At first glance, not a stone seems to be left standing. The new sec. 33h ARC hardly bears any resemblance with the old sec. 33 para. 5 ARC, the to date only special limitation rule applicable to cartel damages claims in the ARC. What appears tremendous – the new sec. 33h ARC comprises eight paragraphs in total – proves also on closer consideration quite far-reaching – even though perhaps not quite as far-reaching as the multiplication of the number of paragraphs by eight may suggest. The extension of the provision text is to a large extent due to the fact that a comprehensive special limitation regime for cartel (damages) claims has been introduced into the ARC which, while primarily meant to transpose the special requirements stemming from the cartel damages directive 2014/104/EU into national law, largely reconstructs the general limitation rules as contained in the German Civil Code previously applicable to cartel (damages) claims. In that regard, the German legislator aimed at attaining consistency with the general limitation rules, and quite successfully at that. As a result, the differences are in many ways hidden in the details – which by no means is to say that they weren’t fundamental. Apart from that, the newly introduced sec. 33h ARC brings some real novelties. One thing, however, is common to (almost) all changes: they strengthen private enforcement by cartel victims.
Make five out of three
The probably most evident change is the extension of the knowledge-based limitation period from three (sec. 195 Civil Code) to five years (now sec. 33h para. 1 and 2 ARC, starting at yearend each). For cartel victims this means that they (at least potentially) have more time to prepare their claims and to possibly even await further developments (for instance the reaction of the cartelists to claims put forward by third parties). As far as non-knowledge-based limitation is concerned, the ten-year limitation period stays the same (sec. 33h para. 3 ARC and sec. 199 para. 3 no. 1 Civil Code, respectively).
Ignorance is an excuse in law
A true limitation novelty is that the (knowledge-based) limitation period only begins to run if and when the cartel victim has gained (or should have gained) knowledge not only of the circumstances on which the claim is based and the identity of the infringer, but also of the circumstance that the harmful event constitutes an “infringement in accordance with sec. 33 para. 1” (sec. 33h para. 2 no. 3 lit. a) ARC), i.e. an infringement of competition law (subject to a cartel fine). In essence, the infringer must going forward, if they want to successfully plea limitation, establish that the cartel victim has arrived (or should have arrived) at the correct conclusion that the facts in question amount to an infringement of competition law in accordance with the pertinent competition rules. It will be interesting to see, though, what standard of proof the courts will apply in that respect and, in particular, how much of competition law comprehension they will attribute to the “average punter” falling prey to a cartel.
All’s well that ends well
A further future requirement for the start of the limitation period is that the infringement of competition law has ceased (sec. 33h para. 2 no. 3, para. 3 no. 2 ARC). Consequently, a cartel (damages) claim will not be time-barred even if the damage is caused by an infringement of competition law that lies far back in the past as long as the infringement has ceased only in the more recent past or is even still ongoing. In principle, cartel victims may therefore liquidate damages from many years ago with potentially significant consequences for the total amount of their claim.
The requirements and effects of suspension are extended in a number of respects (sec. 33h para. 6 ARC): first, it is clarified that the suspension based on investigations by competition authorities does not necessarily require formal opening of proceedings, rather “actions taken for the purpose of the investigation or its proceedings” suffice (sec. 33h para. 6 nos. 1 and 2 ARC). Further, going forward “actions” taken by competition authorities of other EU member states in respect of their respective national (as well as European) competition laws are sufficient too (sec. 33h para. 6 no. 2 ARC). A totally new feature is suspension in case a cartel victim has brought a claim for information or evidence pursuant to sec. 33g ARC against the cartelist (sec. 33h para. 6 no. 3 ARC). Stamina in terms of legal defense against such an information claim therefore does not yield any benefits for the cartelist in terms of limitation. In addition to these special suspension rules, the general suspension rules, in particular pursuant to sec. 204 Civil Code, apply in parallel. In contrast to the general limitation rules which provide for a suspensory run-on effect of six months after the event triggering the suspension has ended (sec. 204 para. 2 clause 1 Civil Code), the special limitation rules enshrined in sec. 33h para. 6 ARC provide for a run-on period of one year (sec. 33h para. 6 clause 2 ARC).
