Judgment of Mr. Justice Clarke delivered the 29th day of January, 2009
1. Introduction
1.1 These proceedings arise out of the objection of the plaintiff
("Ryanair") to the use of automated systems and software to extract
real time flight information from Ryanair's website for the purposes of
presenting it on websites facilitating flight search and booking services,
which are run by the first named defendant ("Bravofly"). Ryanair claims
that these activities, which Ryanair refers to as "screen scraping", breach
Ryanair's online terms and conditions, infringe Ryanair's intellectual
property rights, such as copyright, database rights and trade marks and
amount to conversion and trespass to the goods of Ryanair comprised in
its website.
1.2 Bravofly denies all of the claims and in addition asserts by way of
defence and counterclaim that Ryanair is abusing a dominant position in
contravention of European and Irish competition law.
1.3 As part of the case management of these proceedings I heard six
separate applications over some three days. The first four applications,
which related to discovery and further and better particulars, have already
been ruled on, leaving two issues to be decided. The first remaining issue
relates to an application by Ryanair in which it seeks the striking out of
portions of Bravofly's defence and counterclaim. The second remaining
issue relates to the question of jurisdiction in respect of the proceedings
against the second named defendant ("Travelfusion").
2. Procedural history
2.1 Proceedings in relation to the relevant screen scraping activities were
issued by Ryanair against Bravofly on 14 March 2008, and on application
made by Ryanair on 7 July 2008, were admitted to the Commercial
List of the High Court. On 10 June 2008, Bravofly's sister company,
a Swiss company called Bravofly SA, issued declaratory proceedings
against Ryanair in Switzerland seeking negative declarations that Bravofly
SA was not breaching the terms of Ryanair's website or infringing
Ryanair's database rights. On 28 July 2008, Ryanair issued a motion
seeking an order to join Bravofly SA as co-defendant in the proceedings
on the grounds that Bravofly SA may have been the operator of the
website carrying out the impugned activities at the time of issuing of
the proceedings. This application was heard on 22 October 2008 when
judgment was reserved and is awaited. In accordance with the court's
directions of 7 July 2008, Bravofly delivered an original defence and
counterclaim on 1 September 2008. Particulars were also raised and
responses furnished on both sides and letters seeking voluntary discovery
were exchanged.
2.2 The original defence and counterclaim named Travelfusion as a
provider of the technical facilities and services, necessary to permit
the screen-scraping facilities, to Bravofly. On 22 October 2008, Ryanair
applied to the court for an order to join Travelfusion as a co-defendant
in the proceedings and consequential orders to allow the pleadings
to be amended accordingly. The Court acceded to that request. On
18 November 2008, Bravofly delivered an amended defence and
counterclaim.
3. Issues for Decision
3.1 This judgment, as I have noted, relates to two motions, one brought
by Ryanair and the other by Travelfusion.
3.2 In the first application Ryanair seeks an order pursuant to O. 19,
r.27 of the Rules of the Superior Courts ("RSC") and/or pursuant to the
inherent jurisdiction of this court, striking out parts of Bravofly's defence
and counterclaim, as identified in the notice of motion, which in summary
refer to allegations that Ryanair was guilty of an abuse of a dominant
position contrary to Article 82 of the EC Treaty and s. 5 of the Competition
Act 2002.
3.3 In the second application Travelfusion has brought a motion which
seeks to dismiss the proceedings as against it on the basis that the
Irish courts have no jurisdiction to hear the matter by virtue of the
provisions of Regulation (EC) no. 44/2001 of 22nd December 2002 on
Jurisdiction and the Recognition and Enforcement of Judgment in Civil
and Commercial Matters ("the Brussels Regulation"). Travelfusion is a
company incorporated under the laws of England, with its registered office
in England and its principal place of operation in London, and with no
place of business in Ireland. It is also Travelfusion's case that the terms
of use of the Ryanair website confers exclusive jurisdiction in all disputes
arising out of the use of the website on the English Courts.
3.4 I turn first to Ryanair's application to strike out part of Bravofly's
defence and counterclaim.
4. The Application to Strike Out Portions of Bravofly's Defence and
Counterclaim
4.1 Ryanair seeks to have portions of the amended defence and
counterclaim struck out under O.19, r. 27 of the RSC. The portions of the
amended defence and counterclaim objected to are as follows:-
a. Paragraphs 66 (v), (w), (x), (y) and (bb) of the amended defence and
counterclaim and the portion of the last paragraph of para. 66 which
reads "which are partly the result of Ryanair's own aggressive actions in
response to competition". In these paragraphs, it is said that Bravofly
claims that Ryanair is engaging in abuse of a dominant position through
the creation of barriers to entry to potential competitors by predatory
pricing. These pleas are said by Ryanair to be irrelevant;
b. Paragraphs 67 (d) and 71(c) of the amended defence and counterclaim
which sets out particulars of the flight information services provided by
Ryanair. In these paragraphs Bravofly claims that Ryanair is engaging in
cross subsidisation by using profits from its online services to subsidise
low air fares in order, it is said, to maintain its alleged dominant position
in the market for flight services in which Ryanair operates. These pleas
are also said by Ryanair to be irrelevant;
c. Paragraph 68 of the amended defence and counterclaim wherein
Bravofly asserts that Ryanair has entered into agreements and concerted
practices with third parties with the object or effect of restricting
competition. These pleas are said by Ryanair to amount to a bald claim;
and
d. Paragraph 67 (e) to (k) and (n) to (q) of the amended Defence and
Counterclaim where Bravofly sets out matters which are said by Ryanair
to comprise evidence as to the nature and size of the market for online
travel agency service and/ or general argument as to the benefits of such
services and thus, it is said, improperly included in pleadings.
