On 23 October 2014, pursuant to a request from a Latvian court, the Court of Justice of the European Union ("ECJ") issued a preliminary ruling on the application of Regulation (EC) No. 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (the "Brussels Regulation") to damages actions for breach of EU competition law.
The request originated from a dispute before the Lithuanian Court of Appeal in the course of which flyLAL-Lithuanian Airlines AS ("LAL") sought compensation for damages against two Latvian companies, Starptautiskā lidosta Rīga VAS and Air Baltic Corporation AS, for alleged breaches of EU competition law.
The Lithuanian Court of Appeal granted LAL's applications for provisional and protective measures in December 2008. Subsequently, in January 2012, a Latvian District Court ordered the enforcement of the Lithuanian interim judgment, resulting in appeals being brought by the Latvian companies before a higher court of appeal in Latvia.
Specifically, the Latvian companies claimed that since the dispute in the main proceedings pertained to airport charges determined by the State of Latvia, it did not constitute a civil or commercial matter, thereby precluding the application of the Brussels Regulation pursuant to Article 1(1). It was also claimed that even if the Brussels Regulation did apply, then Article 22(2) (exclusive jurisdiction) would be applicable as the reduction in airport charges were applied by way of decisions taken by organs of commercial companies. Finally, the Latvian companies claimed that since LAL was in liquidation, the enforcement of the Lithuanian judgment would be against public policy under Article 34(1) of the Brussels Regulation as there would be no means of recovery available against LAL if the damages action was ultimately dismissed.
The Latvian Court of Appeal decided to stay the proceedings and to refer preliminary questions to the ECJ on the interpretation of the Brussels Regulation.
In its judgment of 23 October 2014, the ECJ ruled that an action to seek legal redress for damage relating to an alleged infringement of competition law is civil and commercial in nature and thus within the remit of Article 1(1) of the Brussels Regulation. Importantly, the Court added that the conclusion remains unchanged even though the infringements resulted from provisions of Latvian law and the Latvian State owned the majority of the shares in the two companies concerned.
On the scope of Article 22(2) of the Brussels Regulation, the ECJ held that, since the substance of the original dispute concerns a claim for compensation arising from alleged competition law infringements, it does not constitute proceedings concerning the validity of the decisions of a company's organs within the meaning of Article 22(2).
As regards public policy, the ECJ clarified that the concept seeks to protect legal interests that are expressed through a rule of law, and not purely economic interests. The Court further noted that the provisional and protective measures at issue in the main proceedings simply required the monitoring of the Latvian companies' assets, without any payment required to be made. The ECJ concluded that the mere invocation of serious economic consequences does not constitute an infringement of public policy within the meaning of Article 34(1) of the Brussels Regulation.
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