National Grid Electricity Transmission Plc v ABB Ltd & Ors

These applications raise an important question as to the approach the court should take in the light of the so-called French blocking statute, French law No 68-678 of 26 July 1968 (as subsequently modified). They arise in the context of a large-scale follow-on damages action for breach of the competition rules in Art 101 of the Treaty on the Functioning of the European Union (“TFEU”). The claim is brought subsequent to the European Commission’s decision in Case Comp/F38.899 – Gas Insulated Switchgear (“GIS”) issued on 24 January 2007 (“the Decision”).

GIS is heavy electrical equipment which controls energy flow in electricity grids, and is therefore used as a major component in power substations. The Decision was addressed to 20 companies and found that they had been engaged in an extensive and sophisticated cartel regarding the supply of GIS. It found that the cartel lasted, with variation in the involvement of some of the participants, over a period of some 16 years from 1988 to 2004, and covered much of the world, excluding the United States and Canada. The Decision is detailed and lengthy, comprising 552 recital paragraphs. It imposed fines in the total amount of over €750 million, the largest set of fines imposed as at that date in respect of a single cartel.

The claimant (“NGET”) alleges that it suffered substantial losses by reason of overcharges resulting from the illegal cartel. The schedule to its Particulars of Claim, as amended, lists 46 projects which may have been affected involving a total project expenditure of close to £550 million. The damages it is alleged to have suffered depends on computation of what likely overcharge resulted from the cartel and to what extent NGET passed this through to its customers. Those are complex issues which depend on economic analysis of a very significant amount of data, so no clear value can yet be placed on the claim. However, with interest the amount claimed is likely to run to several £100 millions.

There are now, following amendments, 22 defendants to this claim. They comprise companies that fall into four corporate groups. They have been referred to, for convenience, by the name of the parent company as the ABB, Siemens, Alstom-Grid and Areva defendants. Some, but not all, of the individual defendants to this action were addressees of the Decision; others are subsidiaries of addressees of the Decision. However, several addressees of the Decision have not been sued by NGET.

These proceedings were commenced on 17 November 2008. However, Areva, Alstom and Siemens, along with several other addressees of the Decision who are not defendants to the present action, appealed against the Decision to the General Court. Because of those appeals, progress with the early stages of these proceedings was delayed although the court declined the defendants’ application for a complete stay: see the judgment of the Chancellor of 12 June 2009: [2009] EWHC 1326 (Ch). Since then, all the appeals to the General Court have been dismissed as regards liability save in some minor respects as regards the periods of involvement in the infringement. In May 2011, Areva, Alstom and Siemens lodged further appeals to the European Court of Justice (“ECJ”). Those appeals are pending but trial in the present action has now been fixed to commence in June 2014 on the basis that by then all appeals to the ECJ will have been determined.

Accordingly, disclosure in the present case has been proceeding and, at a CMC held on 26-27 March 2013, the court by order decided on the timing of all subsequent steps to trial.

Calculation of the extent to which a cartel has raised prices (“the cartel overcharge”) is never an easy exercise, since it involves estimating what prices would probably have been in a world that never was: i.e. if the same supplies had been made at the same time but under competitive conditions. However, it is particularly challenging in the present case for two reasons. First, this was not a straightforward price-fixing cartel. The Decision found that the cartel involved the sharing of markets and the allocation of quotas and market shares. The United Kingdom in particular was designated a “home market”, reserved to certain members of the cartel with whom the others would therefore not compete for UK projects. Secondly, GIS is about as far from a standard, commodity item as can be imagined. The contracts entered into by the cartelists and their subsidiaries were for bespoke equipment, in response to invitations to tender, and often supplied as part of a wider turnkey project. The overall number of such projects is relatively limited. For the task of estimating the cartel overcharge, a matter very dependent on expert economic evidence, disclosure is therefore of great significance.

Because of the scale and potential complexity of disclosure in this case, it has not been dealt with by way of standard disclosure but by specific disclosure addressed and determined in stages. Issues raised by disclosure have been the subject of a number of decisions, including two reserved judgments on 4 July 2011: [2011] EWHC 1717 (Ch); and 4 April 2012: [2012] EWHC 869 (Ch). The present applications raise yet another issue.

NGET’s application is made as against the 6^th, 9^th and 22^nd Defendants (“the French Alstom Defendants”) and the 10^th Defendant (“Areva”) (together, “the French Defendants”). Extensive disclosure has been given, and continues to be given, by all the other defendants. The specific disclosure that is sought as against the French Defendants mirrors that which is being provided, to some extent by consent and for the rest pursuant to court orders made previously in these proceedings, by the other defendants.