4.2 Ryanair further submits that the court has an inherent jurisdiction
to strike out the above portions of the pleadings, particularly as the
proceedings have been entered in the commercial list and are being case
managed.
4.3 Ryanair seeks to have the relevant portions of the defence and
counterclaim of Bravofly struck out pursuant to O.19 Rule 27 of the RSC
on the grounds that the relevant parts comprise subject matter that is
unnecessary and/ or scandalous and that, if maintained, would serve only
to delay, embarrass or otherwise prejudice the fair hearing of the action.
O. 19 r. 27 RSC states that:-
"The Court may at any stage of the proceedings order to be struck out
or amended any matter in any indorsement or pleading which may be
unnecessary or scandalous, or which may tend to prejudice, embarrass,
or delay the fair trial of the action; and may in any such case, if it shall
think fit, order the costs of the application to be paid as between solicitor
and client."
4.4 Order 19 r. 27 confers a broad discretion on a court to strike out
any part of a pleading, which is unnecessary, scandalous or prejudicial.
In Morony v Guest (1878) 1 LR I.R. 564 Chatterton VC, at page 571,
described one of the predecessors to this rule in the following way:-
"A party is not to be called upon to answer statements which are
irrelevant to the case, or which are pleaded in an unfair, ambiguous, or
prolix manner; but the Court should confine the rule to cases which come
within it."
Chatteron VC, however, also cautioned that:-
"The Rule is not to be abused, nor are pleadings to be scanned too finely,
with regard to the power of the amendments conferred, nor can a party
dictate to his opponent how he ought to plead."
4.5 The primary test used in judging whether a pleading contains
unnecessary or scandalous matters is the relevancy of the matter
pleaded to the proceedings between the parties; whether the pleadings
concerned seek to introduce extraneous matters for purposes and
motives unconnected with the subject matter of the dispute between the
parties. Allegations are not scandalous where they would be admissible
in evidence to show the truth of any allegation in the pleadings which
is material to the reliefs claimed. This test was formulated in Christie v
Christie (1873) L.R. 8 Ch App 499, and approved in Riordan v Hamilton
(Unreported, High Court, 26 June 2000, Smyth J) where Smyth J., at p. 5
of his judgment, stressed that:-
"The purpose of pleadings is to convey what the nature of the action is.
Pleadings should not be used as an opportunity of placing unnecessary
or scandalous matters on the record of the court, or as an opportunity
of disseminating such matters when they have nothing to do with any
dispute between the parties"
4.6 In Riordan v Hamilton, the plaintiff sought certain reliefs against
the defendants who were all members of the Supreme Court. In his
pleadings, he had made a number of serious and intemperate allegations
against the defendants, and Smyth J., having considered the pleadings,
concluded that they should be struck out as scandalous. Smyth J. held
that allegations are not to be considered scandalous where they would be
admissible in evidence to show the truth of any allegation in the pleadings
which is material to the relief claimed.
4.7 At the same time, not all facts which have relevance to the
proceedings may be properly pleaded and matters set out in pleading
must comprise facts that are relevant to the action between the parties
and must not comprise the evidence by which it is hoped that such facts
may be proved. In Hanly v Newsgroup Newspapers Ltd [2004] 1 IR
471, at page 475 , Smyth J stated that only material facts and not the
evidence on which they are to be proved should be pleaded. This principle
is also expressed in O. 19, r. 3 of the RSC, which states as follows:-
"Every pleading shall contain, and contain only, a statement in a summary
form of the material facts on which the party pleading relies for his claim
or defence, as the case may be, but not the evidence by which they are to
prove..."
4.8 A further type of problem to which O. 19 r. 27 is directed is where
pleadings are found to be prejudicial. This may occur for a number of
reasons. However the principal focus is again on materiality. In Hanly
Smyth J. held, at p. 475, that the matters pleaded were scandalous,
prejudicial and embarrassing in that they sough to "introduce immaterial
matters which would lead to the introduction of irrelevant evidence at the
trial of the action."
4.9 In the light of those general principles it is necessary to turn to the
case made by Ryanair in relation to each of the categories of pleading
sought to be struck out.
4.10 Paragraphs 66 (v), (w), (x), (y) and (bb) of the amended Defence
and Counterclaim and the portion of the last paragraph of paragraph
66 which reads "which are partly the result of Ryanair's own aggressive
actions in response to competition".
The relevant pleadings under this heading all appear in the section
headed by reference to particulars of dominant position. In relation to this
portion of the amended defence and counterclaim, Ryanair submits that
the only matters relevant to the question of dominance are matters that
go to show the extent to which the undertaking concerned can behave
independent of its competitors, as defined by the European Court of
Justice ("ECJ") in of Michelin v Commission [1983] ECR 3461. Ryanair
submits that the relevant paragraphs do not comprise material relating
to the market conditions affecting Ryanair in the markets in question
and its economic strength or otherwise and that the relevant paragraphs
constitute no more than allegations of competition law infractions viz a
viz third parties in a different market. Ryanair further submits that these
paragraphs come within the test for scandalous pleadings within O. 19
r. 27 in that they consist, it is said, of highly prejudicial and damaging
slurs on Ryanair and are at the same time irrelevant to anything to be
proved in the proceedings. Ryanair further argues that if maintained,
the particular portions of the amended defence and counterclaim would
occasion considerable delay and additional cost in the proceedings and
significantly embarrass and prejudice the fair hearing of the trial.
4.11 Paragraphs 67 (d) and 71(c) of the amended Defence and
Counterclaim
Ryanair argues that these paragraphs come within O. 19 r. 27 because, it
is said, the relevant paragraphs expressly or by implication put forward a
further claim that Ryanair is abusing its dominant position and where, it is
said, that allegation is irrelevant to the case being made by Bravofly.
