Source: http://antitrustdigest.net/jurisdictional-clauses-and-abuses-of-a-dominant-position-case-c%E2%80%91595-17-apple-eclieuc2018854/
Timestamp: 2019-04-19 06:22:19+00:00

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This review concerns the judgment of 24 October by the CJEU on whether generally worded jurisdiction clauses cover claims of abuse of a dominant position brought by one party to a contract against the other (Case C‑595/17 Apple ECLI:EU:C:2018:854).
The interpretation of generally worded jurisdiction clauses, and whether they extend to cartel claims, was the topic of a couple of articles that I reviewed a few weeks ago here and here.
In 2012, the authorised reseller brought proceedings before the tribunal de commerce de Paris (Commercial Court, Paris, France) against two legal entities in Apple’s group – one established under US law, the other under French law – regarding an abuse of a dominant position related to Apple favouring its own network. That court held that the jurisdiction clause conferring jurisdiction on the Irish courts applied. The cour d’appel de Paris (Court of Appeal, Paris, France) upheld this judgment, but the Cour de cassation quashed it on the grounds that these decisions contradicted the judgment in Case C‑352/13 CDC Hydrogen Peroxide EU:C:2015:335. This judgment, as you may remember, decided that generally worded jurisdiction clauses would normally not cover cartels because the parties would not have reasonably foreseen a cartel when they agreed to the clause. It followed that the jurisdiction clause did not apply, and the French courts had jurisdiction.
After the case went back to the tribunal de commerce de Paris (Commercial Court, Paris, France), the court became aware of a decision by the Portuguese Supreme Court which ruled, contrary to the Cour de Cassation, that a similar jurisdiction clause actually extended to a similar abusive practice (Interlog and Taboada v Apple). As a result, the Portuguese Supreme Court held that Portuguese courts did not have jurisdiction.
According to the AG, this case concerned the correct interpretation of the ECJ’s CDC Hydrogen Peroxide judgment – and how the reasoning in that judgment should apply to non-cartel anticompetitive practices (in this instance, a distribution agreement).
The starting point for this analysis is Article 23 of Regulation No 44/2001 – i.e. Brussels I – which allows parties to agree on the jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship. This requirement seeks to avoid a party being taken by surprise by the assignment of jurisdiction to a given forum as regards all disputes which would arise from a relationship. Instead, only those disputes in connection with which the agreement conferring jurisdiction was made should fall within the scope of the jurisdictional clause.
(3) the substantive law applicable to the dispute has, in principle, no influence on the determination of jurisdiction. The effectiveness of a jurisdiction clause depends solely on whether the case concerns a dispute concerning a ‘particular legal relationship’ between the parties’. It follows that there is no reason why a jurisdiction clause cannot apply to claims for competition law – and this is not what the CDC Hydrogen Peroxide decision holds.
(4) The content of a jurisdictional clause is fundamental to determine whether it can encompass competition claims. The CDC Hydrogen Peroxide decision provides some guidance in this respect: while a generally worded jurisdictional clause would not normally encompass secret cartels, a clause referring to ‘disputes in connection with liability incurred as a result of an infringement of competition law’ likely would. In CDC, the cartel was secret and, therefore, unrelated to the contracts of sale in connection with which the jurisdiction clauses at issue had been entered into. In such a situation, the objective of predictability which justifies the binding force of the jurisdiction clauses — and its corollary, namely the objective that a party must not be ‘taken by surprise’ by the assignment of jurisdiction to a forum having its origin in relationships other than those in connection with which the clause was agreed— argued in favour of disapplying the jurisdiction clause According to the Advocate General, an express reference to ‘disputes in connection with liability incurred as a result of an infringement of competition law’ in jurisdiction clauses will only be relevant for disputes which clearly do not have their origin in the legal relationship in connection with which the agreement conferring jurisdiction was entered into. It follows that other types of antitrust infringements will fall within the scope of generally worded jurisdictional clauses as long as they are related to the contract.
This means that certain types of conduct alleged to constitute a cartel or an abuse of a dominant position, such as the types of conduct that may be employed in the context of a selective distribution system, may have a connection with the distribution agreement and thus be covered by the jurisdiction clause in such a contract, even when such clause has been drafted in general terms. As such, in a case such as this, where the alleged conduct relates to the pricing conditions or supply conditions imposed in a discriminatory manner, it cannot be precluded that the dispute has its origins in the legal relationship between a supplier and his distributor.
The judgment refers solely to the CDC Hydrogen Peroxide, which is described throughout as settled law. The reasoning is rather succinct.
According to CDC Hydrogen Peroxide, courts must interpret jurisdiction clauses to determine which disputes fall within the scope of such clauses. However, a jurisdiction clause can concern only disputes which have arisen or which may arise in connection with a particular legal relationship. This limits the scope of jurisdiction clauses solely to disputes which arise from the legal relationship in connection with which the agreement was entered into.
In CDC Hydrogen Peroxide, the court found that a clause which abstractly refers to disputes arising from contractual relationships does not extend to a dispute concerning competition damages flowing from an unlawful cartel. This is because the undertaking which suffered the loss was unaware of the cartel and could not reasonably foresee such litigation at the time that it agreed to the jurisdiction clause. A similar conclusion applies to cases where alleged infringements of Article 102 have no connection with the contractual relationship in the context of which the jurisdiction clause was agreed (para. 27).