In an application for specific disclosure heard at a CMC on 8 November 2012, NGET sought an order for disclosure in these terms against the French Defendants. The French Defendants did not raise any arguments about proportionality beyond those raised by the other defendants; their particular objection was founded on the French blocking statute. They contended that providing such disclosure will put them, as French companies, in breach of a prohibition under French law which attracts criminal penalties, and therefore should not be ordered. NGET in its skeleton argument for that CMC submitted that the court should exercise its discretion to order disclosure nonetheless, as there was no real risk of any prosecution of the French Defendants under the blocking statute in this case. However, the issue was not then decided as the French Defendants suggested that the problem could be overcome, and an appeal to the Court of Appeal against any decision of this court avoided, by the court making a request to the French authorities to permit the disclosure to be conducted in France pursuant to Council Regulation (EC) No 1206/2001 (“the EU Evidence Regulation”). This was a reference to a request for the direct taking of evidence as provided for in Arts 1(1)(b) and 17 of the regulation.

It should be noted that the EU Evidence Regulation provides for two alternative routes for the taking of evidence in another EU Member State:

In the light of that, and while reserving its position, NGET did not press the court to order direct disclosure on that occasion. The order made on 22 November 2012 accordingly excluded the French Defendants from the various disclosure obligations and instead required those defendants to seek from the court orders that requests be issued in the appropriate form for the taking of evidence by the direct route under the EU Evidence Regulation, and then to serve those requests on the French Ministry of Justice. Such applications were duly made by the French Defendants, and resulted in orders made on 26 November 2012 in respect of the French Alstom Defendants and on 5 December 2012 in respect of Areva, directing requests to be issued and designating those parties’ respective solicitors as the person to be identified on the requisite Form I under Art 17 to perform the taking of evidence.

By mid-January 2013, NGET’s solicitors had become concerned about the delay in obtaining a response to the requests under what is supposed to be a relatively quick procedure. But then, by responses dated 21 January 2013, the French Ministry of Justice rejected the two requests. The letters from the relevant French official are in identical form and, in the agreed translation, give the following explanation:

“Article 17.3 of Regulation No. 1206/2001 of 28 May 2001 provides that the taking of evidence shall be performed by a member of the judicial personnel or by any other person, such as an expert, who will be designated in accordance with the law of the Member State of the requesting court.

Yet, in the case in point, the direct taking of evidence (Form I) requires that the act (consisting of receiving documents) be performed not by Judge ROTH, as mentioned in the letter from the law firm which submitted the request, but by the solicitor of the defendant company in the case, which is supposed to provide the documents covered by the taking of evidence. Such an approach causes a party to the dispute to become responsible for taking the evidence required to settle the dispute, which would seem to run counter to the fundamental principles of law in the requested Member State. Under these conditions, the refusal to allow the direct taking of evidence is in line with Article 17.5 c) of the European Regulation cited above.

In addition, to have a party submit documents deemed necessary to arrive at an outcome to the dispute that the court is required to settle, a court does not need to do so by means of an international request to take evidence: it is sufficient to order the party concerned to submit such evidence. Admittedly, recourse to a rogatory commission based on international enactments allows the parties to evade the risk of having legal proceedings instituted against them in France on the basis of Law no. 68-678 of 26 July 1968, a so-called “blocking statute”, but this would be an abuse of process, since in reality no taking of evidence is required to achieve the result sought by the judge.”

Following this failure of the direct route under the EU Evidence Regulation, NGET renewed its application that the court should simply order the French Defendants to make the required disclosure. As well as resisting the application on the basis of the blocking statute, the French Alstom Defendants issued what is in effect a cross-application that the court should now issue a request to the relevant French court for disclosure, using the court-to-court route under the EU Evidence Regulation. Under that regime, if the French court acceded to the request it would itself order the disclosure of the documents which that court would then transmit to this court under Art 16. The essence of the argument of the French Alstom Defendants was that this was now the appropriate route for the court to take as it would avoid the risk of their being prosecuted under the blocking statute.

Areva was not represented at the hearing of these applications but by letter from its solicitors associated itself with the position adopted by the French Alstom Defendants. Areva had not then itself issued an application for a similar order under the EU Evidence Regulation but it did so on 18 February 2013, shortly after the hearing. Although that has come before the court as a paper application, it is identical, mutatis mutandis, to the application of the French Alstom Defendants and therefore can be addressed on the same basis in this judgment.

In support of their respective positions regarding the application of and risks under the French blocking statute, the French Alstom Defendants and NGET served reports from distinguished French experts. The French Alstom Defendants’ expert is Judge Béraudo, currently a professor at Paris I University and from 2000-2003 a judge in the Criminal Division of the French Supreme Court (Cour de Cassation). NGET’s expert is Mâitre Feugère, a lawyer specialised in criminal law and in particular white collar crime, who is chairman of the Economic and Financial Criminal Commission of the Paris Bar and also of the Business Law Commission of the French National Bar Council, which he represented in recent discussions with the French legislative and executive authorities regarding the blocking statute. The original report by Judge Béraudo for these proceedings was made as long ago as 17 December 2009. Mtre Feugère’s first report in response was given on 1 February 2013. The two experts filed supplemental responsive reports on 8 February (Judge Béraudo) and 12 February (Mtre Feugère).

Although there is a sharp division of opinion between the two experts on a range of matters, both sides agreed that the court should reach its decision on the basis of their written reports and neither sought to cross-examine the other side’s expert.

