On 18 February 2015, the Higher Regional Court of Düsseldorf ("the Court") upheld an earlier judgment of the Regional Court of Düsseldorf of 17 December 2013 rejecting a damages claim in the amount of approximately € 131 million brought by Cartel Damage Claims SA ("CDC") against members of a cement cartel (see VBB on Competition Law, Volume 2014, No. 1, available at www.vbb.com).
CDC is a Belgian company that specialises in enforcing claims of third parties injured by competition law infringements. In the present case, 36 companies ("assignors") had assigned their claims against the members of a cement cartel to CDC. These claims follow a prohibition and fining decision adopted in 2003 by the German Federal Cartel Office ("FCO") against cement manufacturers for anti-competitive agreements.
The assignments of claims for damages to CDC was based on sales contracts pursuant to which, in return for assigning their damages claims to CDC, the assignors received a lump sum of € 100 and a prospective 65% to 85% of the damages in the event of a successful outcome of CDC's legal action against the members of the cement cartel.
During interim proceedings, the admissibility of CDC's damages claim was examined by the court. The admissibility of CDC's claim was affirmed by the Higher Regional Court of Düsseldorf in May 2008 (see VBB on Competition Law, Volume 2008, No. 5, available at www.vbb.com) and, on appeal, by the German Federal Court of Justice in April 2009 (see VBB on Competition Law, Volume 2009, No. 4, available at www.vbb.com).
On the merits of the case, the Court, in its 18 February 2015 judgment, upheld the Regional Court of Düsseldorf's earlier decision of 17 December 2013 and rejected the appeal filed by CDC.
Like the Regional Court, the Court found that the assignment agreements concluded before 1 July 2008 were invalid because at that time CDC was not formally admitted to pursue claims of a third party and therefore infringed the then-applicable German Legal Advice Act.
As regards claims assigned after the amendment of this law in July 2008, the assignment was considered to be contrary to public policy because it unduly shifted the financial risk for the proceedings towards the defendants since CDC did not have financial means to pay the costs of the proceedings if it were to lose the case. Contrary to the assertions of CDC, the Court found that the shifting of the financial risk for the proceedings was the main aim of the assignment. The Court held that this could be concluded from the clear discrepancy between the rights and obligations agreed upon in the assignment contracts: whereas the assignors would receive a share of 65% to 85% of the damages obtained in case of a successful outcome of the legal action, their contributions to costs for the preparation and conduct of the proceedings were minor. According to the Court, since the assignment is contrary to public policy it is void and CDC therefore has no legal capacity to assert the claims for the damages in question.
Further, the Court found that claims against two members of the cartel were time barred. This is because CDC, due to the assignment agreements being void, did not have legal capacity to assert claims which thus did not interrupt the applicable limitation period.
The Court did not decide whether new assignment agreements concluded in 2014, when CDC claims to have been sufficiently solvent, are valid as it did not accept CDC's application for amendment to its initial damages claim to include the new assignment agreements of 2014.
Finally, CDC's claim was rejected because it had been based on a "national" cartel, while the FCO's fining decision had unveiled regional cartels and, according to the Court, a national cartel did not in fact exist. An application for amendment of the claim submitted in this respect was equally rejected.
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