Forum Shopping- The High Court Closes the Door (Slightly)- The High Court's decision in SanDisk Corporation vs Koninklijke Philips Electronics NV and Others 

April, 2007 - Sebastian McMichael

Enforcement of competition law by means of private actions (particularly private damages actions) is a hot topic. The European Commission has a stated policy objective of encouraging private actions and, at the UK level, private actions are becoming more prevalent in both the courts and before the Competition Appeal Tribunal. In particular, the English High Court's decision in Provimi has led to England being seen as an attractive jurisdiction for damages claims. However, in the recent case of SanDisk Corporation vs Koninklijke Philips Electronics NV and Others, the High court has made clear that it will not allow England to become some sort of enforcement utopia and there is a limit to the English courts' jurisdiction to entertain private competition enforcement/damages actions.

In Provimi, a German company brought an action for damages in England for losses allegedly caused to it by a pan-European cartel (acting in breach of Article 81(1) of the EC Treaty). It claimed damages from the English subsidiary of one of the cartelists, although it had not traded with that subsidiary. The High Court held that a subsidiary that charges a price fixed by a cartel implements the cartel and therefore participates in an infringement of Article 81(1) and can be sued in tort. Further, a European customer of the cartel can bring a cartel damages claim in the English courts against the English subsidiary within the cartel group, even if that customer did not purchase any products from the English subsidiary. The impact of the ruling (subject to a successful appeal) is, broadly, that a party who has bought from a number of a cartelist's subsidiaries throughout Europe can bring a single action for damages in England so long as one of the subsidiaries is domicile in England.

From the " forum shopping " perspective, England does offer claimants certain advantages compared with other European jurisdictions. In particular, English discovery and quantification of damages rules can be viewed as more "claimant-friendly" than many mainland European civil law jurisdictions. However, it is clear from the High Court's ruling in SanDisk that the courts will not allow England to become some sort of competition enforcement utopia.

In SanDisk, the claimant (which imported and sold unlicensed MP3 players in the EU) sought to challenge the validity of a number of patents (alleged to be essential for anybody wishing to make and/or sell MP3 players in the EU) held by the defendants and certain measures brought against it by them. In particular, the patentees sought to enforce their patents against SanDisk by obtaining border detention orders in the Netherlands and seizures in Germany and Italy of MP3 players imported by SanDisk. In essence, the claimant argued that the defendants were dominant in certain markets and that their conduct in enforcing the patents constituted an abuse of their dominant position contrary to Article 82 EC. The claimant brought an action in the High Court, in addition to a number of other European jurisdictions, despite the fact that none of the abuses complained of took place in England, that no immediate damage had been caused to the claimant in England by reason of the alleged abuses, and that none of the defendants were domiciled in England. The High Court considered that this was a bridge too far and that the courts in other EU jurisdictions were better placed to determine the claim.

Both Provimi and SanDisk turned on an interpretation of the so-called Brussels Regulation/the Lugano Convention. The Brussels Regulation seeks to provide a system of primary jurisdictional rules binding on the EU Member States; the Lugano Convention applies similar rules to the EFTA states. The central proposition in both measures is that a defendant is to be sued in the courts of the jurisdiction where that person is domiciled. This, however, is subject to certain exceptions and the measures do not prevent all conflicts meaning that several courts might find themselves with jurisdiction to try a particular dispute. It can be envisaged that the Regulation and the Convention will be considered more and more as the European competition authorities continue to push for private enforcement actions and claimants and defendants seek to use differing national procedural rules to their advantage as part of their litigation strategy. Whether the time has (finally) come for the European legislature to seek to harmonise national procedural rules is also likely to be a (contentious) issue of debate.



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