The French blocking statute is described in its title as a law “relating to the Communication of Economic, Commercial, Industrial, Financial or Technical Documents to Foreign Individuals or Legal Entities.” The material provisions, in translation, are as follows:

“Article 1 bis

Without prejudice to international treaties or agreements and laws and regulations in force, it is prohibited for any person to request, search for or communicate, in writing, orally or in any other form, documents or information of an economic, commercial, industrial, financial or technical nature for the purposes of establishing evidence in view of foreign judicial or administrative proceedings or in relation thereto.

Article 2

The persons referred to in Articles 1 and 1 bis shall promptly inform the competent Minister, upon the receipt of any request concerning such communications.

Article 3

Without prejudice to harsher penalties provided for by law, any breach of the provisions of Articles 1 and 1 bis of the present law shall be punished by a six month imprisonment and a fine of 18,000 Euros or either one of these penalties only.”

Art 1 bis came into force in July 1980. On its face, it is of very broad scope. The French Alstom Defendants contend that even searching to see what documentation or information is available would violate the statute.

It is accepted by the French Defendants that the court has a discretion as to whether it should order disclosure from a foreign party to the proceedings notwithstanding that compliance might violate a prohibition under an applicable foreign law. In Mackinnon v. Donaldson, Lufkin and Jenrette Securities [1986] Ch 482, a case involving an application for a disclosure order against a third party bank under the Bankers’ Books Evidence Act 1879, Hoffmann J distinguished the position of ordinary disclosure between parties (at 494-95):

“I am not concerned with the discovery required by RSC, Ord. 24 from ordinary parties to English litigation who happen to be foreigners. If you join the game you must play according to the local rules. This applies not only to plaintiffs but also to defendants who give notice of intention to defend … Of course, a party may be excused from having to produce a document on the grounds that this would violate the law of the place where the document is kept.... But, in principle, there is no reason why he should not have to produce all discoverable documents wherever they are.”

Although that was obiter and concerned the former RSC, in Morris v Banque Arabe et Internationale d’Investissement SA (“BAII”) [2001] ILPr 37 Neuberger J held that the court had such a discretion under the CPR to order disclosure notwithstanding a foreign law prohibition.

Morris v BAII is one of four High Court judgments which have considered the approach to be taken in view of the French blocking statute. The first of these was The Heidberg [1993] 2 Lloyd's Rep 324. That was a claim, inter alia, for general average contribution arising from damage suffered by the first plaintiff’s vessel from collision with a jetty in France. The second and third defendants were the French shippers and cargo insurers, and they sought to rely on the French blocking statute in seeking to discharge disclosure orders. Cresswell J received written evidence from French lawyers put in by both sides and, as here, neither side applied to cross-examine so he reached his decision on the written evidence. Cresswell J refused to discharge the disclosure orders. He drew a distinction between the extensive third party discovery procedures that apply under many jurisdictions in the United States and the more limited inter partes discovery under what was then RSC Ord 24, referred to the statement of Hoffmann J set out above, noted that there was no evidence that anyone had ever been prosecuted for breach of Art 1bis,and observed (at [39]):

“… French companies have in the past regularly given discovery in legal proceedings here. The last judgment I gave in this court was in favour of a French company against a company incorporated in Bangladesh. In that action the successful French company had provided full discovery.”

Morris v BAII was an application in proceedings under the Insolvency Act 1986 arising from the collapse of BCCI. The liquidators of BCCI sought disclosure against the defendant French bank in an action alleging that it had knowingly assisted BCCI in illegal activities. The defendant there had provided discovery in the form of a list of documents, but resisted inspection in reliance on the blocking statute and argued that the liquidators should instead seek the documents under the 1970 Hague Convention on Taking Evidence Abroad, to which France was a party. In that case, the court heard both written and oral evidence from two experts whom the judge described as “very distinguished and experienced French lawyers”. It is appropriate to set out the judge’s summary of the effect of their evidence:

“First, Article 1 bis became part of the Blocking Statute and came into force in France in July 1980. Secondly, the purpose of the Blocking Statute was to enable French companies to resist American discovery procedures, although the Blocking Statute as enacted is more general in scope and is not limited to requests for documents coming from the United States. Thirdly, so far as both experts are aware, there has been no court decision convicting any French citizen for a breach of the Blocking Statute since it came into force. Indeed, despite their enquiries and experience, neither of the experts know of any case where prosecution has even been brought against any person under the Blocking Statute. Fourthly, in the experience of both these experienced and highly qualified experts, there has only been one occasion where either of them even knows of consideration having had to be given to the effect of the Blocking Statute. Fifthly, the disclosure of the Documents in the present case in the lists of 9th February and 29th October 1999 by BAII did not infringe the Blocking Statute. Sixthly, permitting the liquidators or their advisers to inspect any of the Documents, or copies of them, would involve BAII infringing the Blocking Statute, and this would be a criminal offence. Seventhly, if BAII were successfully prosecuted for such an offence, the maximum penalty would be two to six months imprisonment and/or a fine of between 10,000 and 120,000 French francs. Eighthly, the prospects of BAII being prosecuted if they were to permit inspection of the Documents would be “weak” or “very low”, according to Prof. Rives-Lange, or “purely theoretical” or “nil, practically speaking”, according to Le Batonier Danet. Ninthly, there would be no breach of the Blocking Statute if an order was obtained from the French courts for the provision of the Documents for the purpose of these proceedings pursuant to the Hague Convention. Tenthly, an application under the Hague Convention could be made and could have been made, to the French court by BAII or the liquidators, and such an application would succeed.”

