Cooper Tire & Rubber Company Europe Ltd & Ors v Dow Deutschland Inc & Ors [2010] EWCA Civ 864

Case No A3/2009/2487[2010] EWCA Civ 864
IN THE COURT OF APPEAL (CIVIL DIVISION)
[2009] EWHC 2609 (Comm)
ON APPEAL FROM HIGH COURT OF JUSTICE
QUEEN’S BENCH DIVISION
COMMERCIAL COURT
THE HONOURABLE MR JUSTICE TEARE
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 23/07/2010
Before
THE RIGHT HONOURABLE LORD JUSTICE LONGMORETHE RIGHT HONOURABLE LORD JUSTICE LLOYDTHE RIGHT HONOURABLE LORD JUSTICE GROSS
Between
COOPER TIRE & RUBBER COMPANY EUROPE LIMITED & ORSRespondentsDOW DEUTSCHLAND INC AND OTHERSAppellants
(Transcript of the Handed Down Judgment ofWordWave International LimitedA Merrill Communications Company165 Fleet Street, London EC4A 2DYTel No: 020 7404 1400, Fax No: 020 7404 1424Official Shorthand Writers to the Court)
Mr Laurence Rabinowitz QC& Mr Daniel Jowell (instructed by Linklaters LLP) for Appellants (“the Dow Defendants”)Mr David Foxton QC & Ms Philippa Hopkins (instructed by S J Berwin LLP) for RespondentsHearing Hearing dates : 6 th& 7 th July 2010
Judgment

Introduction

[1]This is the judgment of the court. This appeal raises the questions(1) whether the English court has jurisdiction pursuant to Article 6(1) of EC Council Regulation 44/2001 to determine claims made by the victims of illegal cartel arrangements found by the European Commission to have been made by the Defendants and(2) whether, if so, the proceedings should be stayed pursuant to Article 28 of that Regulation (which we shall call “the Judgments Regulation”) because the proceedings are related to proceedings brought elsewhere within the EU. There is also a cross-appeal raising a distinct point about a stay.[2]Once the Commission has found that there has been an infringement of Article 81 (now Article 101 of the Treaty on the Functioning of the European Union (“the TREU”)) of the EC Treaty on the part of participants in relevant anti-competitive conduct in any particular country, that finding cannot be challenged in the domestic courts of any Member State: see Article 16 EC Council Regulation 1/2003 EC (“the Modernisation Regulation”). Such a finding can only be challenged on appeal to what was the Court of First Instance of the Communities and is now called the General Court and then, if appropriate, by further appeal to the European Court of Justice on a point of law. Once an infringement has been established by the Commission, therefore, the main question liable to arise in national courts in respect of any alleged civil liability of participants in the infringement is whether any alleged victim has suffered any loss or damage as a result of that infringement. One might have thought that if there has been a Europe-wide infringement, as the Commission has found in this case, it would not much matter in which Member State that question should be tried. But for reasons which it might be easier to guess than to state, the infringers are very keen that the question should be tried in Italy while the victims are very keen that it should be tried in England. Teare J has decided that the victims’ claims to damages can and should be tried in England and some of the infringers (whom we shall call “the Dow Defendants”) now appeal with permission of the judge.