4.12 Paragraph 68 of the amended Defence and Counterclaim
Ryanair argues that these pleas should be struck out firstly on the basis
of their speculative nature and secondly under O.19 r. 27 on the basis
of the lack of relevancy of the claims to Bravofly's case of any alleged
agreements between Ryanair and third parties and that this lack of
relevancy causes the claims to be scandalous.
4.13 Paragraph 67 (e) to (k) and (n) to (q) of the amended Defence and
Counterclaim
In these paragraphs Bravofly sets out the nature and size of the market
for online travel agency services and the benefits of such services. Ryanair
submits that these paragraphs should be either clarified or stuck out
on the basis that it is not clear whether they represent evidence which
is intended to be given or fact. In this respect Ryanair seeks to rely on
the comments to Smyth J at p. 477 of Hanly, where the court struck out
matters that might or might not be relevant to the question of damages in
the case indicating:-
"In my judgment, it is not permissible for a plaintiff in a statement of
claim in an action such as this to seek to set forth in the pleadings in a
narrative form intended factual evidence in anticipation of, or pre-emptive
of, possible evidence in mitigation of damages that may be tendered at
trial arising from matters in a defence yet to be formulated. The material
in the paragraphs of the statement of claim is scandalous, prejudicial and
embarrassing in the legal sense of those terms."
It is submitted by Ryanair that these impugned parts of the amended
Defence and Counterclaim of Bravofly may ultimately have the
consequence of unnecessarily increasing the length of the trial in respect
of matters which go beyond the real nature of the dispute between the
parties.
4.14 At para. 60 of its original defence and counterclaim Bravofly
pleaded:-
"The plaintiff is in a dominant position in trade for low cost online booked
air travel and also in related services, both in the State and within the
common market or in a substantial part of it"
By notice for particulars, Ryanair sought full and detailed particulars for
Bravofly's basis for making this claim. In reply to Ryanair's application
Bravofly now argues that these particulars were incorporated into the
amended pleadings and form part of the portions of such pleadings which
Ryanair are seeking to have struck out in this application.
4.15 In specific reply to the case made by Ryanair concerning the first
category of pleading sought to be struck out, Bravofly submits that
the portions impugned in this motion were necessary additions to their
pleadings in order to prove their claim that Ryanair are engaging in
anti-competitive behaviour under EU and Irish competition law. To this
end, Bravofly referred to the jurisprudence of the ECJ in relation to
establishing dominance of an undertaking under Article 82 of the EC
Treaty. Bravofly submitted that part of the test of dominance of an
undertaking is as to whether the undertaking could prevent competitors
from entering the market. Bravofly also referred to the decision of the
European Commission in Ryanair/Aer Lingus, Case No. COMP/M 4439,
where, at par. 625, the commission stated:-
"The Commission's investigation showed that Ryanair has a reputation
of engaging in aggressive competition in case of new entry to Ireland,
notably by temporarily lowering prices and expanding its capacity in order
to drive out the new entrant on routes to or from Ireland."
Bravofly argued that the details of the response of Ryanair to entry to its
market is a factor in determining its dominance and as such are proper
particulars for its basis for claiming that Ryanair is in a dominant position
in the relevant market (i.e. the flight market) and do not fall under the
types of pleadings envisaged by O.19, r. 27.
4.16 In relation to the pleading as to cross subsidisation, Bravofly submits
that such pleadings are not irrelevant as, Bravofly claims that Ryanair is
not permitted to use its proprietary rights to prevent online travel agents
activities and any exclusionary conduct by Ryanair is said to amount to an
adverse effect on competition. As such the pleading concerned is said to
be a relevant and proper matter to include in the context of such a claim.
4.17 As to the alleged Anti-Competitive Agreements, Bravofly argues that
Ryanair's assertions in relation to this plea are unsustainable as Ryanair
has referred in its pleadings to an agreement with a third party in relation
to the use of Ryanair's website. In that context Bravofly specifically draws
attention to para. 30 of Ryanair's amended statement of claim, which
pleads:-
"..loss of directed traffic to the plaintiff's website and the likely
consequent impact on sale of complementary service from the plaintiff's
website by the contract partners of the plaintiff additionally exposes the
plaintiff to potential liability under an agreement that it has concluded
with a third party in respect of advertising and sales right on the plaintiff's
website."
Bravofly argues that the reference to this agreement in Ryanair's
statement of claim precludes Ryanair from asserting that reliance on the
same agreement in Bravofly's counterclaim is impermissible under O. 19,
r. 27 of the RSC.
4.18 In relation to particulars of the nature of services other than the
operation of low- fares flights, Bravofly submits that the matters pleaded
in these paragraphs are relevant to the principal plea that both parties are
engaged in the provision of services other than the operation of low fares
flights, and as to the nature of those online services, which involves the
nature of the market in which they are provided.
5. Conclusions on Strike out of Parts of Counterclaim
5.1 As will have been seen, the first set of issues under this heading
concern those parts of the pleadings contained in the counterclaim under
the general heading of "Particulars of Dominant Position" which contain
allegations of aggressive or abusive activity by Ryanair in the flight
services market. In order to assess the argument under this heading
it is necessary to consider the sort of matters that could, arguably, be
relevant to the counterclaim which Bravofly brings against Ryanair in
these proceedings.
