Mr. Justice Teare:
1.Some but not all of the Defendants to these actions contend that this
Court lacks jurisdiction against them and, in the event that the Court has
jurisdiction, contend that the proceedings commenced in this court should
be stayed. Both the jurisdiction and the stay applications depend upon
the application of the Judgments Regulation in the context of European
competition law and multiple parties.
2.The claims in these actions arise out of and follow on a decision by
the Commission of the European Communities dated 29 November
2006 in Case COMP/F/38.638 – Butadiene Rubber and Emulsion Styrene
Butadiene Rubber (the "Commission Decision"). The Commission Decision
found 13 companies (the "Addressees") guilty of an infringement of
Article 81 of the EC Treaty in relation to the market for the supply of
Butadiene Rubber ("BR") and Emulsion Styrene Butadiene Rubber
("ESBR").
3.The Addressees were: Bayer AG ("Bayer"), The Dow Chemical Company,
Dow Deutschland Inc, Dow Deutschland Anlagengesellschaft mbH,
Dow Europe GmbH, (collectively "Dow") Eni SpA, Polimeri Europa SpA
(collectively "Enichem"), Shell Petroleum NV, Shell Nederland BV, Shell
Nederland Chemie BV (collectively "Shell"), Kaucuk a.s. and Unipetrol a.s.
(collectively "Kaucuk") and Trade-Stomil Ltd ("Stomil").
4.The Addressees were variously domiciled in Germany, the Netherlands,
Italy, the Czech Republic, Switzerland and Poland. None was domiciled in
England.
5.The Commission Decision held that the Addressees committed a
"complex single and continuous infringement" of Article 81 of the Treaty
by agreeing price targets for their products, sharing customers by non-
aggression agreements and exchanging sensitive commercial information
relating to prices, competitors and customers. In particular it was said
that:
i) The cartel took effect at least between 20 May 1996 and 28 November
2002.
ii) The agreement was operated by a series of meetings, usually taking
place "on the fringes" of the committee meetings of the European
Synthetic Rubber Association ("ESRA"), in an informal setting before or
after the official committee meetings.
iii) ESRA meetings took place four times each year at various locations
across Europe and the cartel meetings took place at the same locations.
These locations included Milan, Vienna, Amsterdam, Brussels, Richmond-
on-Thames, Frankfurt, Grosse Leder, and Prague. The cartel was ended at
a meeting in London.
6.In considering the liability of particular companies the Commission said:
"Concerning the principle of personal liability, Article 81 of the Treaty is
addressed to "undertakings" which may comprise several legal entities.
In this context the principle of personal liability is not breached so long
as different legal entities are held liable on the basis of circumstances
which pertain to their own role and their conduct within the same
undertaking. In the case of parent companies, liability is established on
the basis of their exercise of effective control on the commercial policy
of the subsidiaries which are materially implicated by the facts. Under
these circumstances, the principle of personal liability is not breached.
References to different areas of law where the principle of autonomy of
a subsidiary plays a different role (such as under corporate law) is not
appropriate."
7.So far as concerns the impact of the cartel on the market the
Commission said:
"In this proceeding, it is not possible to measure the actual impact on the
EEA market of the complex of arrangements of which the infringement
consists and therefore the Commission does not rely specifically on a
particular impact, in line with the Guidelines according to which the actual
impact should be taken into account when it can be measured. The Court
of First Instance has held that the Commission is not required precisely to
demonstrate the actual impact of the cartel on the market and to quantify
it, but may confine itself to estimates of the probability of such an effect.
What can be said, in this case, is that with regard to the EEA, the cartel
arrangements were implemented by the European producers and that
such implementation did have an impact on the market, even if its actual
effect is difficult to measure. Therefore, the Commission will not take into
account the impact on the market in determining the applicable fines in
this case."
8.The Commission Decision imposed fines on the Addressees. The fines
were assessed by reference to the effective economic capacity of the
offenders to cause damage to competition. For this purpose regard was
had to the sales of BR and ESBR by each undertaking in the last full
calendar year of the infringement. Enichem and Bayer were placed in the
first category, Dow in the second category, Shell in the third, Kaucuk in
the fourth and Stomil in the fifth. Regard was then had to the size of each
undertaking (to ensure that the fine had a deterrent effect) by applying
a multiplier to the basic fine. Shell had the largest multiplier applied. The
fines were then adjusted to reflect the period of time each undertaking
was party to the cartel. Aggravating factors (such as involvement in
previous cartels) and mitigating factors (such as co-operation with
the Commission) were considered. In the result Enichem received the
largest fine of EUR 272.25 million, followed by Shell with a fine of EUR
160.875 million. Dow's fine was reduced by 40% to reflect the value of
the evidence it supplied to the Commission of the cartel. In the result it
was fined EUR 64.575 million. Bayer was granted immunity because it
was the "whistle-blower".
9.In February 2007, the Addressees, with the exception of Bayer, lodged
appeals against the Commission's Decision with the Court of First
Instance of the European Communities ("CFI"). It is necessary to note the
grounds of appeal submitted by Dow and Enichem.
i) The Dow Chemical Company contends that it should not be held liable
for the acts of its subsidiaries. The other Dow companies contend that
the Commission identified too early a start date for the cartel and that
the fine imposed on them was too high. Thus the Dow Defendants do not
challenge the cartel's existence on their appeal. Nor do they challenge the
participation of subsidiary companies in the Dow Group in that cartel.
ii) Eni SpA contends that it should not be held liable for the acts of its
subsidiaries. It also contends that the fine is too high. Polimeri Europa
SA, a company in the Eni group, contends that the Commission made
procedural errors in coming to its Decision, that the Commission's
assessment of the market was unfair, that another company, and not it,
was managing BR and ESBR, and that the fine imposed was too high.
Thus Enichem does not challenge the existence of the cartel.
10.The appeals to the CFI were listed for hearing in October 2009. I was
informed that decisions of the CFI can be expected some 6-9 months after
the hearing of the appeal. Thereafter there may be a further appeal to the
European Court of Justice which I was told might take 18-24 months.
11.On or around 29 July 2007, after receiving letters before action from
the Milan office of S.J.Berwin LLP, Enichem commenced proceedings in
Milan against 28 defendants, all of whom were companies in the Pirelli,
Michelin, Continental, Goodyear, Bridgestone and Cooper groups. The
relief claimed was as follows:
"(i) to rule and declare the inexistence in the period between 20.5.1996
and 28.11.2002, of any agreement whatsoever and/or any other
forbidden anti-competition practices (the so-called "cartel") between the
producers of [BR] and [ESBR] addressed by the [Commission Decision];
(ii) in any case, to rule and declare that Eni SpA, Polimeri Europa SpA and
Syndial SpA have never adopted forbidden anti-competition behaviour
within the sphere of the alleged "cartel" referred to under (i);
(iii) in any case, to rule and declare that the alleged "cartel" referred to
under (i) had had no effect on the BR and ESBR prices and that, in any
case, the subjects hereby summoned cannot complain of any damage
consequent to the aforesaid "cartel"."
12.It is necessary to note two matters concerning the Italian proceedings:
i) Although Enichem had not sought to appeal to the CFI on the basis that
the cartel did not exist, Enichem sought a declaration from the Italian
court that the cartel did not exist.
ii) Enichem contends that those who bought BR or ESBR not only
from it but also from other companies in the cartel suffered no loss.
Thus Enichem invited the Italian court to consider whether the cartel
as a whole, not just Enichem, had caused any damage to the tyre
manufacturers who were made defendants to the Italian proceedings.
13.None of the defendants to the Italian proceedings issued a
counterclaim seeking damages from Enichem for its breach of Article 81
though it is common ground that they could have done so. However, on
21 December 2007 26 Claimants drawn from the same groups of tyre
manufacturers who were named as defendants to the Italian proceedings
issued proceedings in England against 23 Defendants who were alleged
to be part of the cartel. However, the disputes between the Claimants and
the Shell Defendants (D1-6) have since been settled and so the remaining
Defendants are the Bayer and Lanxess Defendants (D7-13), the Dow
Defendants (D14-20), Trade-Stomil (D21) and Kaucuk (D22-23).
14.In relation to the Claimants in the English proceedings, it is to be
noted that:
i) Of the 26 companies included as Claimants in the English proceedings,
14 had been named as defendants in the Italian proceedings. The
remaining 12 were subsidiaries or affiliates of the defendant companies in
Italy.
ii) Furthermore, of the 26 Claimants in the English proceedings, only 4 are
English companies.
15.In relation to the Defendants in the English proceedings, it is to be
noted that:
i) All are members of the undertakings which are the subject of the
Commission Decision, namely, Shell, Dow, Bayer, Stomil and Kaucuk,
with one notable omission, namely EniChem. That was obviously because
Enichem had already issued proceedings in Italy and the Claimants in
England foresaw that proceeding against Enichem in England would lead
to an application by Enichem that the proceedings be stayed pursuant to
Article 27 of the Judgments Regulation.
ii) Only 2 of the 23 Defendants are domiciled in England, neither of whom
was an Addressee of the Commission Decision. They were Shell Chemicals
UK Ltd. and Bayer plc.
16.The claims brought in England are for damages for breach of statutory
duty, in particular, Article 81 of the EC Treaty which prohibits agreements
between undertakings which may affect trade between Member States
and which have as their object or effect the prevention, restriction or
distortion of competition within the common market.
17.Although Article 81 prohibits agreements its scope has been
interpreted as extending to the implementation of agreements which
infringe Article 81. In Ahlstrom Osakeyhtio and others v The Commission
Case 129/85 [1988] ECR 5193 the ECJ held, at paragraph 16, that
"an infringement of Article 85 [the predecessor of Article 81], such as
the conclusion of an agreement which has had the effect of restricting
competition within the Common Market, consists of conduct made up
of two elements, the formation of the agreement, decision or concerted
practice and the implementation thereof."