Neuberger J held that, apart from the question of the Hague Convention, he would have little hesitation in exercising his discretion to order inspection. In reaching that conclusion, the judge referred to the observation of Cresswell J in The Heidberg quoted above. He noted that the French bank had received substantial documentation in the underlying proceedings following disclosure by the liquidators. He found that the risk of prosecution under the blocking statute was “probably no more than purely hypothetical.” And he stated:

“Although not necessary to my decision, I agree with [counsel for the liquidators’] submission that the court should normally lean in favour (probably heavily in favour) of ordering inspection, especially where a substantial number of important documents are involved. As I have mentioned, the question of discovery and inspection is obviously a question of procedure which, under international law, is to be determined in accordance with the lex fori.

Further, in connection with litigation of this sort, involving a substantial sum of money, alleged wrong doing and in the context of a massive and notorious international financial scandal, I would echo, with paraphrasing, an observation of Toulson J in the Surzur case to which I have referred. It would, I think, be highly unusual if the French criminal authorities were to prosecute a party to an action such as this in England, in circumstances where he was required to comply with an order of the court for production of documents for the purposes of that action. The enforcement of a law such as the Blocking Statute in a case such as this would not correspond with generally accepted notions of comity.”

He then considered the alternative of a request under the Hague Convention but found that although the bank itself could have made an application to the French court under the Convention it had not done so, and although the liquidators could also apply, this would only lead to unnecessary delay. Accordingly, inspection was ordered against the bank.

Elmo-Tech Ltd v Guidance Ltd [2011] EWHC 98 (Pat), [2011] FSR 24, was a patent infringement action, where the allegedly infringing product was a system produced under a contract to supply the French Ministry of Justice. The defendant served a product description pursuant to PD 63 but refused to include full particulars of all products alleged to infringe the patent relying, inter alia, on the blocking statute. Lewison J referred to The Heidberg and Morris v BAII, and noted that since those judgments there had been one successful prosecution in 2007 for violation of Art 1bis However, not only was that the sole prosecution but the case before the court concerned provision of information by an English company, and some (or perhaps most) of the information could be derived from documents outside France. The judge held that there was no justification for refusing to serve a product description that fully complied with the practice direction. This, therefore, was not a case involving the provision of documents for inspection, and the judge emphasised that the party subject to the obligation was English not French.

Finally, in Secretary of State for Health v Servier Laboratories Ltd [2012] EWHC 2761 (Ch), Henderson J recently considered the application of the French blocking statute in an action based on violation of EU competition law. The issue there arose on the application by the defendants, part of the French Servier group, for a stay of the English action. That application was largely based on the concurrent investigation into some of the same matters by the European Commission. But in support of their application, the defendants relied on the difficulties arising under the blocking statute which, they claimed, would prevent the giving of disclosure by the two French defendants. That argument was supported by written advice from Servier’s French lawyers.

Henderson J referred to the only known instance of a prosecution under the statue, the case of Christopher X (sometimes also referred to as the MAAF case after the complainant insurance company), decided by the Cour de Cassation, Criminal Division,on 12 December 2007. The judge had been provided (as have I) with the judgment in the original and translation, and I gratefully adopt his summary (at [46]):

“At the end of the 1990s, a French banker was accused by the Insurance Commissioner of the State of California of having organised the illegal buy-out of a Californian insurance company, Executive Life, via a French insurance company. In 1999, the Federal Court of California issued civil and international letters rogatory for the communication of documents from the French insurance company. A French lawyer, acting on behalf of the American lawyer representing the Insurance Commissioner, then attempted to obtain information by telephone in France from a former administrator of the insurance company regarding the decisions relating to the buy-out of Executive Life. The French court considered that the information was of an economic, financial or commercial nature, and that it had been sought with a view to obtaining evidence for use in foreign judicial or administrative proceedings. The lawyer had thus attempted to obtain information covered by the French Blocking Statute, without an authorised mandate as provided by the Hague Convention. Accordingly, he was fined 10,000 Euros.”

Henderson J further noted that the lawyer who was prosecuted had been attempting to obtain the information without the authority of a court order and, indeed, by deceptive means.

In considering the arguments under the blocking statute, the judge held that he was not persuaded that the risk to the French defendants of prosecution was any more than theoretical. He stated, at [55]:

“The absence of any successful prosecution in France for breach of the statute, over a period of more than thirty years, with the single exception of the Christopher X case, in my judgment speaks for itself. The facts in that case were exceptional, involving as they did the use of deception by a French lawyer who was acting unilaterally and without the protection of a court order. I cannot believe that the French authorities would even contemplate prosecuting Servier for complying with a standard set of directions for disclosure in litigation brought in the public interest by the English health authorities alleging serious breaches of EU competition law.”

