UK: UK High Court Confirms Jurisdiction Over International Cartels

Last Updated: 11 June 2003

Article by Davina Garrod, Scott S. Megregian, Ian Rose and Anthony Rosen

On 6 May 2003, the UK High Court issued a decision establishing that UK courts will expansively interpret their jurisdiction over international cartel cases. This decision involves a private damages claim arising out of the European Commission’s vitamins cartel case (in November 2001 the Commission fined major vitamins producers €855 million for operating price-fixing cartels in violation of Article 81 of the EC Treaty).

The case involves two groups of proceedings. One action was initiated by Provimi Limited and the other by two companies in the Trouw group. In each case, the claimants sought to recover damages for losses incurred as a result of the participation of Hoffman-La Roche (Roche) and Aventis in the vitamins cartel. Provimi Ltd v. Aventis Roche et. al. and Trouw et. al. v. Aventis and Roche et. al.

Roche and Aventis applied to strike or set aside the claims arguing that, among other things, the UK courts did not have jurisdiction over the non-UK defendants. The High Court denied the application establishing important principles which will determine UK courts’ jurisdiction over cartel cases, as follows:

  • The UK courts have jurisdiction over claims made by a UK company against foreign cartel members.
  • A non-UK company can also bring a claim in the UK courts against a foreign defendant where a UK affiliate of the defendant was also involved in the cartel.
  • The High Court rejected the defendants’ efforts to strike the claims based on forum selection clauses in their sales contracts.

The High Court established that a UK company can sue a non-UK company for damages resulting from competition law infringements. To obtain jurisdiction, the claimant must state that a UK affiliate "implemented" and "gave effect" to the cartel in England and the claims against the UK and non-UK defendants were "closely connected." The High Court stated that each of the defendant groups (Roche and Aventis) formed a single economic unit for competition law purposes. Consequently, an agreement entered into by a non-UK group company will be treated as involving the UK group company if the UK company implements the agreement. As the cartel agreement was implemented in the United Kingdom by UK subsidiaries of Roche and Aventis and the claims were based on the Commission’s infringement decision in the vitamins case, the High Court held that the cartel was implemented in the United Kingdom, and the claims were closely connected. The High Court rejected the defendants’ arguments that the UK subsidiaries should be treated as separate legal entities for the purposes of competition law from their non-UK parents/affiliates and not subject to being joined in the UK case.

The High Court did not limit the scope of its jurisdiction to UK claimants. The High Court also held that non-UK claimants could join UK proceedings to recover damages against foreign companies for cartel infringements. Here again, jurisdiction was found to lie where a UK affiliate of the foreign defendant was involved in implementing the cartel. The ability to join "foreign-to-foreign" claims to UK proceedings will enable claimants to consolidate their actions and bring a consolidated damages claim against all groups of companies preventing the need to commence actions in multiple jurisdictions. The court also recognised that this result was important to avoiding inconsistent outcomes in related cases.

The case also establishes important limitations on the use of forum selection clauses as a procedural defence to UK jurisdiction. Roche and Aventis sought to rely on the forum selection clauses in their contracts with the claimants to deny the High Court jurisdiction to hear the damages claims. These clauses purported to require that claims "arising out of" the respective sales contracts be heard in specified jurisdictions: Switzerland, Germany and France. The High Court explained that infringements of competition law constituted a "breach of statutory duty." As such, the court found that any forum selection clause must expressly cover such claims to be enforceable. The High Court held that the forum selection clauses were of no recourse to the defendants as they did not specifically cover damages claims for infringements of competition law. In the future, arbitration/forum selection clauses will have to be drafted to include competition law damages claims in order to be effective so as to deny a foreign court/seat of arbitration jurisdiction.

The High Court’s judgment clearly establishes its willingness and ability to expansively exert its jurisdiction in competition law damages cases. This expansive application of UK jurisdiction will have important implications under the Enterprise Act 2002, which is due to come into force at the end of June 2003 (see On the Subject…, "New UK Competition Law," published in April 2002). Specifically, the Enterprise Act grants expanded powers to the UK Competition Appeals Tribunal (CAT). The CAT is a specialist panel that will be empowered to award damages to competition law claimants where a prior infringement decision has been made by the Commission or the Office of Fair Trading. This is expected to significantly improve the ability of customers to claim damages for competition law violations.

The Roche/Aventis judgments will have important ramifications for cartel members and potential claimants. Under the High Court’s ruling, non-UK and UK victims of international cartels can sue UK and other companies based worldwide in the English courts for damages suffered throughout Europe. This likely will reduce the need for filing multiple cases as entire group damages will now be recoverable in a single action. Moreover, the English courts’ openness to competition law actions, together with CAT’s new powers to award damages, should result in a significant increase in competition litigation in the United Kingdom. Potential defendants and claimants should be aware that the United Kingdom is well placed to become the primary European forum for damages claims for cartels and other competition law infringements.

The content of this article does not constitute legal advice and should not be relied on in that way. Specific advice should be sought about your specific circumstances.

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