Factual Background

[3]We can take this very largely from the judge’s lucid exposition.[4]The decision by the Commission of the European Communities was dated 29 November 2006 (Case COMP/F/38.638) and entitled 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 (now Article 101 of the TFEU) of the EC Treaty in relation to the market for the supply of Butadiene Rubber ("BR") and Emulsion Styrene Butadiene Rubber ("ESBR").[5]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").[6]The Addressees were variously domiciled in Germany, the Netherlands, Italy, the Czech Republic, Switzerland and Poland. None was domiciled in England.[7]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.[8]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."
[9]The Commission Decision then 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 top 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".[10]In February 2007, the Addressees, with the exception of Bayer, lodged appeals against the Commission Decision with the Court of First Instance of the European Communities ("CFI"). It is worth noting 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 also does not challenge the existence of the cartel.[11]The appeals to the CFI were heard in October 2009. A judgment is awaited.[12]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, which use BR and ESBR in the manufacture of tyres. 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"."
[13]It is relevant to note two matters concerning these Italian proceedings: i) Although Enichem has not sought to appeal to the CFI on the basis that the cartel did not exist, Enichem has (illegitimately) 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 has invited the Italian court to consider whether the cartel as a whole, not just Enichem, has caused any damage to the tyre manufacturers who were made defendants to the Italian proceedings.[14]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. Instead, 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), Stomil (D21) and Kaucuk (D22-23). The appeal in the present case is brought only by the Dow Defendants, save (in circumstances to be explained below) for Dow Europe to whom the judge granted a stay pursuant to Article 21 of the Lugano Convention.[15]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.[16]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 because Enichem had already issued proceedings in Italy and the Claimants in England, no doubt, foresaw that proceedings against Enichem in England would lead to an application by Enichem that the proceedings be stayed pursuant to Article 27 of the Judgments Regulation, on the basis that they were proceedings in relation to the same cause of action between the same parties as were parties to the Italian proceedings. 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. (against whom the proceedings have now been settled) and Bayer plc.[17]The claims brought in England are for damages for breach of statutory duty, in particular, breach of 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.[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 BR and ESBR. The aim of these proceedings, in which similar negative declaratory relief was also sought, appears to have been to protect the Claimants from being exposed to possible recourse suits by fellow producers of BR and ESBR. 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]On 12 June 2008 the Dow Defendants issued an application in England challenging the jurisdiction of the English court and, in the alternative, seeking a stay.[21]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. On 10th September 2008 DCCL intervened in the Italian proceedings.[22]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 the Modernisation Regulation which provides that national courts "cannot take decisions running counter to the decisions adopted by the Commission."[23]On 29 April 2009 Judge Paola Gandolfi gave her decision. She found in relation to the claims set out in paragraph 12 above:- 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. 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.[24]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. 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 of Milan 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.[25]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". The judge recorded that the experts also agreed that it was likely that a decision on the appeal would be made within two to two and a half years from 10 September 2009, that is between September 2011 and February 2012. After the judgment of Teare J, the Court of Appeal of Milan fixed January 2014 for the next hearing of the appeal proceedings.

The Jurisdiction of the English Court

[26]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 Defendants only three are 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 on the basis of their domicile. We shall refer to them as “the Anchor Defendants”.[27]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 was asserted against them is that the claims against the Anchor Defendants who are domiciled in England and the claims against the Dow Defendants are, in the words of Article 6(1) of the Judgments Regulation, "so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings".[28]It was 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 were not addressees of the Commission Decision but were subsidiaries of certain of the Addressees, the debate is therefore whether the Claimants have a claim against those Defendants which cannot be struck out.

The Judgment

[29]The judge decided that, although the particulars of claim were not entirely clear, they were to be construed as alleging merely that the Anchor Defendants were subsidiaries who were not party to, and were not aware of, the anti-competitive practices agreed or adopted by other companies in the undertakings whose conduct was regulated by Article 81. He discerned (no doubt at counsel’s prompting) that the particulars of claim, as so construed, gave rise to a discrete question of law namely whether a subsidiary company who was neither party to, nor aware of, the relevant practices adopted by other companies in such undertakings could themselves be liable to victims of such practices. He then said that, although a claimant, in general terms, only had to establish a good arguable case that the court had jurisdiction, where there was a disputed issue of law which the trial judge would be in no better position to resolve than the judge dealing with the jurisdictional challenge, that latter judge “may have to determine that issue of law in order to have the required degree of assurance that the court has jurisdiction” (para 36). He proceeded to consider the question of law which he had discerned and decided to follow the judgment of Aikens J (as he then was) in Provimi Ltd v Roche Products [2003] EWHC 961 (Comm) [2003] 2 All ER (Comm) 683. In that case Aikens J held, on an application by a subsidiary company to strike out a claim, that it was arguable that a subsidiary was liable to a victim, although the subsidiary was not itself a party to, or aware of, the relevant anti-competitive practices adopted by other entities in the relevant undertaking. Teare J followed this decision and, although it is not entirely clear from later passages in his judgment whether he was finally determining the point of law in favour of the Claimants or merely agreeing with Aikens J that the Claimants had a good arguable case about it, he obviously did acquire the necessary degree of assurance to conclude that the court did have jurisdiction.[30]The judge then decided whether he should stay the proceedings against the Dow Defendants pursuant to Article 28 of the Judgments Regulation. He directed himself in accordance with the opinion of Advocate-General Lenz in Owens Bank Ltd v Bracco Case C-129/92 [1994] QB 509 and considered(1) the relatedness of the proceedings(2) the stage which they had reached in England and in Italy and(3) the proximity of the case to those respective countries. He concluded that the proceedings had no particular “centre of gravity” and that, although there was a greater connection with Italy than with England, that greater connection was not decisive in the case of a Europe-wide conspiracy. He noted that there were currently no proceedings in Italy, although it was “likely” that the Court of Appeal of Milan would reverse Judge Gandolfi’s first-instance decision; any such reversal would not occur for some time. In the circumstances he decided that there was no sufficient justification for a stay. Accordingly he dismissed both the applications made by the Dow Defendants.