18.In May 2008 the Dow Defendants (and other Dow companies)
intervened in the Italian proceedings and adopted the claims made by
Enichem. In June 2008, the Bayer Defendants (and other companies)
intervened in the Italian proceedings, just as Dow had done.
19.Also in June 2008 further proceedings were instituted in Italy by
Enichem against fellow producers of rubber. The aim of these proceedings,
in which similar negative declaratory relief to that sought in the original
proceedings was claimed, appears to have been to protect the claimants
from being exposed to possible recourse suits by fellow producers
of rubber. At the same time Enichem joined as parties to the Italian
proceedings those of the Claimants in England who had not been party to
the first Milan proceedings.
20.Further developments took place in England. In June 2008 the Bayer
and Lanxess Defendants in the English proceedings brought a Part 20
claim against Enichem, seeking a contribution. However, Enichem issued a
challenge to the jurisdiction of those proceedings under Articles 27 and 28
of the Judgments Regulation and, following this, those proceedings were
discontinued.
21.On 12 June 2008 the Dow Defendants issued their application
challenging the jurisdiction of this Court and, in the alternative, seeking a
stay.
22.On 14 July 2008 the Claimants commenced further proceedings
against Dow Chemical Company Limited ("DCCL"), which were served on
1 August 2008. DCCL is a company domiciled in England.
23.On 7 August 2008 the Bayer Defendants issued their application
seeking a stay of this Court's jurisdiction. This application was out of time.
24.On 10 September 2008, DCCL intervened in the Italian proceedings.
25.On 19 September 2008 the Lanxess Defendants issued their
application for a stay of this Court's jurisdiction.
26.On 10 October 2008 directions were given by this Court (Andrew
Smith J.) for the determination of the applications which had been issued
concerning jurisdiction. A hearing date was fixed for 29 March 2009.
27.On 28 January 2009 Judge Paola Gandolfi of the Tribunal of Milan
directed a determination of preliminary matters in the Italian proceedings
and a hearing took place on 9 February 2009. The defendants to
the Italian proceedings sought an order that the proceedings were
inadmissible pursuant to Article 16 of Regulation 1/2003 EC (the
"Modernisation Regulation") which provides that national courts
"cannot take decisions running counter to the decisions adopted by the
Commission."
28.On 16 February 2009 this Court (Blair J.) adjourned the hearing of the
jurisdiction applications pending a decision in Italy. The hearing was fixed
for 5 October 2009.
29.On 29 April 2009 Judge Paola Gandolfi gave her decision. She found as
follows:
i) The Italian court had jurisdiction over the first two claims and the first
part of the third claim under Article 6(1) of the Judgments Regulation.
(The claims are set out in paragraph 12 above.)
ii) The court did not determine whether it had jurisdiction over the second
part of the third claim.
iii) The first and second claims and the first part of the third claim were,
however, inadmissible by reason of Article 16(1) of the Modernisation
Regulation as they ran counter to a Commission decision.
iv) The second part of the third claim was admissible, but was
"characterized by defects in the writ of summons that cannot be
amended", and, in particular, as an application for a "negative
declaration", it was insufficiently detailed and, as a result, declared void.
30.The effect of Judge Gandolfi's decision, therefore, was to dismiss the
Italian proceedings in toto. The claimants and interveners in Italy have
lodged notices of appeal against the decision. Not all the notices of appeal
were in evidence but the Dow defendants in Italy have not sought to
appeal the dismissal of the first and second pleas but only the dismissal
of the third plea. If that appeal succeeds the Italian court of appeal will
also consider the merits of the case. However, before proceeding to do so,
the court of appeal will be likely to issue a preliminary appeal judgment in
which it will either reverse Judge Gandolfi or uphold her judgment.
31.A preliminary hearing before the Italian court of appeal is scheduled
for 1 December 2009. The experts on Italian law are agreed that it is
"likely" that the appeal on the second limb of the third plea will succeed,
though one expert stresses that the likelihood is "not so high." They are
also agreed that it is likely that a decision on the appeal will be made
within two to two and a half years from 10 September 2009, that is
between September 2011 and February 2012, and that if the appellate
court determines the merits a decision is likely within four to five years,
that is between September 2013 and September 2014.
32.On 1 July 2009 I dismissed an application by the Defendants in
England (or most of them) for a further adjournment of the jurisdiction
applications. Those applications were heard on 5, 6, 7 and 8 October
2009.
The Jurisdiction of the English Court
33.As at the date of issue of the first English proceedings only two
Defendants were domiciled in England. In addition, DCCL, the only
Defendant to the second English proceedings, is domiciled in England.
Thus, of the 24 original Defendants only three were domiciled in England.
Those three companies were in the Shell, Bayer and Dow groups of
companies. Jurisdiction was established against those three Defendants
pursuant to Article 2 of the Judgments Regulation.
34.Although other Defendants have submitted to the jurisdiction the Dow
Defendants (apart from DCCL) dispute that this Court has jurisdiction
to hear and determine the claims brought against them. The primary
ground on which jurisdiction is asserted against them is that the claims
against the Defendants domiciled in England and the claims against the
Dow Defendants are "so closely connected that it is expedient to hear and
determine them together to avoid the risk of irreconcilable judgments
resulting from separate proceedings"; see Article 6(1) of the Judgments
Regulation.
35.Counsel for the Dow Defendants said that it was plain that the three
Defendants domiciled in England, none of which was an addressee of the
Commission Decision, had been selected as a tactical device ("Anchor
Defendants") to establish jurisdiction against the other Defendants
pursuant to Article 6(1) of the Judgments Regulation. This does appear
to be likely. No other explanation was suggested by counsel for the
Claimants. However, the question for the Court is whether it is a tactic
which has succeeded in establishing jurisdiction over the Dow Defendants.
36.It is common ground that the Claimants must establish a good
arguable case that this Court has jurisdiction. However, it is clear from
Kolden Holdings Limited v Rodette Commerce Limited [2008] EWCA Civ
10 at paragraphs 47-53 but in particular paragraphs 50-52 that the test
is flexible and that what is required depends upon the nature of the issue
in question. Thus where a fact must be alleged and proved it will usually
be sufficient that there is evidence to support it. But where there is a
disputed issue of law which the trial judge will be in no better position to
resolve than the judge dealing with the jurisdictional challenge, the latter
may have to determine that issue of law in order to have the required
degree of assurance that the Court has jurisdiction.
37.It is also common ground that for the purposes of Article 6(1)
there must be a real issue between the Claimants and one of the
Anchor Defendants, that is, an issue which cannot be struck out; see
FKI Engineering Ltd. v Dewind Holdings [2007] EWHC 72 (Comm) at
paragraph 32. In circumstances where the Anchor Defendants are not
addressees of the Commission Decision but are subsidiaries of certain of
the addressees the debate in this Court has been whether the Claimants
have a claim against those Defendants which cannot be struck out.
38.The Particulars of Claim make the following allegations against all
of the Defendants, including those domiciled in England. It is alleged
that they coordinated their competitive behaviour through an agreement
with respect to the fixing of prices, an agreement not to compete
aggressively to win one another's customers and the exchange of
confidential commercial information; see paragraph 44. It is further
alleged that each of the Defendants implemented those arrangements in
relation to their sales of BR and ESBR; see paragraph 46. It is specifically
pleaded that those Defendants who are subsidiaries of addressees of the
Commission Decision, including the Anchor Defendants, implemented
the arrangements by selling BR and ESBR to the Claimants. There is no
dispute that the Claimants have a good arguable case that the Anchor
Defendants sold BR or ESBR to at least some of the Claimants. It is
common ground that the amount of sales by the Anchor Defendants was
relatively small.
39.It is not clear from these allegations whether it is alleged that the
Anchor Defendants were party to the alleged agreements or that they
knew of those agreements when they implemented the arrangements.
However, in that part of the Particulars which pleads a claim for exemplary
damages it is alleged that the Defendants' wrongful actions were carried
out "in the knowledge of and in wilful disregard of the Claimants' rights";
see paragraph 90.
40.The manner in which it is alleged that the Anchor Defendants
"coordinated their competitive behaviour" or "implemented the
arrangements" was not particularised (save for the plea that those
Defendants who are subsidiaries of addressees of the Commission
Decision, including those domiciled in England, implemented the
arrangements by selling BR and ESBR to the Claimants). Counsel for
the Claimants suggested in argument that the Defendants might have
done so in more than one way eg by participating in the agreements or
by handing over control of their activities to another company within
the group. This was an unsatisfactory basis on which to consider the
Claimants' claim against the Anchor Defendants because the factual basis
of the claims being advanced against the Defendants was not clear. It
was observed by counsel for the Dow Defendants that the Particulars of
Claim distinguished between those Defendants "directly involved in the
cartel" and those who were no more than "direct or indirect subsidiaries
of the addressees of the Decision"; see paragraphs 38 and 39 of the
Particulars of Claim. Counsel submitted that the thrust of the claim was
apparent from the supporting evidence and was based upon (i) the
Anchor Defendants having sold ESBR or BR to the Claimants and (ii)
the concept of an undertaking in European competition law. Indeed,
the primary focus in argument was on the question whether, where a
corporate entity forms part of the "undertaking" which has been found
in breach of Article 81, personal liability for damages can be attached
to that corporate entity because it forms part of the undertaking and
implemented the offending agreements or arrangements by selling BR
and ESBR whether or not the corporate entity had knowledge of the
offending agreements or arrangements. It is appropriate therefore to
consider this question of law.
41.The Claimants submitted that the answer to that question was in the
affirmative and relied upon the decision of Aikens J. in Provimi Limited
v Roche Products Ltd. [2003] EWHC 961 (Comm) in which he said at
paragraphs 30 and 31:
" [30] Therefore the point comes down to this: what knowledge of
the infringing agreement by the legal entity being sued, if any, does
a claimant have to plead and prove in order to succeed in a claim for
damages for infringement of art 81(1)? There are no cases or even
textbook opinions to provide me with a ready answer. Moreover there is a
tension between English law and EU competition law concepts. In English
law the separate identity of corporations is respected and knowledge of
one corporation will not be readily imputed to another. But EU competition
law maintains the concept of an 'undertaking', which is more flexible than
a legal entity. It can embrace a number of legal entities, so long as they
act as a single economic unit and no legal entity acts independently for
any relevant purpose.
