Newsletter Cartel damages, jurisdiction and arbitration clauses
Antitrust disputes can be subject to jurisdiction clauses – if the clauses definitely apply to such disputes. This has been confirmed by the European Court of Justice (ECJ) on 21 May 2015 (ref. no.: C 352/13) for jurisdiction clauses stipulated in international delivery contracts.
The decision of the ECJ is based on a request for a preliminary ruling submitted by the district court (Landgericht) of Dortmund in 2013. Several companies presumably having suffered damage due to a bleaching chemicals cartel existing throughout Europe have transferred compensation claims to Cartel Damage Claims Hydrogen Peroxide SA (CDC) being claimant in the legal proceedings. The company claims before the district court of Dortmund, among other things, jointly and severally compensation for damages from several chemical corporations involved in the cartel. Among the six companies against which proceedings were originally initiated, solely Evonik Degussa GmbH (Evonik) is based in the Federal Republic of Germany. As this company is in the jurisdiction of the German court, this court is also competent for the other defendants. However, the legal proceedings against Evonik have been terminated by way of settlement and withdrawal of the complaint in September 2009. As a result, the other defendants contested the competence of the district court of Dortmund. Their claims were based, among other things, on divergent jurisdiction and arbitration clauses stipulated in the delivery contracts with companies which presumably suffered damages.
Decision by the ECJ
In its preliminary ruling, the ECJ has clarified that deviations from the provisions of the European Regulation on Jurisdiction and the Enforcement of Judgements (EuGVVO) regarding the competence of courts is in general possible by means of individually agreed jurisdiction clauses. However, this only applies on the condition that these clauses are also applicable to legal disputes regarding antitrust violations. Tortious liability as a result of the participation in an unlawful cartel does not arise from the contractual relationship in connection with the delivery agreements and is generally not foreseeable for the parties upon the conclusion of the contract. Thus, antitrust disputes are not automatically subject to general jurisdiction clauses. It is now for the district court of Dortmund to decide whether the clauses stipulated in the delivery contracts establish the competence of the court regarding the claim for antitrust damage filed by CDC.
The ECJ has restricted the scope of its ruling to the subject of jurisdiction clauses. Nevertheless, the same is to be applied to arbitration clauses. It is generally accepted that antitrust disputes may be subject to arbitration. However, arbitration clauses do not automatically apply to tortious liability as a result of the participation in an unlawful cartel. Such inclusion of arbitration only applies if the arbitration clause involves explicitly such disputes in its scope of application or if a corresponding intention by the contractual parties to do so can be interpreted on the basis of the circumstances. Overall liquidated damages clauses may establish an indication for this as they are, for instance, included in purchase and delivery contracts regarding cartel infringements. In such cases there is substantial evidence that the contractual parties have foreseen possible antitrust disputes taking place in the future – and consequently wanted to extend the scope of applicability of jurisdiction and arbitration clauses to antitrust disputes.
However, this has not been clarified yet. In order to avoid disputes on the jurisdiction of the courts and delays of the decision on the merits due to such disputes, the contractual parties should specify their intention when agreeing on overall antitrust damages clauses.
Parties considering an arbitration clause should take into account that arbitration agreements are exclusively effective between the contractual parties. The participation of third parties requires consent of all participants. Consequently, the party suffering damage due to the cartel is restricted in the possibility to sue all cartel members as joint and several debtors. The same applies for the cartel member's possibility to file a third party notice against his co-cartel members. On the other side, an arbitration clause guarantees that the dispute is bilateral and confidential, a fact which is relevant to preserve the parties reputation and, hence, increases the chance of a settlement of the dispute. For these reasons, it is worth considering arbitration clauses also for antitrust disputes.
The ruling of ECJ shows once again that diligent drafting of jurisdiction and arbitration clauses is indispensable. This is the only way to avoid that the decision on the merits of the case is delayed due to prior disputes on the competence of the court. Jurisdiction and arbitration clauses should indicate as clearly as possible whether they are also applicable for antitrust disputes. On deciding in favor of establishing an arbitration or a jurisdiction clause, the procedural and strategic impacts should also be taken into consideration.
Dr. Daniel Dohrn
Telephone: +49 221 2091 441
Telefax: +49 221 2091 333
Dr. Vanessa Pickenpack
Telephone: +49 221 2091 334
Telefax: +49 221 2091 333