The submissions

[31]Mr Rabinowitz QC for the Dow Defendants submitted, inter alia, that the judge was right to determine the point of law he had isolated but came to the wrong conclusion on it because Aikens J had also come to the wrong conclusion. It was not the law that a subsidiary of an infringer could be liable if he was not a party to, or aware of, the anti-competitive agreements or practices of the infringer; alternatively if the point was arguable, it was an important point of law which should be referred to the European Court of Justice for an authoritative determination. If, moreover, Provimi were correct and an Anchor Defendant could in theory be liable for infringements by other entities in a relevant undertaking, it could only be liable for sales actually made by it which, in the present case, were so few that they could not justify suing the Defendants who were not domiciled in the jurisdiction. Mr Rabinowitz further submitted that the judge had erred in refusing to stay the proceedings which had a much more substantial connection with Italy (which was anyway first seised). It was also improper in assessing the stage which the respective proceedings had reached at the time of the application, to take into account the length of time it would take to conclude the proceedings in the respective jurisdictions.[32]Mr Foxton QC for the claimants supported the judge’s reasoning and said that a reference to the ECJ would be inappropriate because it was only necessary for the court to hold that the point of law was arguable in order to establish jurisdiction; the question whether a point of law was arguable could not be referred. By a respondent’s notice he also sought to say that the particulars of claim were not confined to an allegation that, although the Anchor Defendants were neither party to nor aware of the anti-competitive practices of the relevant addressees of the Commission Decision, they were nevertheless liable as themselves being part of the relevant undertaking. On its true construction the pleading alleged that the Anchor Defendants were complicit and that was sufficient.[33]Although it is logical to consider this pleading point first, that can only be usefully done in the context of the point of law considered by the judge which, we shall call “the Provimi point”.

The Provimi point

[34]In English domestic law, which proceeds on the basis that corporate bodies are all separate legal personalities, one cannot say that the act of one company in a group of companies, all controlled by a holding company, is automatically the act of any other company in that group. The position in EU law is, however, different at least in the area of competition law and alleged breaches of Article 81 of the EC Treaty. What concerns EU law is the activity of “undertakings” which may comprise a number of separate corporate entities. The question under Article 81 is whether an “undertaking” has participated in anti-competitive practices and it will not avail the undertaking to say that because a corporate entity which is part of the undertaking is a party to anti-competitive practices, either the undertaking as a whole or a parent company in the group did not participate in those practices. Otherwise evasion of Article 81 would be too easy. Since, however, the Commission, in deciding whether to exact penalties for anti-competitive behaviour, has to find corporate entities on which to impose such fines, liability has to be imposed on a particular entity in the undertaking. As the Commission wants to identify an entity with an ability to pay, it will normally wish to fine a parent company in addition to any relevant subsidiaries and the European Court has evolved a concept of what may be called presumptive decisive influence if a subsidiary company is effectively controlled by a parent company, see Akzo Nobel v Commission Case C-97/08 P, [2009] 5 CMLR 23. It does not, of course, necessarily follow, as a matter of logic that a subsidiary company is to be liable for (or to be deemed to be aware of) any anti-competitive practices of its parent or of a fellow-subsidiary, but the question is whether European law does go that far. That was the question addressed by Aikens J in Provimi.[35]He answered that question by saying in para 31: “[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. "[36]With that introduction it is now appropriate to consider whether the particulars of claim assert a narrow case against the Anchor Defendants which is confined to a claim that although those Defendants made sales of BR and ESBR they did so without being party to (or being aware of) the anti-competitive conduct of relevant Addressees or whether it is a more general case which includes possible alternative cases of knowing participation and implementation.

