The Court of Appeal has held that a claim for losses caused by an Italian cartel did not come within a jurisdiction clause giving non-exclusive jurisdiction to the English courts:Ryanair Ltd v Esso Italiana Srl [2013] EWCA 1450.

The case was argued on the basis that the claimant had a claim in both contract and in tort, and the tort claim (for breach of statutory duty) was so closely connected to the contract claim that the parties must be taken to have intended the jurisdiction clause to cover it. The Court of Appeal, overturning the High Court decision, decided there was no claim in contract so that argument fell away. The court also rejected any suggestion that the tort claim alone could come within the clause, although this part of the judgment is obiter.

The scope of a jurisdiction clause is a matter for interpretation in every case, but this decision suggests that in most cases it will be difficult to persuade a court that cartel follow-on damages claims fall within a jurisdiction clause contained in a supply contract with a cartel member.  

Background

The claimant, Ryanair, claimed damages from the defendant, Esso Italiana, in respect of jet fuel purchased at inflated prices as a result of a cartel. The Italian Competition Authority had found the defendant and others to be in breach of what is now article 101 of the Treaty on the Functioning of the European Union (TFEU) and had imposed substantial fines.

The claimant argued that the sums overpaid to Esso were recoverable under a term of the fuel purchase contract which provided that if any price did not conform to applicable laws, adjustments would be made. They also claimed in tort against the defendant for losses arising from the overcharging by it and by other cartel members on the basis that each member of an illegal cartel is jointly and severally liable for all losses caused by the operation of the cartel.

The jurisdiction clause in the supply contract, which was subject to English law, provided:

“For the purposes of the resolution of disputes under this Agreement, each party expressly submits itself to the non-exclusive jurisdiction of the Courts of England.”

At first instance, the defendant conceded that the breach of contract claim was arguable, apparently due to concerns that alleging the claim was hopeless might constitute a submission to the jurisdiction. The Court of Appeal considered there was no risk of submission provided the argument was legitimately connected to a challenge to the jurisdiction and was made in the context of such a challenge. The court allowed the defendant to withdraw its concession, saying it was necessary to consider the parties’ jurisdictional arguments in the round; if the breach of contract claim was not arguable then the whole premise of Ryanair’s claim to jurisdiction for the statutory duty claim, and the reasoning of the judge’s judgment, was undermined.

Decision

The Court of Appeal found there was no arguable contractual claim based either on the wording of the contract or any implied term. In the absence of a contractual claim, the arguments concerning the close connection between the contract and tort claim fell away.

The claimant did not argue that the tort claim alone came within the jurisdiction clause, but the judgment makes clear such an argument if advanced would not have been successful.

It is possible that a jurisdiction clause drafted more widely and making express reference to tortious claims might be interpreted differently, but in light of this decision it is likely to be difficult to establish that parties should be regarded as intending cartel follow-on damages claims to come within contractual jurisdiction provisions. As Lord Justice Rix commented on the facts of this case:

“I think that rational businessmen would be surprised to be told that a non-exclusive jurisdiction clause bound or entitled the parties to that sale to litigate in a contractually agreed forum an entirely non-contractual claim for breach of statutory duty pursuant to article 101, the essence of which depended on proof of unlawful arrangements between the seller and third parties with whom the buyer had no relationship whatsoever, and the gravamen of which was a matter which probably affected many other potential claimants, with whom such a buyer might very well wish to link itself.”