5.2 It is, of course, the case that Bravofly is not involved in the market
for the provision of flight services itself. Rather it is involved in the market
for the provision of online booking of flight services (or more particularly,
on its case, a sub-set of that market being that which is involved with
online booking of low cost flights). The precise market may, of course, be
the subject of some debate at the hearing, but at this stage it does not
appear to be me to be appropriate or possible to reach any conclusion
as to what the proper market to consider is. A court should not lightly
exclude matters from pleadings where there is at least some reasonable
possibility that the material pleaded could be relevant. Matters should
only be excluded where it is clear that such pleading is irrelevant. On that
basis it is at least possible that the proper market, by reference to which
the court will need to assess the allegations made by Bravofly against
Ryanair, is as Bravofly alleges.
5.3 It is next necessary to note that Bravofly contends that the market
for online booking of low costs flights is a connected or ancillary market
to the market for low cost airline flights themselves. On that basis it
is contended that, if it should transpire that the court is satisfied that
Ryanair holds a dominant position in the market for low cost airline flights
(or at least does so within certain defined geographical regions), then it
follows that it is arguable that dominance in the flight market might give
rise to abuses in the subsidiary on line flight booking market. Again, it is
neither possible nor appropriate to reach any conclusions on this question
at this stage. Suffice it to say that the propositions which I have set
out are sufficiently arguable to render it inappropriate to strike out any
pleadings which are designed to allow those arguments to be progressed
at trial.
5.4 Therefore, at the level principle, it is, in my view, permissible for
Bravofly to seek at trial to establish Ryanair's dominance in the flight
market with a view to seeking to persuade the court that a knock on
effect of that dominance is a proper factor to be taken into account when
assessing whether there has been any abuse of Ryanair's position in the
online booking market.
5.5 The next step in the argument relies on the jurisprudence of the
ECJ in cases such as Michelin which make clear that a court can, in
assessing whether an enterprise has a dominant position, consider the
factual matters which are put forward as amounting to abuse. The logic
behind this position is clear. The test for dominance is well established. In
Michelin the ECJ defined it as follows:-
"A position of economic strength enjoyed by an undertaking which
enables it to hinder the maintenance of effective competition on the
relevant markets by allowing it to behave to an appreciable extent
independently of its competitors and customers and ultimately of
consumers."
5.6 The basis for dominance is, therefore, a sufficient level of economic
power within the market so as to be able to operate without significant
regard for other players. It is obvious that the fact (if it be so) that
the alleged dominant enterprise was able to achieve certain ends by
exercising its economic muscle within the market, can be properly taken
into account in assessing whether it is dominant. If it be dominant,
then the means by which it has achieved those ends (amongst other
things) needs to be assessed to determine whether those means
amount to an abuse of its dominant position. It follows that the same
factual information can be relevant to both questions. The exercise of
a significant degree of market power can be evidence of dominance. If
dominance is established the manner of the exercise of that power can be
evidence of abuse.
5.7 However, it is important to emphasise that in assessing whether
the enterprise concerned is dominant, a court is not concerned with
whether the activity alleged is, in fact, abusive. The court is solely
concerned with whether the enterprise is capable of exercising a degree
of economic power in the relevant marketplace such that it meets the test
for dominance.
5.8 Against that background it seems to me that much of the contested
pleading under this heading is inappropriately drafted. The pleading
makes allegations of "abuse" and "aggressive behaviour". It is not
relevant to these proceedings to determine whether Ryanair was or was
not guilty of abuse of any dominant position which it might arguably have
in the low cost flight market. It is, of course, possible that some of the
underlying facts which might, arguably, be said to amount to an abuse
of such a position in the flight market can be relevant in determining
dominance in that market.
5.9 However, it is important to emphasise that in these proceedings
the only matter that is relevant in relation to the flight market, is the
alleged dominance of Ryanair in that market. Whether Ryanair has (if it
be so dominant) abused that position in the flight market is not relevant
because Bravofly does not operate in the flight market. While some of the
underlying facts on which it might be contended that Ryanair has abused
its alleged dominant position in the flight market can, in accordance with
the established jurisprudence, be relied on as part of the assessment of
whether it is in fact dominant in that market, it is only those underlying
facts which might, arguably, go to show a sufficient level of market power
to establish dominance that are relevant, and not whether those facts
might also amount to an abuse.
5.10 It seems to me to follow that those aspects of the pleading
which assert abuse, aggressive behaviour and the like are, therefore,
inappropriate. It is not relevant to these proceedings to consider or
determine whether Ryanair has been guilty of abuse of a dominant
position in the flight market. The only facts under this heading that
are, arguably, relevant in these proceedings are underlying facts which
demonstrate Ryanair's economic power in the flight market. These latter
underlying facts will be relevant to the court's assessment of whether it
has been established that Ryanair has a dominant position in the flight
market which, for the reasons which I have sought to analyse earlier, is
arguably relevant to the issues which arise in this case.
5.11 It would be wrong for me to be prescriptive as to the precise way
in which Bravofly should plead the underlying facts. However, I am
satisfied that the pleadings as currently drafted under this heading are
not permissible. I propose to afford Bravofly an opportunity to redraft
the pleadings in such a way as confines the allegations in respect of the
flight market to underlying facts which might, arguably, be relevant to
the assessment of whether Ryanair is dominant in that market. There
should be no reference in such pleading to any material which contains
a suggestion of abuse by Ryanair of its alleged dominant position in the
flight market, for such matters are wholly irrelevant to this case.
5.12 The second set of contested pleadings concern allegations of so
called cross subsidisation whereby it is contended that Ryanair is in a
position to cross subsidise its flight business by profits made in the online
booking business. If such facts could be established then same might well
be relevant in an action brought by a competitor of Ryanair in the flight
business, who might maintain that it was an abuse of Ryanair's allegedly
dominant position in that market (or at least the low cost end of it) to
keep flight prices artificially low by such cross subsidisation. However, it
is difficult to see how such an allegation could have any relevance in this
case. It is hard to see how it could be relevant in establishing dominance.
