On October 24, 2018, the European Court of Justice (CoJ) delivered its preliminary ruling in the Apple case (case C-595/17). The judgement addresses a crucial and thorny issue: the application of contractual jurisdiction clauses in competition damage claims. In a nutshell, the CoJ takes the view that a jurisdiction clause may apply in a claim for damages formed on the basis of Article 102 of the Treaty on the Functioning of the European Union (TFEU). Below we take a closer look at this important judgment.
But First, a Short Reminder
Jurisdiction in civil and commercial matters is covered by Regulation 44/2001 (recast by Regulation 1215/2012 and also known as Brussels 1 Regulation). The Brussels 1 Regulation states that, as a general rule, the jurisdiction for bringing a civil or commercial claim is the court where the defendant is domiciled (Article 2). However, in certain cases, an applicant may deviate from this general rule and file its claim in a different jurisdiction.
One alternative jurisdiction is the court that the parties have designated to settle any disputes that have arisen or that may arise in connection with a particular legal relationship (Article 23). In this case, the applicant must bring its claim to this court unless the parties have agreed otherwise.
The application of this rule in the context of competition damages claims has already been the subject of judicial review. In CDC (see our briefing here), the CoJ found that a clause that refers to all disputes arising from a contractual relationship does not cover a dispute relating to an action for damages arising from a cartel. This is because the cartel was not reasonably foreseeable at the time the jurisdiction clause was agreed upon.
Importantly, the CDC precedent focused on cartel cases, but did not touch upon abuses of dominance – a void which the Apple case addresses.
On October 10, 2002, eBizcuss.com (eBizcuss) and Apple Sales International (Apple) entered into a distribution contract. As per the terms of the contract, eBizcuss would become an authorized reseller of Apple branded products and would distribute Apple’s products on a virtually exclusive basis.
In April 2012, eBizcuss brought proceedings against Apple. According to the French distributor, Apple competed unfairly and abused its dominant position as of 2009, in particular by favouring its own distribution network over its third party resellers. Importantly, eBizcuss brought its action before the French Courts – a point that Apple criticized, since the contract provided that ‘the parties shall submit to the jurisdiction of the courts of the Republic of Ireland.’
After five years of judicial procedure, the French Supreme Court (Cour de Cassation) referred the case to the CoJ. The referral focused on the following question: may a jurisdiction clause apply to an action for damages brought on the basis of Article 102 TFEU, even though it does not expressly refer to disputes relating to antitrust violations?
A Guiding Principle: Not Taking Anyone by Surprise
According to the CoJ, the rule is simple: a jurisdiction clause may only apply to disputes which have arisen or which may arise in connection with a given contract. This is to avoid a party being taken by surprise – a principle already asserted in CDC.
While the principle is clear, the CoJ nonetheless emphasized that its application may give rise to contrasting outcomes:
- In CDC, which related to a cartel damage claim, the CoJ found that the claimant had no prior knowledge of the unlawful cartel and could not reasonably foresee such litigation when it agreed to the jurisdiction clause. As the circumstances of that particular case showed, the alleged anti-competitive cartel had no connection with the existing contractual relationship. Therefore, the CoJ concluded that a jurisdiction clause is not applicable to a cartel damage claim involving the parties to the contract – except if the clause explicitly refers to disputes arising from a competition law infringement.
- By the same token, where the alleged infringement stems from the contract, the application of the jurisdiction clause 'cannot be regarded as surprising one of the parties' – even if the clause does not explicitly refer to competition infringements. This may apply in a case such as the one at hand, involving an alleged abuse in the context of a supplier/distributor relationship (by way of reminder, eBizcuss alleged that Apple would favour its own distribution network over its third party resellers).
Importantly, the above does not mean that Article 23 of the Brussels 1 Regulation applies differently depending on whether the damage claim relates to a cartel infringement (as in CDC) or an abuse of dominance (as in Apple). Instead, and as explicitly stated in AG Wahl’s conclusions, what matters is whether the conduct that triggers the dispute is connected to the contractual relationship to which the jurisdiction clause applies – in which case the jurisdiction clause should in all likelihood apply to the dispute.
One Small Step for Apple, One Giant Leap for Legal Certainty
The CoJ’s judgment is an important step for Apple, who wins an important battle against eBizcuss: French Courts should now declare themselves incompetent, to the benefit of Irish judges. Of course, this is not the end of the road, as important substantive questions remain to be addressed; but Apple will at least have bought a significant amount of time (by way of reminder, the proceedings started in 2012).
More importantly, this judgment provides legal certainty for complainants and defendants alike. Indeed, since most antitrust infringements are either cross-border or involve parties established in different countries, jurisdiction is the first battlefield when seeking compensation for damages resulting from such infringements. However, the recent Damages Directive does not address this issue at all. Hence, the Apple judgment is welcome in that it fills the gap left by CDC and provides a clearer and useful roadmap to establishing jurisdiction in antitrust damages cases. Hopefully, it will also limit lengthy debates on jurisdiction before national courts, therefore allowing for quicker and hence more efficient reparation for victims of antitrust violations.