[31] It seems to me to be arguable that where two corporate entities
are part of an 'undertaking' (call it 'Undertaking A') and one of those
entities has entered into an infringing agreement with other, independent,
'undertakings', then if another corporate entity which is part of
Undertaking A then implements that infringing agreement, it is also
infringing art 81. In my view it is arguable that it is not necessary to
plead or prove any particular 'concurrence of wills' between the two
legal entities within Undertaking A. The EU competition law concept of
an 'undertaking' is that it is one economic unit. The legal entities that
are a part of the one undertaking, by definition of the concept, have no
independence of mind or action or will. They are to be regarded as all
one. Therefore, so it seems to me, the mind and will of one legal entity is,
for the purposes of art 81, to be treated as the mind and will of the other
entity. There is no question of having to 'impute' the knowledge or will of
one entity to another, because they are one and the same. "
42.Shortly before the hearing of the Dow Defendants' applications
the European Court of Justice gave judgment in P. Akzo Nobel and
Others v Commission on 10 September 2009. That case concerned the
circumstances in which a parent company could be personally liable for
a fine imposed by the Commission for breach of Article 81 where the
conduct which gave rise to the breach was that of a subsidiary and not of
the parent. The Claimants submitted that that decision supported their
case and showed that the argument described as arguable by Aikens J.
was indeed correct. The Dow Defendants submitted that the decision
supported their case. They submitted that a subsidiary which was not an
addressee of the Commission Decision could only be liable in damages for
breach of Article if it exercised a "decisive influence" over the addressee.
It is therefore necessary to consider what the European Court of Justice
decided in Akzo Nobel and why.
43.The case concerned a cartel in the vitamins industry. The Commission
found Akzo Nobel NV and several of its wholly-owned subsidiaries
liable, with others, for an infringement of Article 81. In fact, only four
subsidiaries were found to have directly committed the infringement.
However, the Commission also fined Akzo Nobel NV, the parent company,
on the basis that, as parent, it exerted a decisive influence over the
commercial policy of these wholly owned subsidiaries and that the
subsidiaries therefore lacked commercial autonomy. This, reasoned the
Commission, entitled it to address its decision to Akzo Nobel NV as well.
44.Akzo Nobel NV appealed the decision, inter alia, on the grounds that
the Commission was wrong to have imputed the subsidiaries' fault to it
as parent merely on the basis of the finding that it was the 100% owner
of the subsidiary. It argued that such an approach was tantamount to
imposing 'strict liability' on the parent.
45.The Court of First Instance and the European Court of Justice upheld
the decision of the Commission. The essential reasoning of the ECJ is set
out in paragraphs 54-66 of its judgment. That reasoning may, for present
purposes, be summarised as follows:
i) An undertaking in European Community competition law covers any
entity engaged in an economic activity. An economic unit may consist of
several legal persons; see paragraphs 54-55.
ii) However, any infringement of Community competition law must
be imputed to a legal person on whom fines may be imposed; see
paragraphs 56-57.
iii) Where a subsidiary does not decide on its conduct independently but
carries out the instructions of its parent the conduct of the subsidiary may
be imputed to its parent because the parent company and the subsidiary
form a single economic unit and therefore a single undertaking. In such
circumstances the parent may be fined notwithstanding that it has not
been personally involved in the infringement; see paragraphs 58-59.
iv) Where a parent company has 100% shareholding in a subsidiary
there is a rebuttable presumption that the parent company exercises
decisive influence over the conduct of the subsidiary. In such a case
the parent and the subsidiary are jointly and severally liable for the fine
unless the parent company can adduce sufficient evidence to show that
the subsidiary acts independently on the market or that the parent and
subsidiary do not act as a single economic entity; see paragraphs 60-61
and 65.
46.The ECJ concluded by saying:
"If the parent company is part of that economic unit, which………may
consist of several legal persons, the parent company is regarded as jointly
and severally liable with the other legal persons making up that unit for
infringements of competition law. Even if the parent company does not
participate directly in the infringement, it exercises, in such a case, a
decisive influence over the subsidiaries which have participated in it. It
follows that, in that context, the liability of the parent company cannot be
regarded as strict liability."
47.Counsel for the Dow Defendants submitted that if it was necessary
to show that a parent company had decisive influence over a subsidiary
which had participated in an infringement of Article 81 before holding
the parent company jointly and severally liable with the subsidiary then
it must be necessary to show the same in respect of a subsidiary if it is
sought to make a subsidiary which has no knowledge of the infringement
jointly and severally liable for the infringement. Counsel pointed out that
in the present case the Commission had exercised great care in examining
the role of parent companies in the infringement before finding them
jointly and severally liable for the infringement of Article 81. It would be
extraordinary, he said, if a similar enquiry was not required in respect of
subsidiaries.
48.In my judgment that submission is not correct. The question
before the Court is not whether mere subsidiaries of addressees of the
Commission Decision are jointly and severally liable for the infringement
but whether subsidiaries who, it is said, implemented the infringing
agreements by selling BR and ESBR are jointly and severally liable
for the infringement. This was not a question considered by the ECJ
in Akzo Nobel. In that case the ECJ had to consider whether a parent
company which had not been personally involved in the infringement
could nevertheless be jointly and severally liable for the infringement with
the subsidiary which had been personally involved in the infringement.
The reasoning of the ECJ is not, I think, of direct assistance in answering
the question before this Court. In the present case the problem is not
to establish a basis upon which a parent company with no personal
involvement in an infringement can be made liable for that infringement.
Rather, it is to establish a basis upon which a subsidiary which has
been involved in an infringement by selling goods which are the subject
matter of the infringement but without any knowledge of the offending
agreements or arrangements can be made liable for the infringement.
That is the very question tackled by Aikens J. in Provimi. It was not
addressed in Akzo Nobel.
49.The essential steps in the argument adumbrated by Aikens J. are
these:
i) An undertaking in European competition law is a different concept from
a legal entity in domestic law. It can embrace a number of legal entities
"so long as they act as a single economic unit and no legal entity acts
independently for any relevant purpose."
ii) Where a legal entity, A, which is part of such an undertaking, C, enters
into an agreement with another undertaking which infringes Article 81 and
another legal entity, B, which is part of undertaking C, implements that
agreement legal entity B also infringes Article 81.
iii) It is unnecessary to prove that legal entity B had knowledge of
the agreement which infringed Article 81 because, for the purposes of
European competition law, the legal entities which are part of undertaking
C "have no independence of mind or action or will. They are to be
regarded as all one." It follows that the mind and will of legal entity A are
to be treated as the mind and will of legal entity B.
50.The first of the above steps is supported by the reasoning in Akzo
Nobel. The second step is consistent with the reasoning in Akzo Nobel in
that the ECJ held that the legal entities which make up an undertaking
may be jointly and severally liable for a breach of Article 81 by the
undertaking. It is also consistent with the reasoning in Ahlstrom
Osakeyhtio and others v The Commission (see paragraph 17 above).
The third and crucial step is not discussed in Akzo Nobel. However, in
my judgment it is a conclusion which is supported by the concept of an
undertaking. An undertaking in European competition law is an economic
unit. That unit is engaged in an economic activity. The prohibition in
Article 81 is on agreements by such undertakings or economic units
but Article 81 is infringed not only by making an agreement contrary
to Article 81 but also by the implementation of such agreements. An
undertaking may act by or through those legal entities which constitute
the undertaking. Whilst the infringement of Article 81 is that of the
undertaking, liability for the resulting fine or damages must be attached
to a legal person. Where a subsidiary is personally involved in the
infringement by implementing the offending agreement there is no
need to enquire into whether or not the subsidiary is involved by having
decisive influence over another legal entity. Since the legal entity which
makes the offending agreement plainly has knowledge of it, a rational
consequence of the concept of an undertaking as a single economic entity,
made up of its constituent legal entities, is that the undertaking has
knowledge of the offending agreement. There is therefore no need, before
attaching liability to a legal entity which is part of that undertaking and
has implemented the offending agreement, to allege and prove that that
legal entity had knowledge of the offending agreement. It is sufficient that
the undertaking had such knowledge.
51.Counsel for the Dow Defendants challenged that conclusion. He
submitted that reliance on implementation by the subsidiary was
insufficient and that personal liability for an infringement of Article 81
by an undertaking can only be established where the defendant has
itself entered into an agreement which infringes Article 81. In support
of this submission reliance was placed on the wording of Article 81,
the limited effect of the decision in Ahlstrom Osakeyhtio and others v
The Commission and the extraordinary consequences which would flow
from attaching liability to an entity which had implemented an offending
agreement but without knowledge of it.
52.So far as the wording of Article 81 is concerned the ECJ has stated
clearly in Ahlstrom Osakeyhtio and others v The Commission that an
infringement of Article 85 (now Article 81) consists of both the formation
and the implementation of the agreement. This wide construction of
Article 81 is supported by (i) the words in Article 81 which direct attention
not only to the object of an agreement but also to its effect and (ii) the
ease with which Article 81 could be evaded if a narrower construction
were adopted. In any event, this Court ought to follow the guidance of the
ECJ on this issue of construction.
53.So far as the actual decision in Ahlstrom Osakeyhtio and others
v The Commission is concerned it is correct that it did not establish
that implementation of an infringing agreement by a legal entity which
was not party to or had no knowledge of the agreement was sufficient
to constitute an infringement of Article 81. That case concerned the
imposition of fines upon legal entities which were domiciled outside
the Community and had entered into an offending agreement outside
the Community on the basis that they had implemented the offending
agreement within the Community. It did not involve the imposition of a
fine upon a legal entity within the Community which was not party to the
offending agreement but had implemented the agreement. Nonetheless
the ECJ stated clearly that an infringement of Article 81 consists of both
the formation and the implementation of the agreement.