It might, arguably, be a means by which dominance in the flight market
might be maintained or achieved. Such cross subsidisation might, for
example, provide for an opportunity for a company such as Ryanair to
operate below cost on certain flights for the purposes of making it very
difficult for competitors to enter the market or, having so entered, to
stay in the market. But it is the ability of a company such as Ryanair (if
it be established) to exclude such competitors that goes to establish its
dominance. The fact that it may have access to sufficient funds to achieve
that dominance by cross subsidisation (or from any other source), does
not seem to me to be particularly material to the question of whether it is
dominant in the first place. Likewise the methods adopted might well be
relevant, as I have pointed out, in an action in which it was alleged that
there was an abuse of a dominant position in the flight market. It is hard
to see how such facts could be relevant in an action in which it is sought
to suggest that there is abuse in the subsidiary or ancillary market for
online booking in the low cost sector.
5.13 Counsel on behalf of Bravofly argued that if cross subsidisation
happens in one direction, then it is also possible that it might happen in
the other direction if the commercial interests of the enterprise concerned
were to require it. That is undoubtedly true. However, it is not currently
asserted that it has, in fact, happened. If Ryanair is found to be in a
dominant position in the flight market such that that finding could justify
a further finding of abuse in the subsidiary flight booking market, then
cross subsidisation which allowed the booking market to operate in an
unfair way against competitors, might well amount to an abuse. But that
is not an abuse which is currently alleged.
5.14 I am not, therefore, satisfied that the cross subsidisation issue could
have any relevance to these proceedings, and it seems to me that the
relevant paragraphs under this heading should be struck out.
5.15 The third disputed area of Bravofly's counterclaim concerns
particulars of what is said to be anti-competitive activity on the part
of Ryanair by reason of having entered into exclusive agreements
with third parties. It is important to note that the genesis of this issue
stems from a contention in Ryanair's statement of claim where, as a
particular of the damage which has or may be caused to Ryanair by what
is said to be Bravofly's wrongful activity, it is said that that activity may
cause difficulties for Ryanair by exposing it to potential liability under
an agreement which it has entered into with a third party. There is,
therefore, a clear basis for the assertion that Ryanair has entered into
some form of exclusive agreement with a third party concerning the
exploitation of aspects of its online booking website.
5.16 The question which I have to address is as to whether the allegation
deriving from that fact, in the manner in which it is particularised in
para. 68 of the amended defence and counterclaim, is sufficient to
properly bring such a claim. The issue seems to me to be analogous to
that which I had to consider in National Education Board v. Ryan & Ors
[2007] IEHC 428, concerning the proper pleading of a claim in fraud.
While the analogy between a fraud claim and an anti-competitive activity
claim is far from complete, there are not insignificant analogies. Both
involve allegations which, if true, involve activity which is likely to be
at least in part clandestine. A person bringing a valid claim in respect
of such matters will be unlikely to be able to plead such a claim with a
great degree of particularity in advance of having had the opportunity to
exercise procedural measures such as discovery. On the other hand there
is clear competing requirement that a party should not be able to make
a bald and general accusation of wrongful activity and thus gain access
to its opponent's private papers, for the purposes of seeing if it can make
out a case. A balance between those two competing requirements needs
to be struck.
5.17 As I pointed out in National Education Board it seems to me that
the court is entitled to require something more than a bald claim before
permitting the pleadings to close, and the plaintiff to seek discovery.
However, a court should not go so far as to require an overly detailed
particularisation of the claim, which would have the effect of potentially
limiting the claim in a way such as would exclude from discovery material
that might well be relevant to true wrongdoing. I am satisfied that an
analogous position applies in an anti-competitive activity claim such as
this. A party should not be permitted to make a bald accusation of anti
competitive behaviour and hope to be able to particularize it as a result
of documents obtained on discovery or by reason of the results of other
procedural measures. On the other hand a party should not be required
to particularize such a claim in such great detail (prior to discovery), such
as might well exclude it from the reasonable opportunity of obtaining
material information on discovery.
5.18 While it is fair to say that it would not be proper to characterize the
claim made by Bravofly in para. 68 of the amended counterclaim as being
merely a "bald" claim, given that there is a reference to the relevant third
party, and given that there is clearly a factual basis for the assertion that
there is a contract between Ryanair and that third party (the existence of
the contract is relied on by Ryanair), which gives exclusive rights to that
third party in relation to the exploitation of aspects of Ryanair's website,
nonetheless I am satisfied that the claim as currently formulated falls on
the wrong side, from Bravofly's perspective, of the line between what it
is reasonable to require of a plaintiff in terms of detail prior to discovery.
In those circumstances, as noted in respect of the first category, it is not
for me to be prescriptive as to the precise way in which Bravofly should
formulate its claim under this heading. I will, therefore, afford Bravofly an
opportunity to reformulate this aspect of the claim to include a significant
amount of additional detail as to the manner in which it asserts that such
a contract is anti-competitive, and what relief is said to flow from that
assertion.
5.19 As to the fourth disputed category it is fair to say that counsel for
Ryanair indicated that this category gave rise to the least level of concern
on Ryanair's side, although counsel did persist with the application to
have what were said to be the offending aspects of the counterclaim
struck out. On balance I have come to the view that I should not make
that order. There is obviously, in many cases, a very fine line between
facts and the evidence by reference to which those facts might be proved.
In cases where it is obvious that the relevant pleading concerns evidence
rather than facts, then it may well be appropriate for the court to strike
out the pleading concerned. On the other hand where the relevant
pleading lies in what might be reasonably be described as a grey area
between fact and evidence, it seems to me that a court should err on
the side of allowing the pleading to stand. I, therefore, make no order in
respect of that aspect of the claim.