A truly fundamental change appears rather unimpressive on the outside: the limitation start of recourse claims among cartelists. The start of the limitation period is now dependent on the (actual) satisfaction of a cartel damages claim by a cartelist in relation to one (or more) cartel victim (sec. 33h para. 7 ARC). While such recourse claims, now governed by sec. 33d para. 2 ARC, in principle follow the substantive-law rules on recovery in case of joint and several responsibility as applicable in general civil law (sec. 426 Civil Code) (and therefore are subject to the general limitation statute as laid down in secs. 195, 199 Civil Code), one important change introduced by the 9th ARC reform consists in – in addition to certain alleviation of liability for ‘crown witnesses’ (i.e. immunity recipients, sec. 33e para. 3 ARC) as well as small and medium-sized enterprises (sec. 33d para. 4 ARC) – delaying the limitation to start running. For the infringer this carries the advantage of not having to take suspensory measures (in particular third-party notice), and, in case of a statutory assignment pursuant to sec. 426 para. 2 Civil Code, the infringer need not fear to face defenses that the other infringers could have put forward in relation to the cartel victim. Although the (considerably) delayed limitation start in the first place benefits the infringer prepared (or forced) to pay compensation; indirectly, however, this should also benefit the cartel victim in that infringers, in view of better recourse prospects in relation to the other infringers, might be more open to settlement negotiations. For cartelists who so far have not been confronted with damages claims, the risk to be confronted with recovery claims put forward by other cartelists at a considerably later point will in any case rise.
No pros without cons…
Another provision seems to involve a disadvantage for the crown witness at first glance: for cartel victims, that are not indirect of direct purchasers or providers of the crown witness, the (knowledge-based) limitation period for damages claims against the crown witness does not start until the lapse of the year in which they were not able to obtain full compensation from the other cartelists (sec. 33h para. 8 no. 1 ARC). This means that crown witnesses can potentially be held liable for a longer period. On closer consideration, however, it becomes clear that this provision is only meant to “compensate for” the – also newly introduced – crown witness privilege according to which the crown witness, unlike the other cartelists, bears only a secondary liability in relation to cartel victims that are not their indirect or direct purchasers or providers (sec. 33e para. 1 clause 2 ARC). Even though the crown witness shall be privileged compared to the other infringers – in case of doubt, the interests of the cartel victims to obtain full compensation shall prevail. The practical relevance of such limitation delay (that arguably is of only declaratory character anyway) is supposedly limited. For one, it applies only to full-immunity crown witnesses (cf. sec. 33e para. 1 clause 1 ARC), and also only to certain groups of cartel victims. Furthermore, claimants within the meaning of sec. 33e para. 1 clause 2 ARC should, in addition to the (postponed) five-year knowledge-based limitation period, keep a watchful eye on the non-knowledge-based ten-year limitation period anyway. Litigation against unwilling cartelist can be quite lengthy; proof of the inability to obtain full compensation from the other cartelists may therefore be possible only after many years of – eventually unsuccessful – litigation. Expiry of the ten-year non-knowledge-based limitation period may then be not all too far off anymore. Lastly, a comparable limitation rule is provided for in relation to small and medium-sized enterprises (sec. 33h para. 8 no. 2 ARC) that equally benefit from a liability privilege (cf. sec. 33d para. 3 ARC).
The future is now! …or rather back then?
The new limitation rules in sec. 33h ARC – as is true for the major part of the private enforcement rules introduced by the 9th ARC reform – have entered into force with effect from 27 December 2016 (the date by which the cartel damages directive should have been transposed). Consequently the new limitation rules apply to claims based on the amended private enforcement rules (sec. 186 para. 3 clause 2, 1st half clause ARC). Over and above, they also apply to claims that are based on the former law (i.e. prior to 27 December 2016), provided they have not become time-barred at the entry-into-force of the 9th ARC reform on 9 June 2017 (sec. 186 para. 3 clause 2, 2nd half clause ARC); however, the old limitation regime shall remain applicable in relation to the limitation start and suspension (sec. 186 para. 3 clause 3 ARC). Given these complex rules, it is a safe bet to assume that the question of the temporal (partly retroactive) applicability of the private enforcement rules introduced by the 9th ARC reform will keep the courts busy for quite some time.