The Particulars of Claim

[37]The Defendants to the particulars of claim, of course, included the Anchor Defendants (they were, in fact, the first and seventh defendants). In their amended form, as they were before the judge, the particulars of claim asserted under the heading “The Facts” as follows:- “41 At various times from at least 28-30 August 1995 until at least 28 November 2002 representatives and/or employees of the Shell Group, the Bayer Group, the Dow Group, BSL, Stomil, Dwory, Kaucuk and the Eni Group met and undertook discussions with a view to coordinating their competitive behaviour by at least the following means:41.1 the forming of agreements with respect to the fixing of prices and/or price targets for BR and/or ESBR products;41.2 the forming of agreements not to compete aggressively to win each others’ customers;41.3 the exchange of confidential commercial information. 42. Such multilateral discussions took place, at least in part, during and following the meetings of the ESRA sub-committees for BR and ESBR, starting from at least the ESRA meetings in London, England on 28-30 August 1995. Bilateral contact between individual corporate groups also took place at various times from at least 28-30 August 1995 until at least 28 November 2002. 43 The multilateral discussions and bilateral contact set out above at paragraphs 41-42 are collectively referred to in these particulars of claim as “the Cartel Discussions”. 44 The Cartel Discussions in fact led to each of the Defendants and companies in the Eni Group and the Shell Group coordinating their competitive behaviour through at least:44.1 an agreement, alternatively a series of related agreements, with respect to the fixing of prices and/or price targets for BR and/or ESBR products;44.2 an agreement, alternatively a series of related agreements, not to compete aggressively to win one another’s customers; and/or44.3 the exchange of confidential commercial information concerning at least prices, competitors, customers, inventory levels and staff policy. 45 Collectively, the agreements and exchange of information set out at paragraph 44 above are referred in these Particulars of Claim as “the Arrangements”. 46. The Arrangements were implemented by each of the defendants, the Eni Group and the Shell Group in relation to their sales of BR and ESBR to the Claimants. Without prejudice to the generality of the foregoing, it is specifically averred that the Arrangements were implemented in connection with the sales of BR and/or ESBR by the First, Fifth to Seventh, Ninth to Thirteenth and Seventeenth to Twentieth Defendants to the Claimants.” There then follows, in the document with which the court was provided, certain particulars which were voluntarily provided by the claimants but only after the hearing before Teare J. We agree, however, with Mr Rabinowitz that the question whether the claim is a narrow or general one should be decided on the material which was before the judge. It is, however, fair to add that in paragraph 90 where a claim for exemplary damages is made it is alleged that the Defendants’ wrongful actions were carried out “in the knowledge of and in wilful disregard of the Claimants’ rights”.[38]The judge may have been correct to say (para 39) that it is not clear whether it is being alleged that the Anchor Defendants were party to the alleged agreements or were aware of them when they made their sales. On the other hand, it would also be correct to say that it is not clear whether it is being alleged that, even if the Anchor Defendants were neither a party to the alleged agreements nor aware of them, they are nevertheless still liable for infringement of Article 81.[39]But once it is alleged that representatives of (inter alia) Shell, Bayer and indeed Dow and others had discussions to co-ordinate their anti-competitive behaviour (para 41) and that those discussions led to “each of the Defendants” co-ordinating their anti-competitive behaviour (para 44) and that the arrangements were implemented by “each of the Defendants” with specific attention being drawn to sales by the First and Seventh Defendants (para 46), that to our mind constitutes a general plea of involvement in the arrangements rather than a narrower assertion of liability in the absence of knowledge or awareness of them. It would not in our view have been open to either of the Anchor Defendants to strike out the plea on the basis that knowledge or awareness was required and had not been pleaded. To the extent that the lack of clarity was embarrassing, it would always have been possible for any Defendant to enquire whether knowledge was being alleged and, if so, what facts and matters were relied on to establish such knowledge. To give an answer to that request would not be to plead a new cause of action.