54.So far as the suggested extraordinary consequences are concerned
counsel posed two examples. The first example was a third party
exclusive distributor. It was said that where a "cartelist" sells all of its
product to a third party exclusive distributor who sells them on a cost-plus
basis the third party would obviously not be liable for any infringement.
Yet he would have implemented the infringing agreement and therefore,
on the Claimants' case, would be liable. I do not consider that this is
an apt example because the present case concerns a subsidiary of
a cartelist, rather than a third party exclusive distributor. There is a
good arguable case that a subsidiary, by reason of its status as such, is
under the decisive influence of the parent company and so part of the
same undertaking. The same cannot be said of the third party exclusive
distributor. Since it is not part of the same undertaking it is not liable for
the breach of Article 81 committed by the undertaking.
55.Whether or not a subsidiary of a cartelist who implements an infringing
agreement without being party to it or having knowledge of it can be
made liable for the infringement of Article 81 depends upon the validity
of the argument described by Aikens J. in Provimi. Counsel for the Dow
Defendants submitted that the absurd consequence of the Claimants'
argument was that a parent company's infringement of Article 81 would
be attributed to any subsidiary in the group regardless of whether
the subsidiary had any contact with the "cartelised" product at all and
regardless of whether or not it was within the same industry. In argument
the example was posed of a subsidiary which sold shoe polish rather than
BR or ESBR.
56.However, I did not understand the Claimants' argument to require
the shoe polish subsidiary to be liable in the same way as the subsidiary
which sold BR or ESBR. Indeed, counsel for the Claimants argued that the
shoe polish subsidiary would not be so liable. In my judgment the shoe
polish subsidiary would not be liable. In order to be liable a subsidiary
must be part of the undertaking which has infringed Article 81. An
undertaking "covers any entity engaged in an economic activity"; see
Akzo Nobel at paragraph 54. There is a good arguable case that the
Anchor Defendants are a part of the undertaking involved in the economic
activity of producing and selling BR and ESBR because they sell those
products. The same cannot be said of the sellers of shoe polish.
57.Counsel for the Claimants referred to the cases of Albany v Stichting
Case C-67/96 [1999] ECR I-5751 and Hydrotherm v Compact Case
170/83 [1984] ECR 2999 in support of the above conclusion. In the
latter case the question arose whether a natural person (Dr. Andreoli),
a partnership (Compact, of which Dr. Andreoli was the personally liable
partner) and a company (Officine Sant'Andrea, also run by Dr. Andreoli)
could be a "single undertaking". The question arose in the context
of an agreement made between Hydrotherm, on the one hand, and
Dr. Andreoli, Compact and Officine Sant'Andrea, on the other hand.
The agreement concerned an exclusive distribution license granted
to Hydrotherm in respect of a type of radiator. The ECJ held that Dr.
Andreoli, Compact and Officine Sant'Andrea were a single undertaking. It
said:
"In competition law, the term "undertaking" must be understood as
designating an economic unit for the purpose of the subject-matter of
the agreement in question even if in law that economic unit consists
of several persons, natural or legal. The requirement of Article 1(1)
of Regulation No.67/67 [which declared Article 85 inapplicable to
agreements "to which only two undertakings are party"] is therefore
fulfilled if one of the parties to the agreement is made up of undertakings
having identical interests and controlled by the same natural person who
also participates in the agreement. For in those circumstances competition
between the persons participating together, as a single party, in the
agreement is impossible."
58.Counsel for the Claimants relied upon the words "for the purpose
of the subject-matter of the agreement in question" as supporting the
conclusion that the seller of shoe polish would not be regarded as part of
the undertaking which sold BR and ESBR.
59.Counsel for the Dow Defendants submitted that the reasoning in
Hydrotherm v Compact could not be read across into the different context
of a single corporate group. I do not understand why it cannot be read
across to the case of a single corporate group which is made up of
several different legal entities. If Hydrotherm had made an agreement
with the different legal entities in such a group which produced the
radiator in question, the reasoning in Hydrotherm v Compact would, in
my judgment, equally apply. Indeed, in the passage in Bellamy & Child,
European Community Law of Competition 6th.ed. to which I was referred
(paragraph 2-017) it is stated, relying on Hydrotherm v Compact, that
"a parent company and its subsidiary or subsidiaries forming a single
economic unit will be counted as a single undertaking."
60.In Albany v Stichting Advocate-General Jacobs referred to the decision
in Hydrotherm v Compact in these terms:
"….the Court has held that "in competition law, the term "undertaking"
must be understood as designating an economic unit for the purpose of
the subject-matter of the agreement in question". Accordingly, the notion
of "undertaking" is relative and has to be established in concreto with
regard to the specific activity under scrutiny".
61.The reference to "the specific activity under scrutiny" supports the
argument that the shoe polish subsidiary would not be part of the
undertaking concerned with the economic activity of producing and selling
BR or ESBR.
62.Counsel for the Dow Defendants submitted that the Commission
Decision in the present case did not support the suggestion that the
relevant undertaking was restricted to those parts of the various groups
that produced BR and ESBR. I am not persuaded that much is to be
gained by referring to the Decision in this regard because it was not
suggested that the particular point was raised for decision. Support
can perhaps be found for both sides of the argument in the text of the
decision. For example, it is to be noted that when assessing the basic fine,
regard was had to the sales of BR and ESBR by the various groups; see
paragraph 467. By contrast, when assessing "deterrence" it is possible
that regard was had to the global turnover of each group; see paragraph
474.
63.Finally, Counsel for the Dow Defendants suggested that were the
Claimants' argument correct, dramatic and surprising results would
ensue with regard to both liability and jurisdiction. Thus a small sale of
the product in question by one subsidiary would expose that subsidiary
to liability for all the damage caused by the cartel because each legal
entity liable in respect of an infringement is liable on a joint and several
basis with other cartelists. Similarly, a legal entity within an undertaking
can be sued in a Member State in which it is not domiciled for all the
damage caused by the cartel simply because an anchor defendant who is
domiciled in that state has made a small sale of the product. These are
logical consequences of the argument but I am not persuaded on their
account that the argument set out by Aikens J. in Provimi is wrong in
principle (though they may be relevant to the exercise of a discretion to
stay under Article 28 of the Judgments Regulation). I was not referred to
any textbook which suggested that it was not correct. On the contrary,
Bellamy & Child, European Community Law of Competition 6th.ed.
expresses the opinion at paragraph 14.117 that "the attribution of liability
……..[by Aikens J.] seems inherent in the scheme of Article 81, whereby
both an offending agreement and its implementation are prohibited but
fines can be imposed and damages awarded only against a legal entity."
64.I have therefore concluded that this Court has jurisdiction against the
Dow Defendants by reason of Article 6(1) of the Judgments Regulation.
There was no dispute that the Claimants had adduced evidence of sales
by the Anchor Defendants within the jurisdiction. There was therefore,
at the very least, a good arguable case that the Anchor Defendants had
implemented the agreements which infringed Article 81. For the reasons
which I have endeavoured to express I consider that the legal argument
expressed by Aikens J. in Provimi much more succinctly than I have
found possible is correct. It follows that I am satisfied that the Claimants
have a good arguable case that this Court has jurisdiction over the Dow
Defendants pursuant to Article 6(1) of the Judgments Regulation.
65.The Dow Defendants also relied upon Article 5(3) of the Judgments
Regulation to establish jurisdiction. In view of my decision on Article 6(1)
it is strictly unnecessary to lengthen this judgment yet further with a
discussion of all the arguments. I will simply express my conclusions as
shortly as possible. Article 5(3) provides for special jurisdiction "in the
courts for the place where the harmful event occurred." That expression
means "both the place where the damage occurred and the place of the
event giving rise to it, so that the defendant may be sued, at the option
of the plaintiff, in the courts for either of those places"; see Reunion
Europeenne SA v Spliethoff's Bevrachtingskantoor BV Case C-51/97
[1998] ECR I-6511 at paragraph 28. However, where the place where the
event giving rise to the damage occurred is difficult or indeed impossible
to determine the plaintiff must sue in the place where the damage
occurred; see paragraph 33. In the present case the act complained of
is a "complex single and continuous infringement" of Article 81 of the
Treaty by agreeing price targets, sharing customers by non-aggression
agreements and exchanging sensitive commercial information relating to
prices, competitors and customers. The meetings which gave rise to it
took place in a number of locations including Milan, Vienna, Amsterdam,
Brussels, Richmond-on-Thames, Frankfurt, Grosse Leder, and Prague. The
cartel was ended at a meeting in London. I consider that this is a case
where it is, at the very least, difficult to say where the event which gave
rise to the damage occurred. It was suggested that the cartel was set in
motion in England over the period 28-30 August 1995 and that that is
sufficient to show that the place where the harmful event occurred was
in England; see Sandisk Corporation v Koninklijke Philips Electronics NV
[2007] EWHC 332 (Ch) at paragraphs 25 and 41. I have, I confess, a
sense of unease, in concluding, in the context of a Europe-wide cartel
orchestrated at meetings in several countries, that the place where the
harmful event occurred is England because that is where the first meeting
took place. That seems to me to be unrealistic. In truth the harmful
events occurred in several countries. In these circumstances I consider
that the Claimants can only rely on the place where the damage occurred.
It is common ground that some damage occurred in England because
some BR and ESBR was sold here. However, it is also common ground
that if jurisdiction is established on that basis it is only established in
respect of the damage which occurred in England. That is, I understand, a
very small part of the whole.
The stay application: Article 27
66.Article 27 of the Judgments Regulation provides as follows:
"1. Where proceedings involving the same cause of action and between
the same parties are brought in the courts of different Member States,
any court other than the court first seised shall of its own motion stay its
proceedings until such time as the jurisdiction of the court first seised is
established." ……………"
67.The Dow and Bayer Defendants (including the Lanxess Defendants)
submit that from the moment Enichem brought its claim in Italy the
Italian Courts were first seised of the entire dispute, including the dispute
between the Claimants and the Defendants in England. That is said to be
so because on the Claimants' own case Enichem and the Defendants in
England are joint tortfeasors and therefore those parties have an identity
of interest such that they are to be regarded as the same party for the
purposes of Article 27(1). If so then the Court is obliged of its own motion
to stay the action.