5.20 In summary, under this heading, I, therefore, propose affording
Bravofly an opportunity to provide a revised pleading in relation to
categories 1 and 3 of those under contest, to strike out the pleadings set
out in the second category, and to decline to make an order striking out
the fourth category.
6. Travelfusion's Claim Under The Brussels Regulation in relation to
Jurisdiction
6.1 As noted earlier Travelfusion has brought an application to dismiss
the proceedings against it for want of jurisdiction under the Brussels
Regulation. The guiding principle of jurisdiction, as set out in the Brussels
Regulation at Article 2, is, of course, that persons are to be sued in the
Courts of the Member State in which they are domiciled. It is not disputed
but that Travelfusion is domiciled in England.
6.2 In its application to the court Travelfusion relied on a number of
different grounds for asserting that the Irish courts have no jurisdiction
to entertain the claim made as against it in these proceedings. However,
while not conceding that the remaining grounds lacked merit, counsel for
Travelfusion confined his argument at the hearing before me to a claim
based on what is said to be an exclusive jurisdiction clause governing the
situation.
6.3 Travelfusion contends that Ryanair's proceeding against it are subject
to the exclusive jurisdiction of the English Courts having regard to the
provision in the Terms of Use of the Ryanair Website, which purport to
governs applicable law and jurisdiction. The clause in question is Clause 7
of the Terms of Use, which provides as follows:-
"Disputes arising from the use of this website and the interpretation of
these Terms of Use of the Ryanair website are governed by English Law.
All disputes relating to these Term of Use and the use of the Ryanair
Website are subject to the exclusive jurisdiction of the English court,
save that Ryanair may, at its sole discretion, institute proceedings in the
country of your domicile."
6.4 In the context of that clause it should be noted that counsel for
Ryanair did not dispute but that, if the clause were applicable, it
would govern each of the causes of action asserted by Ryanair in
these proceedings. In other words it was accepted that each of the
relevant causes of action constituted a dispute "arising from the use
of this website". As will be seen, Ryanair does not accept that, for the
purposes of determining jurisdiction, the clause is applicable in the
circumstances which have arisen. The concession to which I have referred
is, therefore, predicated on Ryanair failing to satisfy me of that fact and,
consequentially, the clause governing jurisdiction in this case. In that
eventuality it is not contended by Ryanair that I can properly draw any
distinction between the various causes of action. Travelfusion also agree
with this interpretation of the clause. Furthermore, Ryanair accepts that
if the jurisdiction clause is operative in accordance with the requirements
of the Regulation, there is no legitimate basis for invoking the jurisdiction
of the Irish courts. The sole issue is, therefore, as to whether the clause
does in fact govern jurisdiction in this case.
6.5 It is Travelfusion's case that this court has no jurisdiction to hear
these proceedings as against it by virtue of the Article 23 of the Brussels
Regulation which states:-
"If the parties, one or more of whom is domiciled in a Member State,
have agreed that a court or the courts of a Member State are to have
jurisdiction to settle any disputes which have arisen or which may arise in
connection with a particular legal relationship, that court or those courts
shall have jurisdiction. Such jurisdiction shall be exclusive unless the
parties have agreed otherwise."
6.6 Travelfusion submits that it is clear under Ryanair's own Terms of Use
that any disputes relating to the Terms of Use or the use of the Ryanair
website are subject to the exclusive jurisdiction of the English courts.
6.7 Travelfusion further argues that the Court should follow the "common
sense" approach to the interpretation of jurisdiction clauses as set out
by Steyn LJ in Continental Bank NA v Aeokos Cia Naviera SA [1994]
1 WLR 588 and approved by the Supreme Court in Leo Laboratories v
Crompton BV [2005] 2 ILRM 43. It was argued by Travelfusion that the
choice of jurisdiction clause must be upheld and give effect even though
one party is challenging the validity of the entire contract including the
clause concerned.
6.8 On the other hand Ryanair submits that Travelfusion, as the party
asserting the applicability of Article 23 to oust the jurisdiction of the
Irish court, has the burden of demonstrating its applicability and further
asserts that an essential precondition to the operation of Article 23 is not
satisfied. Ryanair relies on case law from the ECJ which has held that the
requirements of Article 23 have to be strictly construed, in particular with
regard to whether there was a consensus between the parties in relation
to the clause. At paragraph 7 of the ECJ's decision in Estas Salotti v Rua
[1976] ECR 1831, the ECJ states that Article 23:-
"... imposes upon the Court before which the matter is brought the duty
of examining first , whether the clause conferring jurisdiction upon it was
in fact the subject of a consensus between the parties which must be
clearly and precisely demonstrated."
6.9 Also the ECJ in Benincasa v. Dentalkit [1997] ECR 1 6767, at paras.
28 and 29, explained that this Article should be interpreted strictly, since
the purpose of the Article is to designate, clearly and precisely, a court in
a Contracting State which is to have exclusive jurisdiction in accordance
with the consensus between the parties. Ryanair argues that there is no
consensus as to the jurisdiction clause as Travelfusion itself is disputing
the existence of a contract between the parties in relation to the use of
Ryanair's website.
6.10 It was argued by Travelfusion that the choice of jurisdiction clause
must be upheld and given effect even though one party is challenging
the validity of the entire contract including the clause concerned. In that
context Travelfusion also relies on Benincasa, where the ECJ considered
whether the court of a Member State, specified in a jurisdiction clause in
a franchising agreement, has exclusive jurisdiction pursuant to Article 17
where there was a dispute as to the validity of the franchising agreement.