Henderson J stressed in the next paragraph of his judgment that he could attach limited weight to the contrary view expressed by Servier’s French lawyers since they were not independent experts and had expressed their views only in letters of advice, not a formal expert’s report.

For the French Alstom Defendants, Mr Morris QC sought to distinguish each of these previous High Court decisions. He pointed out that both The Heidberg and Morris v BAII were decided at a time when there had been no prosecution under the blocking statute in France, a matter relied on by both Cresswell J and Neuberger J in their reasoning. Moreover, the EU Evidence Regulation did not exist at the time of those judgments, and so that alternative route, which is much more straightforward than the Hague Convention considered in Morris, was not then available. (Footnote: ¹) The Elmo-Tech case was very different in that there the party from whom information was sought was an English company and the issue did not involve provision of documents from France. And although the Servier case was much more similar to the present, there the judge, as he emphasised, did not have the benefit of an independent expert giving a full opinion, including the expert witness’ declaration recognising his duty to the court.

I accept that these are all relevant distinguishing features between the previous cases and the present. As this is a matter of discretion, it would in any event be for the court to consider the question on the particular facts of this case. But this of course does not mean that all the observations and reasoning of the judges who have previously considered the impact of the French blocking statute on disclosure are irrelevant.

The reports of Judge Béraudo and Mtre Feugère cover a lot of ground. They refer to a further reported case concerning a potential prosecution under the blocking statute, the Taitbout case decided by the Cour de Cassation, Criminal Division, on 30 January 2008. It arose on a complaint filed by a French company following the production in criminal proceedings in the United States by a US party of documents transferred from France. However, the French judge at first instance, and then the Court of Appeal, ruled that the French court did not have jurisdiction because the disclosure had taken place outside France. This ruling was annulled by the Cour de Cassation, which held that the statute applies to disclosure abroad where the victim is French. But the Cour de Cassation did not annul the further ground relied on by the lower courts for dismissal of the complaint. Judge Béraudo says that that was simply a finding that there was insufficient evidence to determine who was responsible for the disclosure from France. Mtre Feugère, by contrast, says that it was a much broader ground, that the conditions of the law were not fulfilled.

Judge Béraudo points out that very few decisions of first instance criminal courts in France are reported and not all appellate decisions are reported. Although he is only aware of the above two French criminal cases under the blocking statute, he suggests that it is therefore possible that there have been other instances.

The experts do not agree on whether the disclosure sought in this case would violate the blocking statute. Mtre Feugère says that the French courts apply a purposive, or teleological, interpretation of the law, such that in the circumstances of this case the elements of the statutory offence that is directed at abuse of disclosure procedures are not met. Judge Béraudo, on the other hand, states that as a law introducing a criminal penalty the blocking statute would be strictly interpreted according to its wording, which contains no ambiguity. He has no doubt that making the disclosure sought would constitute a violation. Indeed, he further considers that even providing a list of documents, without the documents themselves, would be an infringement. He also states that it is only since a change in the law with effect from 31 December 2005 that a company, as well as an individual, can be prosecuted for violation of Art 1bis, and it follows that Judge Béraudo considers that the French experts in Morris v BAII were both wrong in stating that BAII could be penalised for contravention of the statute.

As regards the risk of prosecution, Judge Béraudo considers it very likely that the relevant Public Prosecutor would become aware of any order requiring disclosure by the French Alstom Defendants. The Public Prosecutor then has a discretion whether or not to initiate a prosecution, but if he decides not to do so he must give reasons. Article 40-1 of the French Code of Criminal Procedure provides: (Footnote: ²)

“Where he considers the facts brought to his attention in accordance with the provision of Article 40 constitute[…] an offence committed by a person whose identity and domicile are known, and for which there is no legal provision blocking the implementation of a public prosecution, the Public Prosecutor with territorial jurisdiction decides if it is appropriate:

1.

to initiate a prosecution;

2.

to implement alternative proceedings to a prosecution, in accordance with the provisions of Articles 41-1 or 41-2;

3.

or to close the case without taking any further action, where the particular circumstances linked to the commission of the offence justify this.”

Judge Béraudo considers that in the present case the Public Prosecutor would probably request an investigating judge (juge d’instruction) to continue the investigation. He considers that the increased prominence given to the blocking statute by the Christopher X/MAAF case makes this much more likely. He says that once an investigating judge receives such a referral, he has a duty to conduct an investigation unless the facts “may not be prosecuted as a matter of law” or do not give rise to an offence. He considers that the fact that Alstom is a very prominent French company increases the likelihood of a prosecution since the authorities could not be seen to allow it to violate the law.

By contrast, Mtre Feugère states that he considers it “extremely unlikely” that the Public Prosecutor, if notified here of compliance without an English court order, would take any action, either to launch an investigation, refer the case to an investigating judge or refer it to the criminal court. And in the unlikely event that it was referred to an investigating judge, he does not think he would take any action either.

