On 21 May 2015, the European Court of Justice (CJEU) confirmed that an arbitration clause agreed between parties, may not bind those parties to arbitration if the perpetrator was being sued where the harm took place or in the jurisdiction that another member of the cartel was being sued. The case is an important lesson on the limits of contractual agreements as to the jurisdiction of disputes.
The CJEU was asked to give judgment for the interpretation of Arts. 5(3) and 6(1) of the Brussels Regulations (now Arts. 7((2)) and 8((1)) of the Recast Regulations) in connection with an arbitration clause. The case was referred to the CJEU by the District Court of Dortmund. The case involved a cartel claim against numerous defendants who allegedly were involved in price fixing, exchanging confidential information and limiting the production of hydrogen peroxide and sodium perborate. The alleged infringement lasted for approximately six years and took place in different Member States. The Court asked the CJEU whether they had jurisdiction to hear the case when the parties in question had agreed to resolve the dispute through arbitration?
Generally, an arbitration clause precludes other parties from involvement in an arbitration dispute unless they are party to the agreement in question which contained the arbitration clause. This exclusion can hinder a party from recovering damages in full, especially if the case concerns multiple defendants.
In the present case, the arbitration clause referred to any dispute arising from a contractual relationship. It was decided by the Court that single and continuous infringements of competition law are beyond the scope of a contractual relationship, as they constitute a tortious liability. Furthermore, the party claiming competition law damages was kept in the dark with regard to the true nature of its supplier’s activity and therefore, could not have possibly foreseen any other dispute arising beyond a contractual dispute.
Consequentially, the CJEU decided that an arbitration clause had no effect on disputes concerning liability incurred as a result of an infringement of competition laws.
However, the door remains open to binding competition law disputes to arbitration in that the court did specify that arbitration clauses may be binding if they specifically mention competition law disputes, those disputes then being foreseen and therefore capable of being bound to arbitration.
The case is important in two ways. Primarily, it shows that parties are not bound by an arbitration clause when disputes arise from the illegitimate conduct of one of the parties, and when the competition law dispute was not foreseen or specifically mentioned in the arbitration clause.
Secondly, in the future, those parties who wish to be bound to arbitration for any possible dispute will have to specifically mention competition law infringement and claims if they wish to subvert the recast Brussels Regulation on jurisdiction. Parties when faced against belt and braces clauses of this kind may be wise to amend or not agree to such limitations if they wish to gain full access to EU and domestic courts to enforce their rights and obtain full recovery of damage suffered.
Case C 352/13