England and Wales High Court (Commercial Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		01/07/2009

Mr. Justice Teare:

1. This is an application to adjourn the hearing of an application by the Defendants challenging the jurisdiction of this court which has been fixed for 5 days from 5 October 2009.
2. On 29 November 2006 the European Commission decided that companies in various corporate groups, including certain of the Defendants, had been guilty of operating an illegal price-fixing cartel in relation to two kinds of rubber used in the manufacture of tyres between May 1996 and November 2002. The Claimants now claim damages from the Defendants for breach of statutory duty suffered by reason of the cartel's activities. The losses claimed in this "follow on" action may run to tens of millions of euros.
3. On 29 July 2007 three companies in the Eni group (the "Eni companies") who had been found guilty by the Commission of participation in the cartel commenced proceedings against some but not all of the Claimants in Italy. The Eni companies sought declarations that the cartel did not exist, that if it did they were not part of it and that in any event no losses had been caused by the cartel.
4. The proceedings in this court were commenced on 21 December 2007.
5. Thereafter, in May and June 2008 certain of the Defendants applied to intervene in the Italian proceedings. Later that year certain of the Defendants applied to challenge the jurisdiction of this court pursuant to Articles 27 and/or 28 of the Judgments Regulation. The parties began their preparations for that challenge which included obtaining expert evidence of Italian law.
6. On 28 January 2009 Judge Gandolfi, the judge assigned to the Italian proceedings, indicated that she intended to resolve all preliminary issues before considering the merits of the dispute. On 9 February 2009 she laid down a time table which would lead to judgment being given in May or June 2009. This was contrary to the expectations of the parties who had thought that such issues would not be decided for a period estimated at between 17 months and 5 years, with a majority view being some two and half years.
7. It was in the light of Judge Gandolfi's indication that a directions hearing was brought before Blair J. on 16 February 2009. He adjourned the jurisdiction challenge, which had been fixed for 23 March 2009, until October 2009 but also fixed a further directions hearing for 19 June 2009. It was anticipated that at the further directions hearing the court could decide whether the determination of the jurisdictional challenge would be adjourned pending any appeal in Italy.
8. On 8 May 2009 Judge Gandolfi gave judgment. She dismissed the Eni Companies' claims and those of the intervening Defendants. Thus the present position is that, subject to appeal, the Italian proceedings have been dismissed.
9. On this further directions hearing the Claimants have submitted that the jurisdiction challenge should be heard in October 2009. The Defendants say that it should be adjourned.

The case for an adjournment

10. The Defendants were represented before me by several teams of counsel and solicitors. However, the argument for the adjournment was advanced by Laurence Rabinowitz QC on behalf of the Dow Defendants. His submissions were adopted by the other Defendants. The essential steps in Mr. Rabinowitz' submissions were as follows:

i) Blair J. adjourned the March hearing of the jurisdictional challenge because it was far better that the English court knew what the Italian Court said about its own jurisdiction before deciding the jurisdictional challenges in this court.

ii) That approach applied equally to an appeal from the Italian court. Many, if not all of the Defendants, have appealed.

iii) If the jurisdictional challenge were heard in October 2009 the English court would have to "second guess" what the Italian court of appeal will decide both on the question of jurisdiction and on an additional procedural issue on which Judge Gandolfi relied.

iv) If the jurisdictional challenge were heard after the conclusion of the Italian appeal there would be considerable advantages. If the appeal failed that may mean the end of the jurisdictional challenge. If the appeal succeeded and the Italian court therefore had jurisdiction that would destroy a main plank of the Claimants' arguments.

v) The appeal in the Italian proceedings will take 2-3 years to be determined.

vi) Quite separate from the Italian appeal is the appeal by some of the Defendants from the decision of the European Commission to the Court of First Instance ("the CFI"). The existence of that appeal has serious consequences for the course of the proceedings in this court as is apparent from the decision of the Chancellor in National Grid Electricity Transmission PLC v ABB Limited and others [2009] EWHC 1326 (Ch). The Chancellor made reference to the decision of the European Court of Justice in Case C-344/98 Masterfoods Ltd. v HB Ice Cream Ltd. [2000] ECR1-11369 and said at paragraph 23:

"It is clear from paragraphs 55 and 57 that this court should take all the steps required to ensure that the trial does not come on before all appeals to the CFI and, if brought by any party, to the ECJ have been finally concluded. Accordingly the minimum requirement of this court at this stage is an order to ensure that the action is not fixed for trial against any defendant before, say three months after the exhaustion of all rights of appeal of that defendant from the Decision…"

vii) The appeal to the CFI is to be heard in October 2009 and a decision is to be expected in the early part of 2010. The parties have two months in which to decide to appeal to the ECJ which would take another 18 months. Thus there cannot be a trial of this action until sometime in 2012. This is a relevant matter to be borne in mind when deciding whether to adjourn the hearing of the jurisdictional challenge in October 2009.

viii) To ensure that the delay caused by the adjournment is kept to a minimum "shadow" steps (modelled on those ordered in the National Grid case) should be taken including the completion of pleadings and discussions concerning disclosure and the preservation of documents so that were the jurisdictional challenge to fail (when heard after the conclusion of the Italian appeal) this action would not be "starting from scratch".

