not entertain these questions).
As she notes, these questions are only raised viz the exercise of jurisdiction, and they are (43) “a complex legal question calling for in-depth examination” – a question which I suspect may be referred again if and when the Dutch courts do exercise jurisdiction. This includes [(44) ff) how attributability of damage to an adverse effect on competition in the internal market, must be interpreted where damage arguably occurred outside of the EEA, and the general issue of territorial scope of A101 TFEU. (In my view the answer may be much more straightforward perhaps than seemingly suggested in the submissions, by focusing on the claims essentially being in compensation for damage following breach of statutory duty). This section also discusses substantive issues of presumption of control in competition law.
(68) ff then returns to the issues of jurisdiction, addressing ia the topic of groups of undertakings, taking into account that in one of the cases it is the downstream liability of a subsidiary company for an infringement committed by its parent company that is at stake. Intense reference here of course to CJEU Athenian Brewery.
(79) ff addresses the role of the foreseeability of the co-defendant’s being sued in the jurisdiction of the anchor defendant.
I wholly agree with the AG’s view (81) that “foreseeability is not.. an independent criterion that is examined alongside the other elements defining the fulfilment of the provision at issue.” And, (82)
there is no requirement under Article 8(1) of the Brussels I bis Regulation for the co-defendant him or herself to have specifically foreseen that he or she would be sued in the jurisdiction of the anchor defendant. Rather, abstract foreseeability, in the form of the ability of an informed and reasonable defendant to foresee before which courts he or she might be sued outside his or her State of domicile, is sufficient.
(83) a ‘close connection’ with the defendant, such as here through the group undertaking issue, is particularly relevant in this respect.
I have seen many instances recently where opposing counsel banks on lack of predictability to propose rejecting jurisdiction. I would welcome a finding by the CJEU that brings that interpretative rule back to its true nature.
(87) ff then addresses territorial jurisdiction under A8(1). Statutory interpretation as the AG argues, points to a strong yes (reference ia to FTI Touristik) as does linguistic comparison and the report Jenard, despite the CJEU not having yet ruled on the issue viz A8(1) specifically. If there are two anchor defendants in the same Member State, and subject to the effectiveness of EU jurisdictional law not being impaired, national CPR ought to be allowed to join the case against both, but only I assume in one of the courts where the conditions of A8(1) are fulfilled (see (97) “a court which considers itself to lack jurisdiction may take up the option to make a reference to another court available under its national procedural law, provided that the effective enforcement of the Brussels I bis Regulation is not restricted as a result”).
All in all a very relevant Opinion, CJEU judgment is one to watch!
Geert.
EU Private International Law, 4th ed. 2024, 2.516.
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