Mtre Feugère further relies on a proposed amendment to the blocking statute, which was accepted by the French National Assembly in January 2012 and then transmitted to the Senate, which has still not considered the issue. He thinks this is an additional reason why a prosecution would be unlikely. However, Judge Béraudo dismisses this as irrelevant, since an as yet unadopted amendment would not be taken into account and, in his view, even if the amendment were enacted it would not exclude the disclosure sought in the present case.

The experts also disagree on whether, if a prosecution were instituted, the defendants would be able, as Mtre Feugère suggests, to challenge the blocking statute as unconstitutional, making use of a procedure introduced in 2008 whereby the court is requested to submit a “priority question of constitutionality” to the Conseil d’État. Judge Béraudo considers that there is only a small chance that the requisite steps for the referral of such a question would here be satisfied.

Finally, the two experts express directly contrary views on the implications of the letters from the Ministry of Justice of 21 January 2013 refusing the requests under the EU Evidence Regulation. Judge Béraudo thinks that this increases the likelihood of a prosecution if the French Defendants nonetheless transmit the documents pursuant to a disclosure order by the English court instead of by use of the regulation, whereas Mtre Feugère regards it as a clear indication that resort to the regulation is inappropriate since no taking of evidence in France is involved, and that there is accordingly no risk of prosecution if the documents are supplied directly.

I do not think it is necessary to determine all the matters on which the experts are divided. I shall assume, without deciding, that production of the documents by the French Defendants would infringe Article 1bis. I note that the two experts in the Morris v BAII case reached the same view as regards the disclosure in that case, albeit that was not the classic form of disclosure between parties to a private action.

I do not feel able to reach a view on the significance of the proposed amendment to the French blocking statute, or the likely prospect of a defence of unconstitutionality. In my judgment, the critical question is the likelihood of any prosecution being brought against the French Defendants at all. On that, with all respect to Judge Béraudo, I do not find his opinion at all persuasive. Two of the few points on which the experts agree are that the Public Prosecutor has a discretion whether to institute a prosecution pursuant to Article 40-1 of Code of Criminal Procedure, and that in exercising that discretion he would take into account the public policy reasons underlying the statute. In that regard, the following seem to me very material considerations.

First, I note that in respect of para 3 of Art 40-1, Judge Béraudo states:

“The discretionary power of the Public Prosecutor not to prosecute is generally grounded on humanitarian reasons (such as stealing of food, or car accident where the victims and the driver are relatives) or when the prosecution could harm French public order more than the commission of the offence itself (such as industrial plant occupation during a strike, road circulation prevented by lorry drivers during a strike).”

However, as Henderson J observed in the Servier case, the facts speak for themselves. It is striking that the one instance of a successful prosecution, the Christopher X/MAAF case, arose on very exceptional facts where the disclosure was not made pursuant to a court order and, indeed, procured by fraud. In 1993, Cresswell J noted in The Heidberg how frequently French companies gave discovery in English legal proceedings. There is nothing to suggest that the experience of the subsequent two decades has been any different. If exercise of the Public Prosecutor’s discretion was in practice so limited, there would have been numerous prosecutions of French companies and their officers (even if before 2006 only individuals could be prosecuted) for complying with disclosure orders of the English courts. Judge Béraudo does not address this. As for his suggestion that there may have been other, unknown prosecutions, not only is that merely speculative but if there had been further prosecutions, given the attention which the blocking statute has received, I cannot believe that this would have gone unnoticed.

Secondly, the context of the legislation is significant. The 1980 amendment of the statute that introduced Art 1bis was made because of concern in France at what were seen as abusive discovery requests being made of French companies facing litigation in particular in the United States. That is explained by Mtre Feugère, in a part of his report that Judge Béraudo does not criticise. In this respect, the French blocking statute has a similar background to the UK Protection of Trading Interests Act 1980. Indeed, a significant number of states introduced such blocking legislation as a reaction to the perceived heavy-handed approach of the US law and procedures: see generally A V Lowe, Extraterritorial Jurisdiction (1983), esp at pp xvii-xxii.

Moreover, even when French companies comply with regular US disclosure orders, it appears that they are not prosecuted. Henderson J quoted in his judgment in Servier from the judgment of the US District Court for the Eastern District of New York, in the antitrust litigation arising from the air cargo cartel, the following passage which bears repetition. The US court there granted a motion to compel discovery from Air France of documents that had been withheld in reliance on the blocking statute. In his judgment, after citing several US decisions which had discounted the risk of prosecution under the statute, Magistrate Judge Pohorelsky continued:

“To counter these persuasive observations, the defendant points to but one prosecution that has ever been brought for violation of the blocking statute, involving a defendant and circumstances readily distinguishable from those before this court. The prosecution, as reported in an opinion by the Criminal Division of the French Superior Court of Appeals, involved a French attorney who sought to obtain testimonial evidence for a case pending in a California court by making false statements to a potential witness in France… Notably, the case did not involve discovery responsive to any requests made by the parties in the California case or ordered by the court there. It thus furnishes little proof that the defendant here, who unlike the prosecuted attorney above has not sought to circumvent the blocking statute through deceptive means, would be prosecuted for complying with a court order compelling disclosure of the documents at issue. That the documents at issue have already been disclosed in American proceedings pursuant to the MLAT request [i.e. a request in parallel criminal proceedings pursuant to the Treaty between the Government of the United States of America and the Government of France on Mutual Legal Assistance in Criminal Matters] further undercuts any reason to believe that French authorities would seek to prosecute Air France for disclosing the same documents here. The court thus discounts significantly the hardship proposed by the prospect of criminal sanctions.” In re Air Cargo Shipping Services Antitrust Litigation, 2010 WL 1189341 (EDNY).