11. Counsel for the other Defendants, after adopting the submissions of Mr. Rabinowitz, made a few further submissions. I intend no discourtesy by not summarising those additional submissions.

The case for not adjourning the jurisdictional challenge

12. Mr. David Foxton QC submitted that the jurisdictional challenge fixed for October 2009 should not be adjourned, essentially for these reasons:

i) The Claimants estimate that the Italian appeal might take 3-4 years with another two and a half years for any appeal to the Italian Supreme Court.

ii) The effect of the adjournment which is sought is to obtain a stay of the English proceedings without having to argue that the Defendants are entitled to a stay. That is because in the Italian appeal some of the Defendants (as appellants) seek to have the Italian court of appeal decide on the merits of the claims (if they fail to have the claims declared inadmissible or stayed on Masterfoods grounds).

iii) The adjournment which is sought will delay the progress of the claim and its ultimate determination. That will delay any ultimate recovery and risk evidence becoming stale or unavailable.

iv) A jurisdictional challenge should not be postponed indefinitely. The court first seized should decide the issue promptly. The English court is the court first seized because the Defendants only intervened in the Italian proceedings after the English proceedings had been commenced.

v) If the appeal in Italy were to succeed, issues concerning jurisdiction would still have to be decided here. Certain of the Defendants have submitted to the jurisdiction and served defences and so there is an issue as to whether it is open to them to challenge the jurisdiction.

vi) Not all the Defendants were in the same position with regard to appealing to the CFI. Some do not challenge that they were party to a cartel. Others were not addressees of the European Commission decision and so have not appealed. Some appeal on the narrow ground of "attribution". Any Masterfoods stay coupled with procedural directions must be tailored to the individual defendants. That exercise (described as "close case management") must be done by the national court which has jurisdiction but until the question of jurisdiction is determined the national court to carry out that close case management cannot be identified.

vii) The case will be resolved with less delay if this court decides that it has jurisdiction and carries out the Masterfoods exercise than if the parties wait for the Italian appeal to be determined.

viii) Moreover, deciding the question of jurisdiction will mean that this case will not be left in "limbo" which must be a benefit to all parties. "Real" case management thereafter must be better than "shadow" case management.

The court's decision

13. Having considered the written and oral submissions I have decided that the fair, just and appropriate course is to dismiss the application for an adjournment for these reasons:

i) In principle, a jurisdiction dispute should be resolved at the earliest reasonable opportunity. The advantage of doing so is that the parties to the dispute will know at the earliest reasonable opportunity whether this court has or does not have jurisdiction. That must be of assistance to the parties in planning the management of this very substantial case.

ii) Whilst the resolution of this jurisdictional challenge will or may mean that the English court will have to "second guess" the decision of the Italian appellate court on matters of Italian law and jurisdiction that is not so great a difficulty that the English court should postpone making a decision on its own jurisdiction until the Italian appellate court reaches a decision in two and half years (or even longer). The position was different in February of this year when the decision of Judge Gandolfi was expected in 3-4 months. Further, this court now has the benefit of Judge Gandolfi's decision. (I note that Counsel for the Claimants suggested in his written argument that it is not for this court to second guess the Italian court. I put that further point to one side because it will or may be the subject of argument at a later stage.)

iii) The fact that the substantive case, whether it takes place in England or in Italy, will be subject to a Masterfoods stay is plainly a relevant factor to take into account when deciding whether or not to adjourn. But I do not consider that it amounts to a good reason for adjourning the jurisdictional challenge. The first time the application of a Masterfoods stay was considered in a follow-on action in this jurisdiction was in the National Grid case to which reference has been made. It is fair to say that precisely how it will be applied will continue to be worked out in subsequent cases. In this case counsel for the Claimants has suggested that it will require close case management taking into account the position of each defendant separately. I am doubtful that this will be so since the claim against the Defendants is pursued on a joint and several basis and a uniform order was made in the National Grid case notwithstanding differences between the defendants. However, if disputes of that nature have to be resolved it is more sensible to do so after jurisdiction has been determined so that, if this is the court where the substantive case will be heard, it can exercise case management on a real basis rather than on a shadow basis. That can only be done once jurisdiction has been determined.

iv) Since the Italian appeal raises the merits of the substantive dispute the effect of adjourning the jurisdictional challenge until after the completion of the Italian appeal may prove to be the same as the stay which the Defendants are seeking by their jurisdictional challenge. It therefore seems to me to be right in principle that the jurisdictional challenge should be heard rather than adjourned on case management grounds in circumstances where the effect of that adjournment may amount to the stay sought on the jurisdictional challenge.

v) Whilst the substantial costs of the contested jurisdictional challenge will be wasted in the event that the Italian appeal or the appeal to the CFI succeeds, I do not consider that that potential consequence justifies a further and, possibly very lengthy, adjournment of the jurisdictional challenge.

14. I therefore decline to adjourn the hearing of the jurisdictional challenge and invite the parties to agree any remaining directions required for the hearing of that challenge in October 2009.