Wednesday, August 25, 2010
Posted by D. Daniel Sokol
Ruchit Patel, Cleary Gottlieb explains English Court of Appeal’s Judgment in Cooper Tire and Ors v. Dow Deutschland and Ors.
ABSTRACT: On July 23, 2010, the English Court of Appeal rejected an appeal brought by Dow Deutschland and others against a 2009 decision of the English High Court concerning the jurisdiction of English courts over damages actions following-on from a cartel infringement decision of the European Commission.
The appeal focused on whether a follow-on damages claim filed with the English High Court could be struck out at a preliminary stage on the basis that the only companies domiciled in the United Kingdom were subsidiaries or affiliates of the addressees of a Commission decision (i.e., where the English-domiciled companies were not themselves addressees of the Commission decision). The appeal also considered whether proceedings in England should be stayed until concurrent proceedings in Italy related to the same Commission decision had been concluded.
As explained in greater detail below, the CoA held that an English court should not strike out a follow-on claim at a preliminary stage (i.e., before disclosure-the English term for discovery) where it cannot exclude that the English-domiciled subsidiary on which jurisdiction is based had engaged in, or was aware of, the anticompetitive conduct that was the subject of the Commission decision. Accordingly, provided that the claim makes an "arguable" case that the English subsidiary engaged in, or was aware of, anticompetitive conduct, the case may not be dismissed summarily. The CoA's judgment creates a relatively low jurisdictional standard, implying that, if it is subsequently determined that the English-domiciled defendant(s) did not engage in anticompetitive conduct and was not aware that other companies within the group engaged in such conduct, the English courts would: (1) no longer be able to hold the English defendant(s) liable and (2) likely decline jurisdiction.
In addition, the CoA noted that the High Court was right not to impose a stay on proceedings in England despite the existence of concurrent proceedings in Italy, because the "careful balancing of competing interests carried out by the High Court did not stray outside the reasonable range of options open to it." The CoA was not persuaded that the fact that the Italian court was first seized could act as a form of trump card, describing it as "speculative and imponderable at best." The CoA also held that a judge was entitled to take into account the fact that a decision in the Italian case was not imminent.
Section II below summarizes the background to the follow-on damages actions in question, Section III outlines the proceedings before the CoA and its judgment, and Section IV considers the implications of that judgment.