The ECJ found that a distinction must be drawn between a jurisdiction
clause and the substantive provisions of the contract in which it is
incorporated and that a validly concluded jurisdiction clause remains
valid despite either party seeking a declaration that the contract which
contains the clause is void. The ECJ also stated that it is for the national
court to interpret the clause conferring jurisdiction invoked before it in
order to determine which disputes fall within its scope. The principle was
reaffirmed by the ECJ in Soc.Trasporti Castelletti Spedizioni Internazionali
SA v. Hugo Trumpy SpA [1999] ECR 1/597, where at paras. 48 to 51, the
ECJ started:-
"As the court has repeatedly stated, it is in keeping with the spirit of
certainty, which constitutes on of the aims of the Convention that the
national court seised should be able readily to decide whether it has
jurisdiction on the basis of the rules of the Convention, without having to
consider the substance of the case."
6.11 Accordingly, it is said, a contract in which a jurisdiction clause is
located may be held to be voidable or otherwise unenforceable but not the
jurisdiction agreement within it. The principles in Benincasa were applied
by Laffoy J. in Minister for Agriculture v. Alte Leipziger [1998] IEHC 45, as
the fundamental principles which must guide a court in determining issues
in relation to jurisdiction clauses under the Brussels Regulation.
7. Conclusions on Jurisdiction
7.1 As has been pointed out the only issue which I now have to decide is
whether the choice of jurisdiction clause contained in Ryanair's standard
form is applicable, so as to bind the parties and thus exclude any
jurisdiction other than that of England. Obviously given that Travelfusion
is, by common agreement, English domiciled it follows that the alternative
jurisdiction available under the clause referable to the domicile of the
proposed defendant does not alter the situation. On the facts of this case,
if the clause applies, it chooses England and only England as the forum for
any proceedings.
7.2 It was accepted by the parties that the circumstances giving rise to
the issue in this case are highly unusual. The party who has produced the
standard form containing a choice of jurisdiction clause is the one saying
it does not apply. Equally the party denying that there is any contract
at all is the one who is placing reliance on a clause which arises out of a
contract alleged by its opponent but denied by it.
7.3 Likewise it seems to me that, doubtless because the situation is
unusual, there is little decided case law which is directly on point. It would
appear possible to identify two important principles concerning the proper
construction of the Brussels Convention (and afterwards the Brussels
Regulation), in areas such as this.
7.4 Firstly, the ECJ has been concerned to ensure that issues relating
to the applicability of jurisdiction clauses are determined as a matter
or European law under the terms of the Convention or Regulation, and
without reference to the many different laws of the member states
concerning the substantive issues which might arise in proceedings before
the courts of such member states. The ECJ has, therefore, been at pains
to point out that the question of whether the requirements set out in the
Convention or Regulation for a choice of jurisdiction clause to apply are
met (and whether they are met is to be determined on the basis of an
autonomous application of community law) is wholly separate from any
questions concerning the validity or enforceability of the contract in which
the clause might be found. The validity or enforceability of such contract
in the substantive proceedings will, of course, fall to be determined in
accordance with the law of the member state concerned, or such other
law as the private international law of the member state concerned
may deem applicable. The fact, therefore, that it might be argued that
the contract as a whole is either invalid or unenforceable does not, of
itself, mean that the choice of jurisdiction clause may nonetheless be
applicable, provided that the conditions set out in the Convention, or now
the Regulation, are met.
7.5 The second major principle appears to be that decisions as to whether
a choice of jurisdiction clause applies should be made in a relatively
straightforward way. In Hugo Trumpy the ECJ speaks of a court being able
to "readily decide" the issue. It also seems to follow that that decision
will, in practice, have to be made at a very early stage in the process. In
many jurisdictions (and Ireland is one such) procedural law and private
international law requires that an objection to the jurisdiction of a court
must be made at the beginning of proceedings for the obvious reason
that it would be wholly unsatisfactory to require parties to embark on
the substantive proceedings themselves without knowing whether those
proceedings are going to ultimately determine the issues between the
parties.
7.6 In most cases there is unlikely to be any significant tension between
those two principles. A court is required to decide, at the beginning, and
solely by an application of the principles to be found in the Regulation,
whether a choice of jurisdiction clause applies. On the basis of that
decision, then the question of whether the courts of the member state
whose jurisdiction has been invoked has jurisdiction, can be determined.
Questions such as the validity of the underlying contract as a matter of
the proper law of the member state concerned, will then fall to be dealt
with as part of the substantive proceedings themselves.
7.7 The potential tension between those two principles that can arise in
unusual cases has come into stark relief on the facts of this case. True it
is to say that the question of the validity of a contract as a matter of the
law of the member state concerned (or other applicable law) will never
be exactly the same as the question of the applicability of a choice of
jurisdiction clause (which, as I have pointed out, falls to be determined as
a matter of community law). However, in certain unusual cases the two
questions may be very similar indeed. This case seems to me to be one
such.
7.8 The issue between the parties so far as the choice of jurisdiction
clause is concerned is whether there was a consensus as to that clause.
A key issue in the substantive proceedings is as to whether the set of
standard clauses contained in Ryanair's standard form terms, (including
the choice of jurisdiction clause) govern the legal relations between the
parties, both as to contract and so far as the intellectual property claims
made by Ryanair are concerned. While by no means the only issue in the
substantive case, a very significant issue will, therefore, be as to whether
Bravofly are bound by those terms. That issue, as a matter of Irish law
(or perhaps, on one view, of English law as the applicable law) will largely
turn on whether Bravofly must be taken to have agreed to the relevant
terms and conditions.