68.There is no dispute, it seems, that the proceedings in Italy involve
the same cause of action as the proceedings in England or that the
Italian courts were the first seised. The dispute between the parties is
whether the proceedings in the two jurisdictions are between the "same
parties". The Italian proceedings were commenced by Enichem against
28 defendants, all of whom were companies in the Pirelli, Michelin,
Continental, Goodyear, Bridgestone and Cooper groups. The English
proceedings were commenced by 26 companies drawn from the same
groups of tyre manufacturers (save for Goodyear) against 23 Defendants,
all of whom were producers and sellers of BR and ESBR.
69.The Claimants in the English proceedings are in essence the same
as the defendants in the Italian proceedings. There was no dispute that
they could be regarded as the same parties. The difficulty arose with the
Claimants in the Italian proceedings, Enichem, and the Defendants in the
English proceedings, all the producers of BR and ESBR save Enichem.
Debate was joined on the issue whether they were the same parties.
70.The Dow and Bayer Defendants submitted that where there is an
identity and indissociability of interest between parties they may be
regarded as the same parties for the purposes of Article 27. Enichem and
the Defendants to the English proceedings are joint tortfeasors. They
are jointly and severally liable in respect of the same damage. It was
therefore said that in substance there is an identity and indivisibility of
interest between them.
71.The Claimants did not accept this analysis. They submitted that
Enichem and the Defendants to the English proceedings do not have an
identity and indissociability of interest.
72.It is first necessary to consider the meaning of "the same parties" in
Article 27. Fortunately, this has recently been addressed by the Court of
Appeal in Kolden Holdings Limited v Rodette Commerce Limited [2008]
EWCA Civ 10. In that case Lawrence Collins LJ reviewed the European and
English authorities and distilled from them the following principles:
"85. The starting point is that these general propositions can be derived
from The Tatry[1] and Drouot[2]. First, the object of Article 27 is to
prevent parallel proceedings in different Member States and to avoid
conflicts between decisions and irreconcilable judgments: The Tatry, para
32; Drouot, para 17. Second, the term between "the same parties" has
an independent or autonomous meaning: The Tatry, para 47. Third, in
considering whether two entities are the "same party" for the purposes
of applying the regulation, the court looks to the substance, and not the
form: The Tatry. Fourth, although the parties must be "identical" (The
Tatry, para 33; Drouot, para 18), this identity is not destroyed by the
mere fact of there being separate legal entities involved: in The Tatry
in the English proceedings the party was the sister-ship, and in the
Dutch proceedings was the shipowner; in Drout the barge owner and
the hull insurer were held to be capable of being the "same parties."
Fifth, whether they are identical for this purpose may depend on whether
there is such a degree of identity between the interests of the entities
that a judgment given against one of them would have the force of res
judicata as against the other (Drouot, para 19). Sixth, it will also depend
on whether the interests of the entities are identical and indissociable,
and it is for the national court to ascertain whether this is in fact the case:
Drouot, para 23. In the context of a subrogated claim the Court also
emphasised that the insured would not be in a position to influence the
proceedings: Drouot, para 19."
73.The fifth principle ("may depend") does not suggest that res judicata
is a necessary requirement but that it may determine whether the parties
are the same parties for the purposes of Article 27. By contrast the
sixth principle ("will also depend") suggests that the requirement that
the interest of the parties be identical and indissociable is a necessary
requirement. However, when applying the principles to the facts of the
case before the Court of Appeal Lawrence Collins LJ said that "a decision
against one must be res judicata against the other" and that the parties'
interests must be identical and indissociable (see paragraphs 88 and 90)
which suggests that both are necessary requirements.
74.My understanding of Drouot is that where the judgment of one court
will have the force of res judicata in the other jurisdiction that may
determine the question but that it is not a necessary requirement;
see Drouot paragraph 19. I also understand from Drouot that parties
will not be "the same parties" unless their interests are identical and
indissociable; see Drouot paragraphs 23 and 25. I shall therefore follow
and apply the summary of principles as stated by Lawrence Collins LJ in
paragraph 85 of his judgment.
75.The independent and autonomous meaning of the phrase "the same
parties" is derived from the object of Article 27 which is, in the interests
of the proper administration of justice within the Community, to prevent
parallel proceedings before the courts of different Member States and
to avoid conflicts between decisions which might result therefrom; see
The Tatry at paragraph 32. In each case the court must have that in
mind when determining whether the proceedings in two jurisdictions are
between "the same parties". On the authorities as they presently stand
the independent and autonomous meaning of that phrase is that parties
are the same where their interests are identical and indissociable.
76.Two further points are to be noted from the judgment of Lawrence
Collins LJ in Kolden. First, he understood indissociable in the sense of
indivisible; see paragraph 91. Second, in determining whether interests
are identical and indissociable the court has regard to the claims in both
proceedings, not to the subsequent defences; see paragraphs 92 and 93.
77.Counsel for the Dow and Bayer Defendants submitted that it followed
from the circumstance that Enichem and the Defendants in the English
proceedings were alleged to be joint tortfeasors that a decision in one
jurisdiction would be res judicata in the other and that their interests were
identical and indivisible.
78.The case on res judicata was put in the following way. The only issue
in the English proceedings, according to the Claimants, is whether they
suffered damage and if so how much, each Defendant being jointly and
severally liable for the whole. If that claim were to continue and the
Claimants were to fail, the Claimants could not thereafter sue Enichem
in respect of the same claim. Reliance was placed on House of Spring
Gardens v Waite [1991] 1 QB 241 at pp.252-254, Philips v Ward (1863)
2 Hurstone and Colman 717, 159 ER 297 and Spencer, Bower, Turner and
Handley, Res Judicata 3rd.ed.1996 at paragraph 220.
79.The Claimants said that the Dow and Bayer Defendants were mistaken
in their submissions with regard to joint tortfeasors and res judicata.
They said that the relevant principles of English law concerning joint
tortfeasors were not based upon res judicata but release by judgment
and the merger of a claim in a judgment, which principles have now been
amended by statute; see Bryanston Finance Ltd. v de Vries [1975] 1 QB
703 at pp.721-722 and 730-732, section 6 of the Law Reform (Married
Women and Tortfeasors) Act 1935 and sections 3 and 4 of the Civil
Liability (Contribution) Act 1978.
80.However, those principles do not exclude the possibility that res
judicata might apply as between joint tortfeasors. Whether joint
tortfeasors have a sufficient privity of interest that might lead to the
application of res judicata is not the subject of clear authority. Philips v
Ward concerned joint debts. Whilst House of Spring Gardens v Waite did
concern joint tortfeasors, it also concerned a joint tortfeasor who "was
content to sit back and leave others to fight his battle" (see p.254 A-B). It
was accepted by the Dow and Bayer Defendants that whether or not res
judicata applied to joint tortfeasors on the grounds of privity of interest
depended upon the facts of each case; see also Spencer, Bower, Turner
and Handley, Res Judicata 3rd.ed.1996 at paragraph 232.
81.It is necessary therefore to consider the claims in the English
proceedings and the claims by Enichem in Italy. The Claimants in England
seek damages for breach of statutory duty (Article 81) against the
producers and sellers of BR and ESBR. They say that each Defendant
is jointly and severally liable for the whole loss caused by the cartel.
The Defendants do not include Enichem. In Italy Enichem has claimed
negative declarations, namely, (i) that the cartel did not exist, (ii) that
Enichem was not part of an unlawful cartel and (iii) that the cartel had
no effect on the price of BR and ESBR and that the tyre producers who
bought BR and ESBR from members of the cartel did not suffer damage
caused by the cartel. The first and second claims have been struck out
and the Dow Defendants have not appealed against that decision. The
third claim has also been struck out but is the subject of an appeal and
it is agreed between the experts on Italian law that the appeal on the
second limb of the third claim is "likely" to succeed. That limb covers the
same ground as the claim in the English proceedings save that the Italian
court is not asked to assess the quantum of damage suffered by each
purchaser of BR and ESBR. There is also a difference between the period
of time which it is alleged the cartel covered as between the English
and Italian proceedings. However, looked at broadly, the interests of the
Defendants in England and the interests of Enichem in Italy have much in
common. They all wish to show that the purchasers of BR and ESBR have
suffered no loss as a result of the cartel.
82.Enichem has also claimed the first two negative declarations against
its fellow producers and sellers of BR and ESBR. The latter proceedings
contain a section stating Enichem's interest in seeking such relief as
follows:
"The interest of the plaintiff companies in obtaining the pronouncements
indicated above (in contradiction against the other members of the
alleged cartel – and of the companies of the relative groups – which are
hereby summoned) emerges clearly from the following circumstances:
(i) it results from the above-mentioned decision of the EC Commission
that certain of the present defendant companies have expressly stated
that the plaintiff companies had participated in the adoption of specific
anti-competitive types of behaviour and in particular that the companies
of the ENI Group had apparently "acted in the role of leader of the cartel
both for BR and for ESBR"…….
(ii) these statements (on which the EC Commission was seen to rely in
taking its decision) expose the plaintiff companies to the evident risk of:
(a) becoming "the favourite target" of claims for compensation on the
part of BR/ESBR buyers (who could sustain that they had paid prices
which were too high as a consequence of the anti-competitive behaviour
adopted by the members of the alleged cartel);
(b) being exposed to possible recourse suits on the part of the other
members of the alleged cartel."
83.These additional proceedings appear designed to protect Enichem from
contribution claims in which it may be said that companies in the Enichem
Group were the leaders of the cartel. They indicate that in the context of
contribution proceedings between Enichem and the other producers and
sellers of BR and ESBR their interests diverge.