[40]Mr Rabinowitz responded that just such a request had been effectively made in the witness statement of the Dow Defendants’ solicitor, Mr Michael Sanders, dated 12th June 2008 which exhibited a letter of 9th June 2008 in which he had complained that the claims had been so inadequately pleaded that the Dow Defendants did not know how it was said that the English courts had jurisdiction. Mr Sanders was, however, able to infer that Article 6(1) of the Judgments Regulation might be relied on and he required the Claimants to identify the nature of the claims which each individual Claimant had against the UK domiciled subsidiaries of the Bayer and Shell groups.[41]We cannot agree with Mr Sanders that the claims were inadequately pleaded or that it was necessary at that stage that the Claimants should identify the claim which each individual claimant had against the UK domiciled subsidiaries beyond that which had already been identified in para 41-46 of the pleading. Enthusiastic litigants sometimes forget that jurisdiction applications are supposed to be dealt with swiftly and economically at the beginning of the case. It is quite wrong for unnecessary costs to be incurred in England when it is not even clear that the case will proceed in England at all (and when indeed the defendants are vigorously asserting that it should not).[42]Be that as it may, Mr Rabinowitz then sought to rely on the response to Mr Sanders’ witness statement filed by the Claimant’s solicitor Ms Farrell on 1st August 2008. Her witness statement contained 101 paragraphs in which she (to our mind unnecessarily) gave many of the particulars demanded by Mr Sanders and then in paragraph 45, before she even came to explain the basis on which the English court had jurisdiction, said this:- “It is the Claimants’ case, as pleaded in the Particulars of Claim, that the various Defendants, and also the groups of which they form part, are “economic undertakings” in the sense in which that term is used in EU competition law. More particularly, those companies which are subsidiaries of, or in the same corporate group as, the various addressees of the Commission Decision, including those that are English companies, were used by the various “undertakings” to implement the cartel arrangements agreed on by those different undertakings. That implementation included the implementation of those arrangements in the United Kingdom.” This, said Mr Rabinowitz, contained no allegation that anyone other than the Addressees of the Commission Decision was involved in any cartel. But it does not, to our mind, purport to narrow the particulars of claim in any way. It is still an open question whether it is going to be alleged that the subsidiaries domiciled in the United Kingdom were or were not parties to, or aware of, the cartel.[43]In these circumstances it seems to us that the particulars of claim encompass both the possibility that the Anchor Defendants were parties to or aware of the anti-competitive conduct of their parent company and the other Addressees and the possibility that they were not. It is only if they were not that what we have called the Provimi point will arise. But it is unnecessary to decide it on this application because it is open to the claimants on the pleadings to prove that the Anchor Defendants were parties to (or aware of) the Addressees’ anti-competitive conduct. The strength (or otherwise) of any such case cannot be assessed (or indeed usefully particularised) until after disclosure of documents because it is in the nature of anti-competitive arrangements that they are shrouded in secrecy. But the case that the Anchor Defendants were parties to the cartel arrangements or were aware of them when they sold BR and ESBR to the Claimants is not a case that is susceptible to being struck out at the present stage.[44]In those circumstances, it is self-evident that the claims against the Dow Defendants are sufficiently closely connected with the claims against the Anchor Defendants to make it “expedient to hear and determine them together to avoid the wish of irreconcilable judgments resulting from separate proceedings” and that there is therefore jurisdiction for the English court to determine the claims against the Dow Defendants pursuant to Article 6(1) of the Judgment Regulation. It also follows that it is not possible to distinguish between the claims against the Anchor Defendants and those against the other Defendants on the premise that the former would only relate, at most, to the modest sales of BR and ESBR by each Anchor Defendant in the UK.