It seems clear that Air France was not prosecuted in the aftermath of that order, and Air France is at least as prominent a French company as Alstom or, indeed, Areva.

Thirdly, the nature and circumstances of the present proceedings are important. Jurisdiction over the French Defendants is exercised alongside the English defendants pursuant to Art 6(1) of Council Regulation (EC) 44/2001. The substantive law which the French Defendants violated and on which the claim against them is based is Art 101 TFEU. The gravity of those infringements of the Treaty is demonstrated by the level of fines imposed by the EU Commission, as varied by the General Court on appeal, amounting to over €10 million on the 6^th defendant alone, and a further €48.195 million upon it jointly and severally with the 22^nd defendant. Out of that €48.195 million, €20.4 million was imposed on the 22^nd defendant jointly and severally with the 10^th and 12^th defendants (along with a Swiss company in the then Areva T&D group). The ECJ has repeatedly made clear that private actions for the resulting damages further the objective of EU competition law. In Case C-453/99 Courage v Crehan [2001] ECR I-6297, the court stated at paras 26-27:

“The full effectiveness of Article [101] of the Treaty and, in particular, the practical effect of the prohibition laid down in Article [101(1)] would be put at risk if it were not open to any individual to claim damages for loss caused to him by a contract or by conduct liable to restrict or distort competition.

Indeed, the existence of such a right strengthens the working of the Community competition rules and discourages agreements or practices, which are frequently covert, which are liable to restrict or distort competition. From that point of view, actions for damages before the national courts can make a significant contribution to the maintenance of effective competition in the Community.”

I find it virtually inconceivable that where jurisdiction over a company is exercised pursuant to an EU regulation to make it a defendant to proceedings in another EU Member State, for damages alleged to result from an established and serious violation of a fundamental provision of EU law, which proceedings serve an objective of EU policy, the public authorities of one EU Member State would in the exercise of their discretion institute criminal proceedings against that company for complying with the procedural rules of the courts of the Member State where the proceedings are brought. Again, this is not a point that Judge Béraudo directly considers in either of his reports.

I should add that I do not in reaching this conclusion rely on the letters from the French Ministry of Justice refusing the requests under the EU Evidence Regulation. I note the differing implications drawn from the text of those letters by the two experts. It seems to me that the language of the letters is at best equivocal and that it would be inappropriate to place weight on what is said there when considering the likelihood of a Public Prosecutor, or Juge d’Instruction, instituting a prosecution.

It follows from the above that, in the absence of the EU Evidence Regulation, I would have little hesitation in exercising my discretion to order that the French Defendants provide disclosure. Does the existence of that regulation change the position? In my view, it does not, for the following reasons.

The EU Evidence Regulation is not basically concerned with the provision of disclosure between parties to litigation at all: see Masri v Consolidated Contractors Int (No 4) [2008] EWCA Civ 876, [2010] 1 AC 90, per Sir Anthony Clarke MR at [45]. (Footnote: ³) Such disclosure does not involve the taking of evidence in another Member State. This is what I understand the official of the French Ministry of Justice to mean by the first sentence of the final paragraph of her letters. Thus to use the regulation as the means to ensure ordinary disclosure would be an extraordinary route.

The decisions of the ECJ cited by the parties do not support the French Defendants’ argument for use of the EU Evidence Regulation in this case. Case C-170/11 Lippens v Kortekaas [2012] ILPr 42, concerned a claim brought in the Dutch court against directors of Fortis NV for damages allegedly suffered by shareholders after relying on financial information about the company given out by the defendants. When the claimants applied for a provisional witness hearing of the individual defendants before the Dutch court, those defendants who lived in Belgium contended that the Dutch court should not issue a witness summons but was required to request the Belgian court to take their evidence pursuant to the EU Evidence Regulation. On a reference by the Dutch Supreme Court, the ECJ held that a national court was not obliged to use the method of taking evidence set out in the regulation but was entitled to use its national procedural law to summon as a witness a party residing in another Member State. The Court stated:

“29.

…, it must be recalled that, according to recitals 2, 7, 8, 10 and 11 in the preamble to Regulation No 1206/2001, the aim of the regulation is to make the taking of evidence in a cross-border context simple, effective and rapid. The taking, by a court of one Member State, of evidence in another Member State must not lead to the lengthening of national proceedings. That is why Regulation No 1206/2001 established a regime binding on all the Member States, with the exception of the Kingdom of Denmark, to remove obstacles which may arise in that field (see Case C-283/09 Weryński [2011] ECR I-0000, paragraph 62).