84.In considering whether there is sufficient privity of interest between
parties to justify the application of res judicata it is necessary to have
regard to the statement of principle by Sir Robert Megarry V-C in Gleeson
v Whipple [1977] 1 WLR 510 at p.515 which was quoted by Lawrence
Collins LJ in Kolden at paragraph 88:
"… it seems to me that the substratum of the doctrine is that a man
ought not to be allowed to litigate a second time what has already been
decided between himself and the other party to the litigation. This is in
the interest both of the successful party and of the public. But I cannot
see that this provides any basis for a successful defendant to say that the
successful defence is a bar to the plaintiff suing some third party, or for
that third party to say that the successful defence prevents the plaintiff
from suing him, unless there is a sufficient degree of identity between the
successful defendant and the third party. I do not say that one must be
the alter ego of the other: but it does seem to me that, having due regard
to the subject matter of the dispute, there must be a sufficient degree of
identification between the two to make it just to hold that the decision
to which one was party should be binding in proceedings to which the
other is party. It is in that sense that I would regard the phrase 'privity of
interest....' "
85.Counsel for the Claimants relied upon a further passage at p.516:
"Any contention which leads to the conclusion that a person is liable to
be condemned unheard is plainly open to the gravest of suspicions. A
defendant ought to be able to put his own defence in his own way, and to
call his own evidence. He ought not to be concluded by the failure of the
defence and evidence adduced by another defendant in other proceedings
unless his standing in those other proceedings justifies the conclusion
that a decision against the defendant in them ought fairly and truly to be
said to be in substance a decision against him. Even if one leaves on one
side collusive proceedings and friendly defendants, it would be wrong to
enable a plaintiff to select the frailest of a number of possible defendants,
and then to use the victory against him not merely in terrorem of other
and more stalwart possible defendants, but as a decisive weapon against
them."
86.With that guidance in mind I have reached the conclusion that that
there is not a sufficient degree of identification between the Defendants
in England and Enichem in Italy to make it just to hold that the decision
in the English proceedings should be binding upon Enichem, for these
reasons:
i) Enichem and the Defendants in England are legally distinct and
separate entities.
ii) Whilst Enichem and the Defendants in England have a common interest
in resisting the claims of the Claimants in England and of the defendants
in Italy and establishing that they have suffered no loss, Enichem, as the
person who was held by the Commission to have had a prominent role
in the cartel and may therefore expect to face substantial contribution
claims, ought in fairness to be able to marshal its own evidence and
arguments rather than to have to rely on the evidence and arguments of
others who may not feel as exposed as Enichem.
87.Counsel for the Dow and Bayer Defendants have submitted that this
is an erroneous approach because what matters so far as the claim is
concerned in both jurisdictions is the damage suffered by the purchasers
of BR and ESBR. On that issue it is said that the interests of Enichem and
the Defendants in England do not diverge. However, I consider that that
is too narrow an approach when considering the question posed by Sir
Robert Megarry, namely, whether, having due regard to the subject matter
of the dispute, there is a sufficient degree of identification between the
two to make it just [emphasis added] to hold that the decision to which
one was party should be binding in proceedings to which the other is
party. Where the parties are legally distinct and separate and the findings
made as to damages may have a bearing on the subsequent contribution
claims it is, in my judgment, only fair that Enichem, who considers itself
to be especially at risk in such proceedings, should be able to conduct its
own defence and adduce the evidence which it wishes to adduce rather
than rely on the arguments and evidence of others who may not feel as
exposed. The proceedings commenced by Enichem in Italy against their
fellow "cartelists" are a manifestation of Enichem's concern in that regard.
88.The second argument advanced by the Dow and Bayer Defendants is
that the interests of Enichem and the Defendants in England are identical
and indivisible. Subject to a minor point concerning the duration of the
cartel, it can be said that their interests are identical and indivisible
in that both Enichem and the Defendants in England are concerned
to show that the cartel caused no damage. That is the issue raised by
Enichem and that is the issue with which the Defendants in England are
faced. However, I consider that this is too narrow and mechanistic an
approach. As I have already observed in the context of the res judicata
argument the interests of Enichem and the Defendants in England
diverge on the question of contribution between the joint torfeasors.
Although that question is not raised by the claim in Italy against the
tyre manufacturers (as opposed to the claim in Italy against the other
cartelists) or by the claim in England, Enichem is very likely to have
that question in mind when advancing its claim in Italy just as it would
were it resisting the claim in England. It will influence the evidence and
arguments it would wish to advance. For this reason I consider that it can
fairly be said that the interests of Enichem and the Defendants in England
"diverge" (see Drouot paragraph 20). I accept, as I must, that in Kolden
Lawrence Collins LJ held that the question of "the same parties" is to be
determined by looking at the claims and not at the subsequent defences
(see paragraph 92). Thus it is not possible to conclude that because
defendants have different defences to a claim their interests diverge.
However, upon the assumption that each Defendant in England will wish
to resist the claim by denying that loss has been caused by the cartel as
alleged by the Claimants, I am looking at the claim and the manner in
which Enichem would wish to resist the claim in England were it party
to it (and the manner it will wish to advance its claim in Italy). I am not
looking at different defences which might be advanced against the claim
in England but at the manner in which Enichem would wish to deny that
claim by saying that no damage had been caused by the cartel, a defence
which each cartelist would wish to advance.
89.There is a further point relied upon by the Claimants, though it may
simply reflect the last point. That is that Enichem and the Defendants
are entitled to conduct their own legal proceedings without interference
from each other. That includes reaching a settlement independently of the
others, as the Shell Defendants have done. That suggests they are not
the same parties and that their interests are not identical.
90.I have kept in mind that the object of Article 27 is to prevent parallel
proceedings before the courts of different Member States and to avoid
conflicts between decisions which might result therefrom. However, by
holding that Enichem and the Defendants in England are not the same
parties I am not frustrating that object. It is common ground that the
English and Italian proceedings are related and so there is undoubtedly
a discretion to stay the English proceedings under Article 28. That was
not regarded by Lawrence Collins LJ in Kolden as a sufficient answer.
However, he was dealing with claims arising out of an assigned claim
which is, I think, a clear case for the application of Article 27, unlike
claims against joint tortfeasors.
91.For these reasons I have concluded that the English and Italian
proceedings are not between the same parties and accordingly I refuse to
stay the English proceedings pursuant to Article 27.
The Lugano Convention
92.There are two Defendants who are domiciled in Switzerland and
therefore subject to the Lugano Convention. They are Bayer International
SA and Dow Europe GmbH.
93.In relation to Article 21 which (like Article 27 of the Judgments
Regulation) provides for a mandatory stay where the parallel proceedings
are between the same parties it is accepted by the Claimants and Dow
Europe GmbH that the Italian court was first seised of the dispute
between those parties (because the Italian court was seised on 13 May
2008 when Dow intervened in the Italian proceedings and the English
court was seised of the dispute on 30 May 2008, the date of service being
the requisite date under the Lugano Convention). Dow Europe therefore
submits that this Court is required to stay the English claim against it.
94.In response the Claimants have noted that the English Court was first
seised of the dispute between the Claimants and other Dow companies
when proceedings were issued on 21 December 2007 (because under
the Judgments Regulation the date of issue is the relevant date). The
Claimants say that the effect of that seising is that this Court was seised
of the dispute between the Claimants and all Dow Defendants, including
Dow Europe, because entities within a single undertaking have, in respect
of a liability imposed on that undertaking, an identity and indissociability
of interest. I am inclined to agree that such entities within a single
undertaking have, in respect of a liability imposed on that undertaking,
an identity and indissociability of interest. However, I am not persuaded
that that enables this Court to hold that it was seised of a claim against
one such entity subject to the Lugano Convention at the moment when
this Court became seised of claims against other such entities subject to
the Judgments Regulation. If the argument were correct it would mean
that this Court would be seised of a claim against the entity subject to the
Lugano Convention even if no proceedings had been issued against it. I
am not persuaded that that is right. No authorities or textbook authority
was cited in support of it. In this case proceedings had been issued
against Dow Europe but the argument was not dependent upon that but
simply upon Dow Europe having an identity and indissociability of interest
with the other Dow companies.
95.There must therefore be, in principle, a mandatory stay of the claim
against Dow Europe. However, I have been informed that as at the date
when the Italian court became seised of the claim, a number of Claimants
in England were not party to the Italian proceedings, namely, Claimants
nos. 6, 11, 12, 13, 14, 16, 17, 18, 19, 20, 21 and 26. They were only
joined to the Italian proceedings at a later date. It was therefore said
(and not disputed) that the English court was the first seised in respect
of claims against Dow Europe by those Claimants and that there could
not be a mandatory stay of those claims but only of the claims by those
Claimants who were party to the Italian proceedings when the Italian
court became seised. To that limited extent there must be a mandatory
stay.
The stay application: Article 28
96.Pursuant to Article 28 any court other than the court first seised may
stay the proceedings before it "where related actions are pending in the
courts of different Member States". It is common ground that the English
and Italian proceedings are related and that the Italian court is the court
first seised. The Dow and Bayer Defendants therefore seek a stay of the
English proceedings.
97.The Bayer (and Lanxess) Defendants are faced with the problem that
they made their application for a stay after the time limited for such an
application had expired. I shall deal with this matter first.
98.The time limited for an application by the Bayer and Lanxess
Defendants for a stay expired on 25 April 2008, 29 May 2008 or 11 June
2008 (depending upon the date on which each Defendant acknowledged
service). The Bayer Defendants issued their application for a stay on 7
August 2008 and the Lanxess Defendants on 19 September 2008.
99.It was submitted on behalf of the Bayer and Lanxess Defendants
that the provision in the rules requiring an application for a stay to be
made within 28 days after filing an acknowledgment of service (see CPR
58.7(2)) was inconsistent with the Judgments Regulation and therefore
could not be given effect. In the alternative it was submitted that there
was good reason to extend time.