The Provimi point (revisited)

[45]As to the Provimi point, we can readily agree that, as Aikens J said, it is “arguable”. We would, however, add that it is also arguable the other way. Although one can see that a parent company should be liable for what its subsidiary has done on the basis that a parent company is presumed to be able to exercise (and actually exercise) decisive influence over a subsidiary, it is by no means obvious even in an Article 81 context that a subsidiary should be liable for what its parent does, let alone for what another subsidiary does. Nor does the Provimi point sit comfortably with the apparent practice of the Commission, when it exercises its power to fine, to single out those who are primarily responsible or their parent companies rather than to impose a fine on all the entities of the relevant undertaking. If, moreover, liability can extend to any subsidiary company which is part of an undertaking, would such liability accrue to a subsidiary which did not deal in rubber at all, but another product entirely? These and other difficulties have been ventilated by Mr Nicholas Khan in the 2003 volume of European Lawyer page 16 and Mr Brian Kennelly in the May 2010 issue of the CPI Anti-Trust Journal.[46]If it had been necessary to address the Provimi point, we would have been inclined to say that it would be necessary to make a reference to the ECJ before coming to a conclusion on jurisdiction. It would be possible to say that, because a claimant only has to show that he has a case against an anchor defendant which cannot be struck out, the fact that the Provimi point is arguable should not deter the English court from assuming jurisdiction. But that would mean that the Provimi point could never be decided in a jurisdiction (and possibly, therefore, in any other) context. That would not be a satisfactory state of affairs.[47]As it is, the need for a reference does not arise. We merely record that Mr Rabinowitz did ask for a reference in the following terms:- “(1) Which legal entities within a corporate group are liable for an infringement of Article 101(1) TFEU and to what extent. In particular:(a) Does liability extend to all legal entities that form part of the “undertaking” that committed the infringement or only to those entities within the undertaking that have responsibility for the infringement?(b) Is “undertaking” for these purposes to be regarded as (a) the whole corporate group under common control or (b) only those parts of the corporate group that produce the type of products or services that were the subject of the unlawful agreement or arrangement?(c) Does liability fall on a legal entity that innocently “implemented” an unlawful agreement or arrangement by selling products or services at prices (or in a manner) that is affected by the infringement but that did not itself participate in the agreement or arrangement and was unaware of its existence at the relevant time? Does it make a difference if the innocent implementer was part of the same corporate group as companies that participated in the infringement?(d) If an innocent implementer is liable, is it liable to the same extent as those legal entities within its group that participated in the unlawful agreement or arrangement or only liable in respect of damages caused by the extent to which its own sales were affected by the infringement?” This seems to us, at the moment, an unnecessarily elaborate and cumbersome question but no doubt it could be made simpler and more direct in a case where a reference was considered to be required. (a) Does liability extend to all legal entities that form part of the “undertaking” that committed the infringement or only to those entities within the undertaking that have responsibility for the infringement? (b) Is “undertaking” for these purposes to be regarded as (a) the whole corporate group under common control or (b) only those parts of the corporate group that produce the type of products or services that were the subject of the unlawful agreement or arrangement? (c) Does liability fall on a legal entity that innocently “implemented” an unlawful agreement or arrangement by selling products or services at prices (or in a manner) that is affected by the infringement but that did not itself participate in the agreement or arrangement and was unaware of its existence at the relevant time? Does it make a difference if the innocent implementer was part of the same corporate group as companies that participated in the infringement? (d) If an innocent implementer is liable, is it liable to the same extent as those legal entities within its group that participated in the unlawful agreement or arrangement or only liable in respect of damages caused by the extent to which its own sales were affected by the infringement?”