30      An interpretation of the provisions of Regulation No 1206/2001 which prohibits, in a general manner, the court in a Member State from summoning as a witness, pursuant to its national law, a party residing in another Member State and hearing that party under that national law would be contrary to that objective. As the Czech and Polish Governments and the Advocate General, in point 44 of his Opinion, observed, such an interpretation would limit the possibilities for that court to hear such a party.

31      Thus, it is clear that, in certain circumstances, in particular if the party summoned as a witness is prepared to appear voluntarily, it may be simpler, more effective and quicker for the competent court to hear him in accordance with the provisions of its national law instead of using the means of taking evidence provided for by Regulation No 1206/2001.”

I note further that although Art 10 of the regulation provides that the requested court shall execute a request “at the latest” within 90 days of receipt, the Advocate General in Lippens referred to a Commission report which found that in most cases requests were executed in a longer period, in some cases more than six months. He stated, at para 48 of his Opinion:

“It seems to me to be appropriate in practice that, in the interests of the sound administration of justice, that court should be able to assess on a case by case basis which method of taking evidence, among those derived from national law and those derived from EU law, will be most effective in obtaining the evidence which it requires for the purpose of giving a ruling.”

Judgment in Case C-332/11 ProRail BV v Xpedys NV was given on 21 February 2013, following the hearing of the present applications, and was the subject of notes to the court from Counsel. It arose out of proceedings in the Commercial Court of Brussels concerning the derailment near Amsterdam of a freight train travelling from Belgium to Holland. In accordance with the Belgian rules of procedure, the Brussels court appointed an expert to investigate the causes of the accident and the resulting damage. This involved investigation not only in Belgium but also in the Netherlands. One of the Dutch companies involved challenged this order on the basis that the Belgian court should instead have made a request in accordance with the “direct” route under the EU Evidence Regulation as regards the investigation by a judicial expert in the Netherlands.

The ECJ held that there was no such mandatory requirement to use the EU Evidence Regulation. Following the Opinion of the Advocate General, the Court stated (at para 44) that the regulation “does not restrict the options to take evidence situated in other Member States, but aims to increase those options by encouraging cooperation between the courts in that area.” And the court continued (at para 45):

“In certain circumstances, it may be simpler, more effective and quicker for the court ordering such investigation, to take such evidence without having recourse to the regulation.”

The French Alstom Defendants rely on paras 47-48 of the judgment, which state:

“It must be stated that, in so far as the expert designated by a court of a Member State must go to another Member State in order to carry out the investigation which has been entrusted to him, that might, in certain circumstances, affect the powers of the Member State in which it takes place, in particular where it is an investigation carried out in places connected to the exercise of such powers or in places to which access or other action is, under the law of the Member State in which the investigation is carried out, prohibited or restricted to certain persons.

In such circumstances, unless the court wishing to order cross-border expert investigation foregoes the taking of that evidence, and in the absence of an agreement or arrangement between Member States within the meaning of Article 21(2) of Regulation No 1206/2001, the method of taking evidence laid down in Articles 1(1)(b) and 17 thereof is the only means to enable the court of a Member State to carry out an expert investigation directly in another Member State.”

However, I consider that this qualification is clearly referring to the situation where an individual designated by the court of one state would be personally taking evidence in another state in a manner which the latter state restricts, since it involves the exercise of judicial or official authority in that state. In those circumstances, collaboration with the public authorities through the EU Evidence Regulation is the only way that the evidence can properly be taken. The ProRail case accordingly concerns the “direct” route under the regulation, which the French Ministry of Justice has already refused to accept as appropriate in response to this court’s requests. Moreover, the judgment has no bearing on the requirement for a company based in a second state which is a party to litigation in the first state itself to supply information and documents to the other parties to that litigation. Like Lippens, the ProRail case concerns the official taking of evidence, not disclosure of documents by one party to another.

I appreciate that there is still some time before this case comes to trial. However, significant time was lost through an abortive attempt to use the direct route under the EU Evidence Regulation. The case is now proceeding on a carefully structured timetable to trial, and the details on the operation of the cartel and as regards GIS projects which the disclosure from the French Defendants will provide is needed by the experts for the process of assembling and assimilating data for the complex exercise of estimating the cartel overcharge. There is, in my view, a real risk that the respective French courts might reject a further request under the regulation as inappropriate since they are not being asked to take evidence but, in effect, to order documentary disclosure. Moreover, if resort to a request under the regulation were found appropriate for the present disclosure by reason only of the blocking statute, further and repeated requests may similarly be needed whenever additional information or clarification is sought from any of the French Defendants. Given my conclusion regarding the risk of prosecution under the French blocking statute, I see no sound basis for taking a course that involves further delay and uncertainty. I consider that the French Defendants should be subject to an order for disclosure in the same way as all the other defendants, including the Swiss, German and Austrian defendants.

For the reasons set out above:

I shall hear Counsel regarding the precise terms of the disclosure order to be made pursuant to (i) above.