100.The submission of inconsistency was based upon the proposition
that Article 28 provided on its true construction that an application for
a stay could be made at any time "where related actions are pending
in the courts of different Member States". By contrast the CPR provided
that such an application could only be made within 28 days after
acknowledgment of service. It was said, correctly, that Article 28 should
be given a broad interpretation in support of its objective to avoid
the risk of conflicting decisions. It was said that, so construed, Article
28 empowered the national court to grant a stay at any stage of the
proceedings. "It is inevitable that in certain cases (such as the present),
circumstances will develop during the course of proceedings which lead to
a risk of irreconcilable judgments. It would be artificial, and contrary to
the wording and purpose of Article 28 to prevent a court from exercising
its discretion to grant a stay in such circumstances."
101.Article 28 states the condition which must be satisfied before a court
other than the court first seised may stay its proceedings, namely, that
related actions are pending in the courts of different Member States.
It is silent as to the procedure to be applied when a party seeks such
a stay and there is, in particular, no limitation as to the time within
which an application for such a stay should be made if that condition
is satisfied. Such matters are for the national courts to regulate. This
Court has done so in the CPR by providing for a time limit of 28 days
after acknowledgment of service which however may be extended in an
appropriate case. In exercising that discretion to allow a "late" application
for a stay this Court can take into account and give appropriate weight to
the object of Article 28. I do not consider that such a procedural scheme
is inconsistent with Article 28.
102.The grounds relied upon for an extension of time are:
i) The Bayer Defendants were not parties to the Italian proceedings when
the time limited for seeking a stay expired.
ii) They were joined after they were deemed to have submitted to the
jurisdiction of this Court.
iii) The Lanxess Defendants were only joined to the Italian proceedings
one day before they were deemed to have submitted to the jurisdiction.
iv) Other Defendants, including Dow, then made their jurisdiction
applications. To meet the risk of inconsistent judgments and
fragmentation of proceedings the Bayer and Lanxess Defendants applied
for a stay. This was a reasonable and inevitable response.
103.The Bayer Defendants served a defence in the English proceedings on
11 June and the Lanxess Defendants did so on 25 June 2008. Notice of an
intention to seek a stay was not given until 30 July 2008. This shows that
both Defendants took and maintained for some time a decision to defend
the claims brought against them in England rather than to seek a stay.
It seems likely that they changed their stance once it was appreciated
that others were seeking a stay. Jurisdiction applications were issued by
other Defendants on 12, 20 and 24 June 2008. Normally, such a change
of strategy would not be blessed with an extension of time. However, it
was consistent with ensuring that all Defendants sought a stay so as to
avoid fragmentation of the litigation and to reduce the risk of inconsistent
decisions. Further, the delay in seeking a stay has not caused prejudice
to the Claimants which cannot be remedied in costs (eg the costs of the
Claimants serving Replies on 21 August 2009). In these circumstances
it seems to me that it would be correct in principle to grant an extension
of time. Such an extension would be consistent with the object of Article
28 in a multi-party case. I accept that the position is now different from
the position when the applications were made by the Bayer and Lanxess
Defendants in that some of those who sought a stay have not pursued
that application so that there is no longer a common stance adopted by
the Defendants. But I consider that I should deal with the application for
an extension of time (as opposed to the application for the stay itself)
by reference to the circumstances as they existed when the Bayer and
Lanxess Defendants issued their applications.
104.The Court is not bound to stay the proceedings before it. It has
a discretion whether or not to do so. Whilst the Court must obviously
consider all the circumstances of the case before it, the Court must
equally obviously have in mind the object of Article 28 which is to avoid
the risk of conflicting judgments. That covers "all cases where there is
a risk of conflicting decisions, even if the judgment can be separately
enforced and their legal consequences are not mutually exclusive";
see The Tatry at paragraphs 52 and 53. It has been observed, and I
respectfully agree, that this Court should be "ready to give generous
support to the convention's obvious concern about the undesirability of
irreconcilable judgments"; see Centro Internationale Handelsbank AG v
Morgan Grenfell Trade Finance Ltd. [1997] CLC 870 at p.892 D.
105.There was common ground that three matters in particular are
relevant to the exercise of the discretion to stay, namely, (a) the extent
of the relatedness and the risk of mutually irreconcilable decisions; (b)
the stage reached in each set of proceedings; and (c) the proximity of the
courts to the subject matter of the case; see Advocate General Lenz in
Owens Bank v. Bracco (No 2) Case C-129/02 [1994] ECR I-117 at 144.
106.In the present case there is a clear risk of conflicting decisions
between the English and Italian courts. The one may find on the evidence
and arguments adduced before it that the cartel caused no damage. The
other may find on the evidence and argument adduced before it that the
cartel caused substantial damage. Each is considering in essence the
same question and therefore the extent of the relatedness and the risk of
inconsistent decisions is substantial.
107.There are however two features of this case which bear on the
weight which it is appropriate to give to this factor. First, there is the
circumstance that the proceedings in Italy have been dismissed. Whilst
the Italian law experts are agreed that it is likely that the appeal will
succeed (with regard to the issue of loss raised by the second part of
the third claim) there is no certainty that the appeal will succeed. It may
fail. It would be unfortunate if the proceedings before this Court were
stayed and then, between September 2011 and February 2012, the Italian
appeal were to decide that Judge Gandolfi's decision was correct so that
there would be no decision on the merits in Italy. Second, there is the
circumstance that some Defendants have submitted to the jurisdiction
of this Court and have chosen not to seek a stay of the proceedings
before this Court; they are the Stomil and Kaucuk Defendants. There will
therefore be proceedings before this Court in which the Claimants will
be seeking damages for the loss, if any, caused by the cartel. (It is also
the case that some Claimants, if they wish to pursue their claim against
Dow Europe, must do so in Italy as a result of the stay which this Court is
required to order pursuant to Article 21 of the Lugano Convention.) Thus
the grant of a stay of the claim against the Dow and Bayer Defendants
will not avoid the risk of inconsistent decisions arising out of the English
and Italian proceedings.
108.In response to the first point the Dow and Bayer Defendants have
submitted that in circumstances where there is still an action pending in
Italy and where it is agreed that it is likely that the appeal against Judge
Gandolfi's decision will succeed, the decision of Judge Gandolfi at first
instance does not alter the fact that, unless a stay is granted, there is
a clear and present risk of irreconcilable judgments. In response to the
second point it is said that pursuant to the Court's case management
powers the Court can stay the proceedings against those Defendants
who have not sought a stay of the proceedings against them pursuant to
Articles 27 and 28 of the Judgments Regulation.
109.My approach to these arguments is as follows. It must be relevant
that the court first seised has determined to dismiss the claims brought
before it so that unless the decision is overturned on appeal there is no
risk of conflicting decisions. The significance of this factor is reduced by
the fact that it is agreed that it is likely that an appeal will be successful.
However, the dismissal of the claims and the possibility that such
decision may be upheld on appeal means that although the extent of
the relatedness between the two proceedings is substantial the risk of
inconsistent decisions has been reduced.
110.The dismissal of the Italian proceedings at first instance has a
further consequence. This court cannot decline jurisdiction pursuant to
Article 28(2). That is only possible where the action before the court
first seised is pending at first instance. Thus even if a stay were granted
this Court will ultimately have to exercise its jurisdiction. If the Italian
Court of Appeal allows the appeal from Judge Gandolfi and addresses the
merits this Court, if it waits for the Italian decision, will have the benefit
of that decision on the merits when it exercises its jurisdiction. But if,
for example, the Italian Court of Appeal finds that the cartel did cause
damage this Court will probably still have to quantify the damage caused
to the Claimants because quantification is not in terms an issue in Italy.
111.It must also be relevant that some Defendants have not sought a
stay pursuant to Articles 27 and 28 of the Judgments Regulation (and
notwithstanding that there must be a mandatory stay in respect of
some of the claims against Dow Europe). That is because the Court in
those circumstances cannot avoid the risk of inconsistent decisions. I
accept that this Court has power to stay the whole or part of a case
on case management grounds. I am not persuaded that such power is
excluded by section 49 of the Civil Jurisdiction and Judgments Act 1982 as
submitted by counsel for the Claimants. If such a power were exercised
to avoid the risk of inconsistent decisions that would not be inconsistent
with the object of Articles 27 and 28 of the Judgments Regulation. It
would promote that object. However, none of the Defendants who have
submitted to the jurisdiction have applied for such a stay. Rather, the stay
of the claims against those Defendants has been sought by the Dow and
Bayer Defendants. It seems to me that a particularly good reason would
be required to justify a stay in such circumstances and the Defendants
in question would surely be entitled to be heard on the question. I do
not consider that there is such a reason in circumstances where the
Italian Court has dismissed the proceedings before it and accordingly
(a) the prospect of a decision on the merits in Italy is contingent upon a
successful appeal in Italy and (b) the English Court will ultimately have to
exercise its own jurisdiction.
112.The stage reached in England is that the proceedings have been
commenced and Particulars of Claim have been served. In Italy, the
proceedings have been commenced but have been dismissed at first
instance on jurisdictional and other grounds without consideration of the
merits. The decision at first instance is now under appeal. If the appeal
succeeds the Italian Court of Appeal will determine the merits.
113.It seems to me that at least one reason why the stage reached in the
parallel proceedings is relevant is that it may indicate when a decision is
likely to be reached. This is a relevant matter to bear in mind because in
principle the sooner a decision is reached the better. (Where proceedings
are well advanced the prospect of wasted costs may be another such
reason.) Of course that is only one matter to be borne in mind. It must be
weighed against other relevant factors. This approach is consistent with
the observations of Advocate General Lenz in Owens Bank v Bracco at
paragraph 78:
"78. Contrary to the defendants' view, it is also legitimate for the court
second seised to have regard, when reaching its decision regarding
a possible stay, to the stage reached in the parallel proceedings. The
proceedings before the court first seised should of course have reached a
more advanced stage than the proceedings before the court subsequently
seised of a related action. Where this is not the case, however, and where
there is no prospect of a decision in the first set of proceedings, there is
nothing to prevent the court subsequently seised from taking account of
this when arriving at its discretionary decision."