7.9 Both questions will, therefore, fall to be decided by reference to
whether it can properly be said that there was an agreement or consensus
between the parties. It is true to say that the question of the applicability
of the choice of jurisdiction clause, so far as the Regulation is concerned,
will fall to be determined by reference to whether it can properly be
said that there was a consensus between the parties, in the sense in
which that term is used in the jurisprudence of the ECJ and referable
only to the jurisdiction clause, while the question of whether there
was an agreement, so far as the substantive issues in the proceedings
are concerned, will fall to be determined, for example, by reference to
whether it can properly be said that Bravofly entered into a contract at
all with Ryanair incorporating the relevant terms. Nonetheless the two
questions are very similar.
7.10 As I understand it, the questions which arise largely stem from
the proper characterisation of the manner in which the Bravofly
website interacts with the Ryanair website. Can it be said that a proper
characterisation of that interaction leads to a view that there was an
agreement by Bravofly to be bound by Ryanair's terms and conditions?
If it can (as a matter of Irish - or English - contract law), then all of the
relevant Ryanair clauses will, prima facie, be applicable. Equally it is
difficult to see how a similar question, i.e. the proper characterisation
of the interaction between the two websites concerned in the context of
whether it can be said to give rise to an agreement between the parties,
would not be highly relevant, although not, perhaps, determinative, of
the issues which arise in relation to the existence of a consensus as to the
choice of jurisdiction clause as required by the Regulation.
7.11 This case, therefore, brings four square into contention a position
where the question of whether there is a choice of jurisdiction clause
which ought be recognised under the provisions of the Regulation and the
questions of whether, in the substantive proceedings, there are binding
legal arrangements between the parties, largely turn on the same or a
very similar question. I say largely because, for the reasons which I have
sought to analyse, the precise test is, of course, different. The question
which I have to decide is as to the proper approach of a court faced with
such a situation.
7.12 Firstly, it appears to me that it would be most unsatisfactory if a
court were required to enter into a detailed inquiry in relation to the
underlying facts giving rise to the proceedings, similar to that which would
need to be conducted to determine the central issues in the substantive
proceedings, in order for the court to determine jurisdiction. In such a
circumstance the court could hardly be said to be able to "readily decide"
the jurisdiction issue. Obviously such a situation will not arise where
the parties had in fact reached some form of agreement (from which
a consensus on the jurisdiction issue can be inferred) but where the
questions which govern the validity and enforceability of a contract in the
substantive proceedings (in cases where they arise) do not, therefore,
involve the absence of any agreement or consensus in the first place.
There may, however, be cases where the unsatisfactory situation which I
have just identified cannot be avoided.
7.13 On the other hand it seems to me that the situation here is different.
It is not open to Ryanair to suggest that it does not want its legal
relations with those who use its website to be governed by the terms of
use which it has specified. Much of the case which Ryanair seeks to bring
involves urging on the court that those terms of reference are applicable
to its legal relations with Travelfusion. While Travelfusion does deny the
applicability of the terms, it seems to me that it would do significantly less
damage to the jurisdiction regime specified in the Brussels Regulation to
permit, for the purposes of an action, a party to accept, for jurisdictional
purposes only, the applicability of a jurisdiction clause sought to be
imposed by the other side (while denying in the substantive proceedings
the existence of any agreement) rather than creating a situation where it
would be necessary to embark on a level of inquiry into the facts which
would very closely parallel the inquiry that would be necessitated by a
hearing of the substantive proceedings themselves.
7.14 The United Kingdom Court of Appeal in Continental Bank had to
consider a somewhat analogous situation under the Brussels Regulation.
It is true to say that the issue under consideration in that case involved
the contractual jurisdiction provisions contained in Article 5(1) of the
Brussels Regulation rather than a choice of jurisdiction clause. There
are limits, therefore, to the extent to which one can draw an analogy
from such a situation. However, the other facts of the case in question
were very similar to those with which I am faced. The party's seeking to
assert jurisdiction under Article 5(1) denied that there was any contract
at all. On that basis, on its case, there were no contractual obligations
of any sort between the parties and therefore, for example, there could,
again on that party's case, have been no place for the performance
of any contractual obligations. Nonetheless, the Court of Appeal was
happy to accept that a sufficient case for the application of Article 5(1)
had been made out by virtue of the assertion of the opposing party of
contractual relations which, if they existed, would undoubtedly have
conferred jurisdiction on the courts of the United Kingdom to determine
issues arising out of same.
7.15 It seems to me that, by a parity of reasoning, a defendant is
entitled, while denying the existence of any contract, to rely on a choice
of jurisdiction clause which will necessarily be contained in any contract
should same be found to exist.
7.16 It seems to me that such an approach is also consistent with the
overall approach of the ECJ. True it is that, in Estas Salotti, the court
noted that there must be an examination by the relevant court of the
member state concerned to ensure that the jurisdiction clause "was in fact
the subject of a consensus between the parties which must be clearly and
precisely demonstrated". It is important, however, to note that the court
was in that case concerned with the situation where the party who might
be said to have inserted the jurisdiction clause in dispute was the one
that was seeking to rely on it. In this case the party who might be said
to have inserted the jurisdiction clause is the one seeking to deny it. It
would create no unfairness or injustice to permit a party in a position such
as Travelfusion to accept, for the purposes of jurisdiction, the existence
of the relevant choice of jurisdiction clause. Travelfusion is, in this case,
happy to accept the jurisdiction clause. The clause itself was inserted
into any contractual relations that might be said to exist by Ryanair.
That, in my view, is a sufficient consensus to meet the requirements
of the Regulation even though Travelfusion asserts the absence of any
contractual relationship.
7.17 For those reasons I am satisfied that the choice of jurisdiction clause
is operative on the facts of this case. It follows that the courts of Ireland
have no jurisdiction to deal with the issues raised as and between Ryanair
and Travelfusion and the claim as against Travelfusion must, therefore, be
struck out for want of jurisdiction.