On 17 September 2018, the Court of Justice of the European Free Trade Association States (the "EFTA Court") handed down its judgment in Nye Kystlink AS v. Color Group AS and Color Line, Case E-10/17, answering preliminary questions asked by Norway's Borgarting Court of Appeal (Borgarting lagmannsrett), in a case concerning the limitation period for bringing damages claims subsequent to a competition law infringement decision imposed under Articles 53 and 54 of the European Economic Area Agreement ("EEA"), the corresponding provisions of Articles 101 and 102 TFEU.
In 2005, Kystlink AS, a Norwegian ferry company, brought to the attention of the Norwegian Competition Authority the existence of an alleged anti-competitive exclusivity agreement between one of its competitors, Color Line, and the Municipality of Strömstad. Due to cross-border implications, the Norwegian Competition Authority referred the case to the EFTA Surveillance Authority ("ESA"). On 14 December 2011, the ESA issued a decision finding that the exclusivity agreement prevented Kystlink AS from gaining access to the Strömstad port facilities and therefore infringed Articles 53 and 54 EEA.
On 14 December 2012, Kystlink AS brought an action before the Norwegian Courts against Color Line seeking damages for financial losses it incurred due to infringement of Articles 53 and 54 EEA. Pursuant to Section 9(1) of the Norwegian Limitation Act, a claim for damages is time-barred three years after the date on which an injured party obtained or should have procured necessary knowledge about the damage and the responsible party. However, under Section 11 of the same Act, a claim for damages arising from a criminal offence may in any event be filed within one year after the criminal conviction becomes final. The Oslo District Court (Oslo tingrett) found the action to be time-barred under Section 9(1) and excluded the application of Section 11. Kystlink AS appealed the judgment to the Borgarting Court of Appeal.
The Borgarting Court of Appeal referred three questions to the EFTA Court, concerning essentially two distinct matters. First, the Court asked, in essence, whether infringements of Articles 53 and 54 EEA are to be considered as criminal offences and whether damages claims based on such infringements should therefore benefit from Section 11 of the Limitation Act.
Second, the Borgarting Court of Appeal asked whether combining a limitation period with a duty of investigation on the part of the injured party, as provided for under Section 9(1) of the Limitation Act, runs counter to the principle of effectiveness, particularly in cases where the limitation period could expire even before the ESA has reached a final decision on the practice at stake.
Kystlink AS drew a parallel between the ESA infringement decision and Norwegian criminal law, arguing that the fine imposed by the ESA is significant and substantially higher than fines received for most violations of criminal law, and therefore Section 11 should apply.
The EFTA Court highlighted that, in the absence of harmonising EEA legislation, it is for the internal legal order of each EEA State to lay down procedural rules for legal proceedings intended to safeguard the rights derived from EEA law. However, the conditions under these rules must not be less favourable than those relating to similar domestic rights and must respect the principles of equivalence and effectiveness in EEA law.
The EFTA Court found that the principle of equivalence dictates that national procedural law must remain neutral in relation to the origin of the rights invoked. Nevertheless, a damages claim based on a breach of EEA competition law should not automatically benefit from the limitation rule laid down in Section 11 of the Limitation Act. Rather, the national court is under a duty to assess whether a damages claim based on a ESA decision should be equated with a similar damages claim based on a national criminal conviction or rather on a national administrative sanction. In its assessment, the national court must consider the purpose, cause of action and the essential characteristics of allegedly similar domestic actions.
As regards the principle of effectiveness, Kystlink AS claimed that the duty of investigation placed on the injured party for the application of Section 9(1) of the Limitation Act is too onerous. Such injured party is expected on its own, without recourse to the investigative powers of the ESA, to bring a damages claim in a national court before the ESA's investigation has been completed. In addition, it is problematic in light of the principle of legal certainty because the limitation period may expire before an injured party has actually gained the necessary knowledge for bringing an action for damages. In its defence, Color Line submitted that a limitation period of three years does not, in itself, violate the principle of effectiveness, even when the triggering of a limitation period is contingent on what a claimant knew or ought to have known.
The EFTA Court held that EEA States are free to combine a limitation period for bringing a damages action for infringement of Articles 53 and 54 EEA with a duty of investigation on the part of the injured party where the limitation period could possibly expire before the ESA has reached a final decision, as long as such duty and limitation period do not render it impossible or excessively difficult to bring a damages action for infringement of EEA competition rules. However, the EFTA Court acknowledged the potential for information asymmetry and held that the duty of investigation should not go further than to require the procurement of information that the claimant can reasonably be expected to obtain from readily accessible sources. In assessing this duty, national courts must take into account the individual facts and circumstances of each case and must have particular regard to the special features of competition cases which tend to be protracted and complex in nature.
In this noteworthy judgment, the EFTA Court makes it clear that the national laws of EEA States may require injured parties not to be idle in bringing damages claims proceedings before national courts, but rather to be proactive, to stay informed and pay close attention to the procedural rules of EEA States which may substantially differ in the absence of harmonisation.
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