But the court then held that: ‘While the anti‑competitive conduct covered by Article 101 TFEU, namely an unlawful cartel, is in principle not directly linked to the contractual relationship between a member of that cartel and a third party which is affected by the cartel, the anti‑competitive conduct covered by Article 102 TFEU, namely the abuse of a dominant position, can materialise in contractual relations that an undertaking in a dominant position establishes and by means of contractual terms’ (para. 28). It follows that: ‘in the context of an action based on Article 102 TFEU, taking account of a jurisdiction clause that refers to a contract and ‘the corresponding relationship’ cannot be regarded as surprising one of the parties within the meaning of the case-law’ (para. 29). As a result, ‘the application, in the context of an action for damages brought by a distributor against its supplier on the basis of Article 102 TFEU, of a jurisdiction clause within the contract binding the parties is not excluded on the sole ground that that clause does not expressly refer to disputes relating to liability incurred as a result of an infringement of competition law’ (para. 30).
I think this is bound to be a controversial judgment. On the one hand, the ratio of the decision could be said to be, in line with CDC Hydrogen Peroxide, that all disputes which are in the reasonable contemplation of the parties to fall within jurisdiction (and, by analogy, arbitration) clauses. On the other, the court’s reasoning makes a distinction between collusive conduct – which is supposed not to be directly related to the contractual relationship, and hence fall outside the scope of jurisdictional clauses – and unilateral conduct – which can be said to be related to contractual relationships, and hence fall within the scope of jurisdictional clauses.
This latter part of the reasoning is problematic, and it significantly departs from the AGs opinion. In particular: (i) not all losses related to abusive conduct occur in the context of contractual relations. The court acknowledges this, but seems to ignore the possibility of losses from an abuse not being related to a contractual relationship between the parties; (ii) not all Art. 101 conduct is secret or a cartel. Importantly, such conduct can very often fall within the reasonable contemplation of the parties (e.g. disputes regarding the validity of contractual clauses regarding resale price maintenance or the operation of selective distribution systems); (iii) this reflects the fact that, as pointed out by the Advocate General, there is no necessary link between the applicable substantive rules (i.e. Arts. 101 and 102) and whether a specific dispute was connected to a contractual relationship or in the reasonable contemplation of the parties.
At the same time, the court bases its conclusions on the fact that it cannot be regarded as surprising for parties to a contract that a dispute based on Art. 102 TFEU will arise – i.e. such a dispute will be in the reasonable foreseeability of the parties. By coupling this element of reasonable foreseeability with an unjustified assertion that Art. 102 TFEU claims will fall within the scope of jurisdiction clauses, the reasoning seems contradictory.
A potential justification for this is that the court could be trying to develop an approach to jurisdictional clauses which provides greater legal certainty and guidance to national courts – one treatment for claims based on Art. 101, another for Art. 102 TFEU – than the alternative case-by-case analysis of whether a particular competition dispute has a sufficient link to a particular contract. However, I find it unlikely that a rule that requires generally worded jurisdictional clauses to be interpreted in accordance with the applicable substantive provisions of the European Treaties will be able to increase legal clarity, particularly given the absence of any clear link between the content of this rule and its purported normative foundations. Instead, it is likely that such an approach will lead to increased uncertainty, e.g. regarding how to treat certain abusive conduct that did not fall within the reasonable contemplation of the parties, or collusive conduct that a reasonable impartial observer would think must have been contemplated by the parties.
This could be read as creating a presumption that abuses by a supplier who holds a dominant supplier which have caused losses to its distributor will usually be sufficiently linked to the contractual relationship and would, in the context of distribution contracts, be in the reasonable contemplation of the parties.
Such a presumption would merely seek to operationalise the principles governing the interpretation of jurisdictional clauses in the context of distribution – and potentially, other vertical – relationships. Such an approach would also allow proof that the presumption should not apply in individual cases, which would be in line with the court’s conclusion that a jurisdictional clause should not be excluded ‘on the sole ground that that clause does not expressly refer to disputes relating to liability incurred as a result of an infringement of competition law’. This interpretation would also ensure that the rule to be derived from this judgment would be suitable to ‘avoid a party being taken by surprise by the assignment of jurisdiction to a given forum as regards all disputes which may arise out of its relationship with the other party to the contract and stem from a relationship other than that in connection with which the agreement conferring jurisdiction was made’ (see para. 22 of the judgement, and para. 68 of CDC Hydrogen Peroxide).
For those interested in this case, I also recommend Miguel Ferro’s comment, which is available here. This piece addresses a number of topics I did not touch on above: he is more interested on the impact of the CJEU’s role in providing guidance to national courts as regards private enforcement, on the role that the EU principle of effectiveness can have in the interpretation of jurisdictional clauses, and on the ultimate lawfulness of jurisdiction clauses under EU (competition) law. He nonetheless seems to agree with me that the best interpretation of the judgment is that it is up to the national court to decide if the criteria of reasonable foreseeability are met, even in the context of abuses related to distribution agreements. If the alleged abuse was unknown, unrelated or subsequent to a contract, the jurisdictional clause should not apply.
I have published a better structured analysis of this decision with CPI International. If you are interested, you can find it here.

References: CJEU 
 Art. 101
 Art. 102
 Art. 102
 Art. 101
 Art. 102