Tort prevails over contract for deciding jurisdiction in abuse of dominance cases: The CJEU’s judgment in Wikingerhof v. Booking.com
Since its heyday, the focus in private competition litigation has been on cartel damages claims. The Court of Justice of the EU’s recent judgment in Wikingerhof v. Booking.com draws another anticompetitive behaviour into the spotlight: abuse of dominance.
The CJEU’s judgment was claimant-friendly because it held that the Netherlands-based hotel reservation platform Booking.com can be sued, based on tortious jurisdiction, in Germany as the place where the alleged anticompetitive harm occurred. The CJEU found that contractual jurisdiction, which would have favoured the Netherlands, did not apply because the claim did not require an interpretation of the contract.
The judgment gives rise to some question marks. We hope that the CJEU will soon have the opportunity to address these and provide clarification as to where companies may be sued for an alleged abuse of dominance. In the meantime, contract drafters should pay close attention to both the scope and the form of jurisdiction clauses.
German hotel Wikingerhof applied for injunctive relief against Booking.com before the German courts. Wikingerhof had entered into a contract with Booking.com in 2009. It objected to a new version of Booking.com’s terms and conditions introduced in 2015. These T&Cs allowed Booking.com to affix the indication “preferential price” or “discounted price” without Wikingerhof’s consent, and made the placement of the hotel in search requests dependent on a commission in excess of 15%. Wikingerhof claimed that Booking.com abused its dominant position and sought an injunction prohibiting these practices.
Booking.com argued that the German courts lacked jurisdiction and pointed to a jurisdiction clause in favour of the Amsterdam courts. This was successful in the first two instances where the German courts found that neither the jurisdiction of the court for the place of performance of the contractual obligation (point 1 of Article 7 of Regulation No 1215/2012), nor the jurisdiction of the court for the place where the harmful event occurred in matters relating to tort, delict or quasi-delict (point 2 of Article 7), was established. The German Federal Court of Justice brought this jurisdictional issue before the CJEU.
The CJEU found that tortious jurisdiction was established. In a nutshell, it gave the following reasons:
- The main question was the distinction between matters relating to tort and matters relating to a contract. The CJEU found that an action concerns matters relating to a contract if the interpretation of the contract appears indispensable to establish the lawful or unlawful nature of the conduct at issue. In contrast, if an obligation imposed by law applies to the defendant independently of that contract, the cause of the action is a matter relating to tort, delict or quasi-delict.
- The legal issue at the heart of the case in the main proceedings was whether Booking.com committed an abuse of a dominant position. In this respect, it was not indispensable to interpret the contract between the parties, meaning that this was a matter relating to tort, delict or quasi-delict.
- The CJEU found that this result is also consistent with the objectives of proximity and sound administration of justice. This is because the court having jurisdiction under this provision, namely that of the market affected by the alleged anticompetitive conduct, was the most appropriate for ruling on the main issue of whether the allegation of abuse of dominance was well founded. This is particularly so for gathering and assessing the relevant evidence. In that regard, the CJEU made reference “by analogy” to its 2019 judgment in Tibor-Trans.
Impact on abuse claims
From a practical perspective, the Wikingerhof judgment may be the harbinger of an increase of claims based on an abuse of a dominant position. The underlying set of facts, with an all-powerful online platform imposing its rules on market actors practically forced to participate in the scheme, will certainly be used by claimants in other scenarios in the modern platform economy.
Open questions remain
Wikingerhof gives new momentum to the perpetual issue of where to draw the line between special jurisdiction for contract and tort if the parties are bound by a contract but the claim is not, in a strict sense, based on it.
The newly introduced standard of an “indispensable” interpretation of the contract seems to move the post towards tortious jurisdiction. Yet, the practical application of that standard to cases of abuse of dominance will surely lead to further points of contention. For example, one can imagine cases of alleged abuse resulting from certain contractual stipulations which may be outweighed or at least mitigated by other clauses of the same contract. Where to draw the line, then?
It would be premature to assume that the CJEU has established jurisdiction at the claimant’s venue whenever a dispute relates to infringements of EU competition law. On the contrary, it remains open how the “place where the harmful event occurred or may occur” (point 2 of Article 7) will be determined in abuse cases.
For cartel damages, there has been much debate following the CJEU’s 2015 CDC Hydrogen Peroxide judgment, with some further clarification in Tibor-Trans in 2019. Applying that latter judgment “by analogy”, the CJEU finds that the court “of the market affected by the alleged anticompetitive conduct” has jurisdiction in the present case.
It is easy to see how that definition will cause problems when looking at the actions of global online platforms. Hopefully, the CJEU will soon have the opportunity to refine its case law and clarify the legal situation.
Drafters beware of jurisdiction clauses
Unlike in relation to cartel damage claims, claimants’ choice of venue may be restricted by jurisdiction clauses, which can be enforceable in abuse of dominance cases (Apple v. EBizcuss.com). The chances of successfully lodging a claim outside the designated jurisdiction thus heavily depend on the contract’s small print. Conversely, the impact of Wikingerhof may be mitigated by introducing a jurisdiction clause that covers claims based on abuse of dominance. Contract drafters must pay close attention to the various requirements in terms of scope and form of such a clause. According to the referring court, the jurisdiction clause in Booking.com’s T&Cs did not meet those requirements.