Article 28

[48]The judge dismissed an application for a mandatory stay pursuant to Article 27 because the litigation in England and in Italy was not between the same parties. The Dow Defendants, however, also applied for a discretionary stay pursuant to Article 28 which provides as follows:- “1. Where related actions are pending in the courts of different Member States, any court other than the court first seised may stay its proceedings. 2. Where these actions are pending at first instance, any court other than the court first seised may also, on the application of one of the parties, decline jurisdiction if the court first seised has jurisdiction over the actions in question and its law permits the consolidation thereof. 3. For the purposes of this Article, actions are deemed to be related where they 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.” Mr Rabinowitz has, therefore, to persuade the court to upset the judge’s discretion on the basis that he erred in law or reached a decision which was outside the spectrum of decisions reasonably open to him. That is always a difficult task.[49]As already indicated, the judge directed himself to have regard(a) to the relatedness of the proceedings(b) the stage which each set of proceedings had reached and(c) the proximity of England and Milan to the issues between the parties. He decided in his discretion not to stay the proceedings, although the Italian court was first seised and the proceedings were very closely related, because: i) proceedings were now more advanced in England, since the Italian proceedings had been dismissed and, even though “likely” to be restored by the Court of Appeal of Milan to a relevant extent, such restoration would be unlikely to occur before 2012; ii) while the proceedings were not particularly proximate to England and were more proximate to Italy, there was no court which could be said to be the centre of gravity in what was a Europe-wide conspiracy; and iii) proceedings would be likely to be continuing in England in any event against two companies which had submitted to the jurisdiction. On an overall balance he therefore decided against a stay.[50]Mr Rabinowitz submitted that the judge approached the question in the wrong way. He should have acknowledged the primacy of the country first seised which was Italy; he should have acknowledged more than perfunctorily the close relatedness of the proceedings (on which he had already relied to come to his conclusion on Article 6(1)). He should then have required extraordinarily strong reasons (of which there were none) before he refused a stay, especially since any contribution claim against Enichem might well be impossible if, although the English court held that the victims had suffered loss which should be compensated, Enichem persuaded the Italian court that no such loss had been suffered.[51]The judge was faced with a difficult balancing exercise. He acknowledged (para 106) that the proceedings in Italy and England were related so that there was a risk of mutually irreconcilable decisions. He was aware that the earlier proceedings were in Italy so that the Italian court was first seised (and was the only court seised) of Enichem’s claim for negative relief but he was also aware that the Dow Defendants had only sought to intervene in the Italian proceedings after they had been served with the English proceedings. As against those considerations he had to weigh the fact that the prospect of a decision on the merits in Italy was contingent on a successful appeal (despite it being “likely” that such appeal might be to a degree successful) and the fact that proceedings would, in any event, continue against those Defendants who had submitted to the jurisdiction in England (para 111). It was also probable that the English court would, in any event, have to quantify any damage, if the Italian court considered that the cartel had caused any damage at all, since quantification was not an issue in Italy (para 110).[52]He then held that, in considering the stage which the proceedings had reached in each jurisdiction, he was entitled to consider when a decision was likely to be reached. For this purpose he relied on para 78 of Advocate General Lenz’s opinion in Owens Bank Ltd v Bracco, saying (para 113) that it was only one matter to be borne in mind. He accepted that the connections with England were slight and that an alleged key player in the form of Enichem was domiciled in Italy but pointed out that that did not mean that Italy could be said to be the centre of gravity of the case since the conspiracy was Europe-wide (para 115). He acknowledged that there was an element of care and deliberation in the claimants seeking out Anchor Defendants in England and said that might be important if Italy clearly was the centre of gravity but it was not (para 116).[53]He balanced all these factors together and concluded that he should decline to stay the proceedings. This was a carefully considered balancing exercise and we are far from persuaded that he either erred in law or came to a decision outside the reasonable range of options open to him. We are certainly not persuaded that the fact that the Italian court was first seised of Enichem’s claim can operate as a sort of trump card or even as a primary factor where there was as much care and deliberation on the part of Enichem in starting proceedings for negative declaratory relief as there was in the Claimants’ decision to make their substantive claim in England. In Centro Internationale v Morgan Grenfell [1997] CLC 870, 891 Rix J warned against sweeping submissions in the area of Article 28 of the Judgments Regulation (then Article 22). Nor are we persuaded that some combination of events in an inevitably somewhat distant future might put difficulties in the way of the Dow Defendants making a contribution claim against Enichem. That is speculative and imponderable at best and would depend on the Italian court holding that the elaborate conspiracy found by the Commission had not caused anyone any loss at all.[54]The only substantive argument of Mr Rabinowitz which needs to be addressed is his submission that the judge was wrong to take into account the time when a decision was likely to be reached, in considering the stage which the proceedings had reached at the time of the application to the English court. He submitted that the judge was impliedly criticising the Italian court system by saying that it was unlikely a decision would be reached until September 2012. (In fact we now know that the next hearing in the appeal on the outright dismissal of the claim will not occur until January 2014).[55]But there is no such implied criticism. The fact that it may take different periods of time for similar proceedings to come to a conclusion in different jurisdictions, for whatever reasons, is not a criticism; it is merely a fact of life to which a judge cannot be expected to close his eyes.[56]The judge could, moreover, have referred to authority in addition to that of Advocate General Lenz in Owens Bank Ltd v Bracco. At an earlier stage in Owens Bank Ltd v Bracco Ms Barbara Dohmann QC made a similar submission to the Court of Appeal to that which Mr Rabinowitz made to us. In the judgment of the court delivered by Parker LJ it was said that the judge had been entitled to take into account the fact that a decision was not imminent, see [1992] AC 443, 474. In the Centro case moreover Rix J took into account the fact that a decision in an Italian action might well not be heard before a decision would be reached in England, [1997] CLC at page 893D.[57]In the result, we see no error on the part of the judge and would not interfere with the way in which he exercised his discretion. Nor, since his decision was one made in his discretion, can we see any scope for a reference on this aspect of the case. We therefore dismiss this appeal.

