Recent developments include the latest on the first opt-out collective action in the CAT and the decision to stay a follow-on damages claim in favour of an agreement to arbitrate.
First opt-out collective action certification application in the CAT adjourned
On 31 March 2017 the CAT declined to issue what would have been the first Collective Proceedings Order for an opt-out collective action in Dorothy Gibson v Pride Mobility Products Limited.
In summary, the CAT was not satisfied that the claims comprising the proposed class action raised sufficiently common issues. In particular, it was that the case that some of the claims covered conduct and a range of products so diverse as to fall outside the fairly narrow scope of the underlying OFT decision from which the claims arose. Those claims would therefore have gone beyond the possibilities of follow-on claims and instead constituted standalone claims (which are inconsistent with the nature of admissible opt-out collective actions).
However, rather than reject the CPO application, the CAT adjourned it and permitted the applicant to file a reformulated draft claim form offering a better definition of the proposed class of claimants.
Follow-on competition damages claim stayed in favour of arbitration agreement
On 28 February 2017, the High Court stayed a follow-on competition damages action brought by Microsoft Mobile against three lithium-ion battery cartelists on jurisdictional grounds. The claim arose from the European Commission's finding that Sony and others participated in a price fixing cartel in the market for rechargeable lithium-ion batteries between 2004 and 2007. Total fines of €166 million were imposed.
Microsoft pursued its claim against Sony and two other non-English based defendants, based on purchases made by Nokia prior to its acquisition by Microsoft in 2013. Sony argued that the claim against it was not within the court's jurisdiction as the supply contract under which the cartelised products were sold to Nokia contained a broad arbitration clause.
After a five day hearing, Marcus Smith J ruled that the arbitration clause applied to the claim against Sony, and accordingly that it should be resolved by arbitration. This ruling comes in the context of the principle usually applied by the English and EU courts that competition damages claims (which are generally tortious rather than contractual) are likely to fall within an arbitration clause only where they are closely related to a parallel contractual claim. To date, competition damages actions have generally been "carved-out" from the "one-stop shop" presumption applied when interpreting arbitration clauses (namely that contracting parties generally intend all their disputes arising in relation to a contract to be dealt with in the same forum).
Marcus Smith J held that the claim against Sony could be said to be covered by the arbitration clause if the conduct complained of was also capable of giving rise to a contractual claim against Sony. Sony argued that the contractual terms obliged it to negotiate prices in good faith and to inform Nokia of any events that affected its ability to meet any of its contractual obligations. Sony argued that its participation in a cartel therefore constituted a clear breach of those contractual obligations. The court accepted this argument, even though Microsoft had not pleaded it.
This finding had implications for the other defendants. Sony had been the "anchor defendant", in that it was the English-based defendant that Microsoft had used to "anchor" the proceedings in the English courts, enabling it to join the other foreign defendants as necessary or proper parties. Without that "anchor", the English courts will not have jurisdiction over those foreign defendants unless another jurisdiction gateway is available.
As such, Marcus Smith J considered that the "necessary or proper party" test was not satisfied as Sony, the anchor defendant, was not properly before the court in circumstances where the claims against it were to be stayed. He also held that Microsoft had not established sufficient evidence that it had suffered substantial damage in England and Wales referable to each of its claims.
This case gives rise to two important practice points:
- the potential existence of a parallel contractual claim is likely to become an important consideration for practitioners on both sides when assessing jurisdictional arguments in competition damages actions; and
- the potential knock-on effect of an arbitration clause on non-parties is not to be ignored, particularly in "anchor defendant" cases.
It is understood that permission to appeal is being sought.
Cases referred to:
Microsoft Mobile Oy (Ltd) v Sony Europe Limited & Ors [2017] EWHC 374 (Ch)
Dorothy Gibson v Pride Mobility Products Limited [2017] CAT 9