114.In the present case the proceedings in Italy, although a judgment at
first instance has been given, cannot, in the context of a decision on the
merits, be said to have a reached a more advanced stage than the English
proceedings. It is agreed that a decision on the merits in Italy is not likely
until September 2013-2014. It is difficult to predict when a decision on
the merits may be expected in this Court because there remains the
prospect of a Masterfoods stay (that is, a stay pending the determination
of the appeal to the CFI and thereafter to the ECJ; see National Grid
Electricity Transmission PLC v ABB Limited and others [2009] EWHC 1326
(Ch) and Masterfoods Ltd. v HB Ice Cream Ltd. [2000] ECR I-11369).
But it is to be presumed in the absence of evidence to the contrary that
a Masterfoods stay will also be required in Italy. I was not told that the
agreed estimate of a decision in Italy makes allowance for a Masterfoods
stay. I assume that it did not. I shall therefore leave such a stay out of
account in order to compare like with like. It is likely that much of 2010
will be taken up in preparation for trial and that a trial will take place in
2011. Thus it seems likely that a decision on the merits will be reached
significantly earlier in this jurisdiction than in Italy. That is one matter to
be taken in favour of declining to stay but it must be weighed with all the
other circumstances of the case.
115.As to the "proximity" of the English and Italian courts to the case
it can be said that there is a significant connection with Italy because
Enichem, an alleged key player in the cartel, is domiciled in Italy whilst
the connections with England are slight. However, the connections with
Italy are not such as to place the centre of gravity of the case in Italy.
The cartelists were variously domiciled in Germany, the Netherlands,
Italy, the Czech Republic, Switzerland and Poland. None was domiciled in
England, though there were three subsidiaries in England and Enichem
has two factories in England. The purchasers of BR and ESBR were
companies in the Pirelli, Michelin, Continental, Goodyear, Bridgestone and
Cooper groups who are registered in several countries including England,
Italy, Germany, France, Belgium, Slovakia, the Czech Republic, Sweden,
Portugal, Spain, Greece, Hungary and Poland. The meetings at which
the cartel was agreed took place in Milan, Vienna, Amsterdam, Brussels,
Richmond-on-Thames, Frankfurt, Grosse Leder, and Prague. The cartel
was ended at a meeting in London. The tort alleged by the Claimants
and as found by the Commission was, as submitted by the Claimants,
a Europe-wide tort which crossed borders and was linked to numerous
jurisdictions. I do not consider that "proximity" with Italy is a significant
factor in this case.
116.A related point is the submission by Counsel for the Dow and Bayer
Defendants that the basis upon which jurisdiction has been established
in England is "slender" or "tenuous", namely, by finding three Anchor
Defendants in England who had made modest sales of BR and ESBR. It
was submitted that this was forum shopping, "a carefully constructed
artifice specifically designed in light of – and to circumvent – the prior
Italian proceedings." I do not doubt that the Claimants have carefully
sought out the Anchor Defendants as a means of establishing jurisdiction
in England. This might well be a significant factor in a case whose centre
of gravity is in the jurisdiction first seised of the dispute. But given the
Europe-wide scope of the alleged cartel it cannot be said that the centre
of gravity of the case is in Italy. In a Europe-wide tort there will inevitably
be alternative places where jurisdiction can be established. If the court
seized second has a discretion to stay pursuant to Article 28, "proximity"
with the court first seised will be a relevant matter to consider. But in the
present case it is not a matter which carries significant weight.
117.In the result I consider that it is appropriate and consistent with the
objective of Article 28 to decline to order a stay of the Court's jurisdiction
over the claim against the Dow and Bayer Defendants. Such an order
offers a good (though not a certain) prospect that the risk of inconsistent
decisions between the English and Italian courts will be avoided and
will enable all the claims in England (save some of those against Dow
Europe) to proceed in the same jurisdiction. If, as is agreed to be likely,
Enichem's appeal succeeds it seems likely that the claims in England will
be determined before the Italian Court of Appeal will be able to determine
Enichem's claim in Italy. In that event the Italian court will have the
benefit of the decision of the English Court thereby reducing the risk of
inconsistent decisions. If, however, Enichem's appeal in Italy fails then
Enichem can be joined to the English proceedings and the determination
of the claims in England, or at any rate those against the Dow and Bayer
Defendants, will not have been unnecessarily delayed by awaiting the
outcome of the appeal in Italy.
118.By contrast a stay of the claims against the Dow and Bayer
Defendants would leave claims against other Defendants in this
jurisdiction. The English Court would be likely to reach a decision on the
merits of those claims significantly before the Italian court of appeal and
would only have the benefit of the Italian decision (assuming the appeal
succeeded) if it delayed giving judgment until September 2013-2014.
This Court would be unlikely to delay giving judgment for that length of
time and so would be likely to reach a decision without the benefit of the
Italian decision on the merits, thereby increasing the risk of inconsistent
decisions.
The Lugano Convention
119.There are two Defendants who are domiciled in Switzerland and
therefore subject to the Lugano Convention. They are Bayer International
SA and Dow Europe GmbH.
120.So far as concerns Article 22 of the Lugano Convention, which is
the equivalent of Article 28 of the Judgments Regulation, there is a
difference. The Court only has a discretion to stay so long as proceedings
are pending at first instance. It is common ground that they are not
pending at first instance in Italy and therefore this Court has no discretion
pursuant to Article 22 to stay the claims against Bayer International SA
and Dow Europe in any event.
Waiver of the exclusive jurisdiction and arbitration clauses
121.In addition to seeking a stay based on Articles 27 and 28 of the
Judgments Regulation the Dow Defendants have also applied for a stay
pursuant to Article 23 of the Judgments Regulation and Article 17 of the
Lugano Convention on the grounds that some of the contracts of sale
contain an exclusive jurisdiction clause. The Application Notice does not
mention Section 9 of the Arbitration Act 1996but the witness statement
of Michael Sanders dated 12 June 2008 does. The application for a stay
on the grounds of exclusive jurisdiction or arbitration clauses has been
adjourned but, by his order dated 10 October 2008, Andrew Smith J.
directed that at this hearing "the Claimants shall be at liberty to argue
………… that some or all of the Dow Defendants have waived reliance
on" Article 23 of the Judgments Regulation, Article 17 of the Lugano
Convention and/or Section 9 of the Arbitration Act 1996."
122.The Claimants have therefore invited me to decide the question of
waiver. The Dow Defendants have submitted that I cannot do so without
evidence of the proper law of each contract in order that the law of waiver
as understood by that proper law may be put before the Court. There is
no such evidence before this Court.
123.The Dow Defendants have not particularised their stay applications
based upon exclusive jurisdiction or arbitration clauses. There are, I
understand, several such clauses. They do not, apparently, provide for
jurisdiction in the same place which would appear to raise the possibility
of disputes under the various contracts of sale being referred to several
different jurisdictions.
124.The Claimants' case on waiver has been put as follows:
"The Claimants submit that by their willingness to have disputes relating
to the cartel determined in Italy, and in proceedings to which the
Claimants and the Dow Defendants are all party (albeit that the Dow
Defendants have adopted a "supporting" role) the Dow Defendants have
elected not to exercise any rights to sue that they might otherwise have
had, and/or should be precluded from now asserting such rights. The
conduct of the Dow Defendants is fundamentally inconsistent with any
enforcement of the exclusive jurisdiction or arbitration clauses in relation
to the causes of action in issue; they must be taken to have elected not to
pursue their rights under those clauses or to have abandoned them: see
"The Comandate" [2008] 1 Lloyd's Rep. 119."
125.It is not clear what acts are relied upon as indicating the Dow
Defendants' "willingness" to have the claims determined in Italy. If the
issue of the application notice dated 12 June 2008 is relied upon, the
question would arise whether an application notice which raises both
an application to stay on the grounds of Articles 27 and 28 and on the
grounds of Article 23 would amount to a waiver of the right to rely on
Article 23. That question would probably be determined by the law of this
forum but I heard no argument on that. If however Dow's intervention in
Italy on 13 May 2008 prior to the issue of that application notice is relied
upon, then it may be that evidence of Italian law is required to evaluate
the nature of that act and whether it is inconsistent with an intention to
rely upon the exclusive jurisdiction or arbitration clauses in the contracts
of sale. I heard no argument on that. In these circumstances I do
not consider that I can properly decide the issue which the Claimants
have asked me to decide. It seems to me more sensible, if this issue
is seriously to be pursued by the Dow Defendants, that they should
particularise their application based upon Article 23 of the Judgments
Regulation or Section 9 of the Arbitration Act and that the Claimants
should particularise their response to that claim, stating in particular the
acts relied upon as amounting to a waiver of the right to make such claim.
126.I therefore decline to decide the question of waiver at this time.
Conclusions
127.My conclusions can be summarised as follows:
i) This Court has jurisdiction over the Dow Defendants pursuant to Article
6(1) of the Judgments Regulation; see paragraphs 33-64.
ii) This Court is not obliged to grant a mandatory stay pursuant to Article
27 of the Judgments Regulation; see paragraphs 66-91. It is however
obliged to grant a mandatory stay of some of the claims against Dow
Europe pursuant to Article 21 of the Lugano Convention; see paragraphs
92-95.
iii) An extension of time is granted to the Bayer and Lanxess Defendants
to seek a stay pursuant to Article 28 of the Judgments Regulation; see
paragraphs 96-103.
iv) I decline to grant a stay pursuant to Article 28 of the Judgments
Regulation; see paragraphs 104-118. Bayer International SA and Dow
Europe are unable to seek a stay pursuant to Article 22 of the Lugano
Convention; see paragraphs 119-120.
v) I decline to decide the issue of waiver with regard to applications for a
stay based on Article 23 of the Judgments Regulation or section 9 of the
Arbitration Act 1996; see paragraphs 121-126.