The Cross-Appeal

[58]The cross-appeal concerns the Claimants’ appeal from the decision of the Judge that the Defendant, Dow Europe, was entitled to a stay of the proceedings against it under Art. 21 of the Lugano Convention.[59]It was not in dispute that Dow Europe was domiciled in Switzerland, where the Lugano Convention rather than the Judgments Regulation applies. So too was a Bayer Defendant but no more need be said of that Defendant given the stance taken by Bayer.[60]There is a difference between the Lugano Convention and the Judgments Regulation in respect of determining the Court first seised of proceedings: so far as concerns English law, the Lugano Convention looks to the date of service of proceedings, whereas the Judgments Regulation looks to the date of issue of proceedings.[61]The Judge dealt with the position of Dow Europe in paragraphs 92 – 95 of the Judgment. He had regard to the following dates: i) the 21st December, 2007, the date of issue of the English proceedings; ii) the 13th May, 2008, the date when the Italian Court was first seised of the dispute between the Claimants and Dow Europe, by reason of the Dow Defendants having intervened in the Italian proceedings on that date; and iii) the 30th May, 2008, the date of service of the English proceedings on Dow Europe.[62]Before the judge, it was common ground that the question of jurisdiction, so far as concerned Dow Europe, turned on the Lugano Convention. The Judge considered and rejected an argument that the English court was first seised of the dispute between the Claimants and Dow Europe on the same date that it was seised of the dispute between the Claimants and the other Dow Defendants. Accordingly and in principle, applying Article 21 of the Lugano Convention, a stay of the proceedings against Dow Europe was inevitable, as the Italian Court was the court first seised. That stay, however, only applied to those Claimants who were parties to the Italian proceeding before the 30th May, 2008.[63]The Claimants’ challenge to this decision of the judge involved essentially the same arguments as they had advanced before the judge.[64]Very properly, however, the Dow Defendants drew the attention of this Court to the decision of Sir William Blackburne in The Trademark Licensing Company Ltd v Leofelis SA [2009] EWHC 3285 (Ch) [2010] I.L.Pr. 16. In that case, the Swiss defendant sought a stay of proceedings under Article 22 of the Lugano Convention on the basis of proceedings brought in Italy that had been served prior to service of the English proceedings. The claimants in that case retorted that the Judgments Regulation, not the Lugano Convention, applied to this issue. Sir William Blackburne held that the Judgments Regulation, not the Lugano Convention, applied where the dispute involved a choice between jurisdiction in two member states.[65]Sir William Blackburne said this, at [23] of his judgment in Leofelis:
“ ….The Lugano Convention is immaterial to the issue. The fact…that Leofelis is domiciled in Switzerland and, let it be assumed, is only domiciled in Switzerland, which is not a Member State of the European Union is irrelevant to the operation of article 28 of the Regulation. That article and the other articles in Section 9 are concerned with proceedings which take place in the courts of different Member States. The obligation imposed by article 27 (in the case where the proceedings involve the same cause of action and between the same parties) and the discretion conferred by article 28 (where there are ‘related actions’) fall to be applied by the courts of Member States in the circumstances set out in those articles. The domicile of the particular litigant has no bearing on the application of the articles if the circumstances set out in the articles are found to exist. As the two courts in question in the current dispute are in Member States – Italy and the United Kingdom – the Regulation is in point.”
[66]Upon reflection, both parties accepted the correctness of Sir William Blackburne’s analysis in Leofelis. Accordingly, the Dow Defendants did not pursue their opposition to the cross-appeal. We are content with the stance taken by the parties and the cross-appeal is allowed on this ground alone - thus, on the basis of an argument which had not been raised before the judge. It follows that the position of Dow Europe is no longer distinguishable from the position of any of the other Dow Defendants.

Conclusion

[67]We therefore dismiss the appeal and allow the cross-appeal.

Cited in 24 later judgments

and 15 more of the most senior