Do arbitration clauses catch cartel damages claims?
Whilst the CJEU’s 2015 landmark decision in CDC v. Akzo Nobel et al. considered whether cartel damages claims fall within the scope of jurisdiction clauses in favour of EU Member States, what about arbitration clauses? The first German court decision on this issue, handed down by the Regional Court of Dortmund (Landgericht Dortmund), has concluded that, where German law applies to the clause, they do – irrespective of whether the clause is worded broadly or narrowly (judgment of 13 September 2017, case no. 8 O 30/16 [Kart]).
In its 2015 decision in CDC v. Akzo Nobel et al., the CJEU concluded that, under the Brussels Regulation regime, a jurisdiction clause in favour of an EU Member State could not be found to include cartel damages claims within its scope, unless this agreement is explicit and specific. Considering the unknown and unforeseeable nature of cartel damages claims, “a clause which abstractly refers to all disputes arising from a contractual relationship” cannot be interpreted as “extending to a dispute relating to the tortious liability that one party allegedly incurred as a result of the other’s participation in an unlawful cartel. Given that the undertaking which suffered the loss could not reasonably foresee such litigation at the time that it agreed to the jurisdiction clause and that that undertaking had no knowledge of the unlawful cartel at that time, such litigation cannot be regarded as stemming from a contractual relationship. Such a clause would not therefore have validly derogated from the referring court’s jurisdiction.” (judgment C-352/13, paras. 69-70) (for more on CDC and its implications click here to access a PDF of our earlier briefing note).
As the CJEU’s decision on this point was based on the application of autonomous EU law on jurisdiction clauses in favour of EU Member States, its decision was not, legally, directly relevant to the interpretation of arbitration clauses (which, generally speaking, is determined by the national law which falls to be applied to the clause before the relevant tribunal/court) That being said, some influence had to be expected before the EU courts.
Accordingly, the first national courts which dealt with the issue – the Court of Appeal of Amsterdam (Kemira v. CDC, judgment of 21 July 2015, case no. ECLI:NL:GHAMS:2015:3006, regarding a sodium chloride cartel) and the District Court of Rotterdam (Stichting De Glazen Lift/Kone et al., judgment of 25 May 2016, case no. ECLI:NL:RBROT:2016:4164, regarding an elevator cartel) – reached the same result as the CJEU in respect of the arbitration clauses before them. In contrast, the English High Court held in Microsoft Mobile OY (Ltd) v. Sony Europe Limited & Ors  EWHC 374 (Ch) that an arbitration clause (to which English law applied) covered a private cartel damages action (as a matter of interpretation of the clause in the context of the supply contract before it – see here an Arbitration Links post by Elizabeth Jordan and Alexander Fawke on the decision).
The decision of the Regional Court of Dortmund
In refusing to hear a cartel damages action brought before it in relation to a rail cartel, the Regional Court of Dortmund reached the same end result as the English High Court did in Sony. The contracts between the claimant and one of the cartel members contained arbitration clauses (in respect of which German law fell to be applied by the Regional Court) which referred to arbitration “all disputes out of this contract” and “all disputes out of and in connection with this contract”. Accordingly, the defendant relied on the arbitration agreements and asked the court to dismiss the action. In contrast, the claimant maintained that the arbitration clauses did not cover cartel damages claims and explicitly referred to the CJEU’s decision in CDC v. Akzo Nobel et al.
The Regional Court of Dortmund disagreed with the claimant and held that the action fell within the arbitration clauses. It emphasised that an arbitration-friendly stance must be taken when interpreting arbitration clauses under German law. This generally leads to their wide interpretation so that arbitration agreements concluded with a view to contractual claims are generally considered to also cover concurring tortious claims. Since cartel damages actions are categorised as tortious claims under German law, they are thus covered by an arbitration clause (when German law applies to it) if they derive from a set of facts that also provides for a concurring contractual claim.
According to the court, it neither matters whether the cartel infringement took place prior to entering into the agreement, nor do the nature and seriousness of the fault have an influence on the interpretation of the arbitration clause, as is also generally accepted regarding other concurring tortious claims (e.g. in case of breaches of pre-contractual duties or wilful deceit). Furthermore, it has no bearing on the interpretation that private enforcement also serves public interests since the same holds true for other tortious claims. With the same argument, the court decided against applying the foreseeability test stipulated by the CJEU in CDC v. Akzo Nobel et al. regarding jurisdiction clauses. According to the court, such test is not convincing and there is no principle that the same standards must be applied regarding jurisdiction clauses in favour of EU Member States (governed by the Brussels I Regulation) and arbitration clauses to which German law applies.
From an arbitration perspective, it is to be welcomed that the Regional Court of Dortmund supports a broad interpretation of arbitration clauses. The decision is currently pending in the appeal stage and it remains to be seen whether the Higher Regional Court of Dusseldorf (Oberlandesgericht Düsseldorf) and ultimately the German Supreme Court of Justice (Bundes-gerichtshof) will take the same view.
If upheld, the decision would mean that, in cases where a relevant arbitration clause is subject to German law, a claimant in a cartel damages case may face a fragmentation of proceedings when it moves against several cartelists and agreed on arbitration with some of them. Furthermore, this may not be something which potential claimants can likely suppose to address at the drafting stage in circumstances where such an arbitration clause would otherwise be the parties’ preferred choice (in which case attempting to cater for the potential existence of a cartel by changes to drafting or the mechanism would, ordinarily, likely to be a commercial non-starter for a variety of reasons).
Of comfort to claimants may, however, be that the result of the case may not be one which defendants may necessarily want to pursue, even if available to them. Defendants would need to carefully consider their defence strategy. Invoking the arbitration agreement would most likely mean that the dispute between themselves and the claimant would be resolved by an arbitration involving only themselves and the claimant i.e. the defendant would usually be prevented from securing, in that forum, any contribution claims from other cartelists by means of third party notices. Getting, before a court, a cartel damages claim dismissed in favour of arbitration may thus turn out to be a Pyrrhic victory in the long run.
Click here for the judgment (German language only).