Roche Products Ltd. & Ors v Provimi Ltd

In May 1999 the European Commission started an investigation into the vitamins and pigment markets in Europe. On 21 November 2001 the European Commission (“the Commission”) made a Decision, (“the Decision”) which was published on 10 January 2003. The Decision held that various manufacturers of vitamins had operated cartels, contrary to Article 81 (formerly Article 85) of the EC Treaty (Footnote: ¹), in relation to the sale of vitamins (Footnote: ²) within the EU and the European Economic Area (“EEA”) for periods of up to ten years between 1989 and 1999. The Decision held that F. Hoffmann – La Roche AG (“Roche Switzerland”), a Swiss company, had participated in the cartels in relation to all the vitamins covered by the investigation. It also held that Aventis SA (which was known at the time as Rhône – Poulenc SA) was responsible for an infringement of Article 81 through the participation of its subsidiary, Rhône – Poulenc Animal Nutrition (which has since become Aventis Animal Nutrition SA – “AAN France”). AAN France was involved in the same cartels as F. Hoffmann – La Roche AG, but in relation only to vitamins A and E. I will refer to companies in the Hoffmann – La Roche group of companies as “the Roche” group. I will refer to companies in what was the Rhône – Poulenc group (now called Aventis) as “the Aventis” group.

In 1999 criminal proceedings were started in the USA, alleging that F Hoffmann – La Roche AG had taken part in various cartels for vitamins sold in the US and elsewhere in the world. There were also investigations in the USA against Aventis companies. There have been proceedings in Canada and investigations in Australia concerning vitamin cartels in which it is said that Roche and Aventis companies were participants.

The Commission’s Decision resulted in four actions in the Commercial Court against various companies in the Roche and Aventis groups. The actions were started in May 2002. The claimants are two English companies and a German company. Those companies were all direct purchasers of vitamins from companies within the Roche and Aventis groups. The defendant companies are sellers and associated companies in those two groups. The claimants’ principal allegation in all the proceedings is that the defendant companies participated in various cartels, contrary to Article 81 of the EC Treaty, and that the claimant companies have suffered damage because vitamins were sold at an inflated price as a result of the formation and implementation of the cartels. This is alleged to give the claimants a right to damages for breach of a statutory duty not to infringe EC competition laws, in particular Article 81. (Footnote: ³)

In the present series of applications before the court, the defendants’ aim is to strike out and/or set aside part of these proceedings. The applications are made on the grounds that the claimants do not have an arguable case and/or that the English Courts do not have jurisdiction to determine these claims against most, but not all defendants. The applications raise issues about what a claimant has to prove to succeed in a claim for damages said to arise out of a breach of Article 81. They also raise questions on the proper application of EC Regulation 44 of 2001 (“Regulation 44” or “the Regulation”) (Footnote: ⁴) and the Lugano Convention, in circumstances when one side alleges that a foreign jurisdiction clause applies and this is challenged.

The questions argued in these applications are complex, not least because of the multiplicity of actions and parties. (Footnote: ⁵) This was not one of those jurisdiction challenges where I could read the papers in my room and hear only short oral argument. (Footnote: ⁶) The helpful submissions of Mr Hoskins (for the Roche group of defendants), Mr de la Mare (for the Aventis group of defendants) and Mr Carr QC for the claimants lasted six days. I am very grateful to them all. I will consider the applications under the following broad headings: (A) The Commission Decision; (B) the actions and the jurisdictional framework; (C) the parties, the allegations, the applications and the issues that arise; (D) the applications to strike out parts of the cases or dismiss them as having no reasonable prospect of success; (E) the challenges to the jurisdiction based on Article 17 of the Lugano Convention and Swiss jurisdiction clauses; (F) the challenges to the jurisdiction based on Article 23 of Regulation 44 and German jurisdiction clauses; (G) the challenges to the jurisdiction based on Article 23 of Regulation 44 and French jurisdiction clauses; (H) conclusions.

This is central to the case, so it is necessary to set out some of the details.

Section 1 is headed “The Facts” and Recital (1) sets out a “Summary of the Infringement”. It states:

Recital (2) summarises the basic facts of the EU cartels:

Section 1.2.5 of the Decision is headed “The Producers”. This gives details of the various “undertakings” identified in Recital 1 and some other companies in the various undertakings.

Section 1.4 is headed “The Cartels”. It describes the organisation and operation of each of the cartels. The cartels were designed both to share markets within the EU and also to fix prices. Recital 176 states that at Regional product market meetings, the various regional groups (including the EU group) would be responsible for implementing the price increases that had been agreed at a more senior level.

Section 1.5 is headed “ The Nature and Reliability of the Evidence”. It points out that the majority of the undertakings had admitted their involvement in unlawful price fixing and market sharing arrangements contrary to Article 81(1). (Footnote: ⁹)

Section 2 is headed “Legal Assessment”. Having referred to the relationship between Article 81 of the Treaty and Article 53 of the EEA Agreement, Section 2.2.2 deals with “Agreements and Concerted Practices”. Recitals 554 and 558 discuss what is meant by the formation and existence of an “agreement” for the purposes of Article 81. Recital 554 states: (Footnote: ¹⁰)

Section 2.2.3 is headed “The Nature of the Infringement in the Present Case”. It describes the dominant role of “Roche”, the company I have called Roche Switzerland. It states that Roche Switzerland was the “prime mover and main beneficiary of the complex of collusive arrangements”. (Footnote: ¹²) Section 2.2.4 is headed “Restriction of Competition” and gives details of the principal aspects of the agreements and arrangements that can be characterised as restrictions of competition. These include allocating markets and market share quotas; agreeing concerted price increases; “concerting” on the implementation of those price increases in the different markets; and dividing the business of specific customers. Section 2.2.5 is headed: “Effect upon Trade between Member States and Between EEA Contracting Parties”. The Decision records that the continuing agreement between producers had an appreciable effect upon trade between Member States. (Footnote: ¹³)

Section 2.2.8 is headed “Addressees: Undertaking Identity and Succession”. As I have already explained in (1) above, the EC competition law concept of an “undertaking” is broader than the English law notion of a corporate entity. So when this Decision describes F.Hoffmann-La Roche AG as an “undertaking” it is, in my view, embracing other corporate entities within the Roche group that have in some way “entered into” or “participated in” or “implemented” the cartel agreements. They are included because they have not operated as a “functionally separate entity” from F. Hoffmann-La Roche AG. This is borne out by the wording of Recitals 636 and 637 which I have quoted above. It is also inherent in the way that Recital 642 identifies Solvay Pharmaceuticals BV as the addressee because that “undertaking” directly participated in the infringement and “operates as a functionally separate entity from its parent Solvay SA”. (Footnote: ¹⁴) But this leaves open the difficult question, much debated before me, of the circumstances (if any) in which a corporate entity that is not specifically an addressee in the Decision can be sued as having infringed Article 81(1). I have to consider that in Section C below.

Section 2.3 is headed “ Remedies”. Recital 655 states that, under Article 15(2) of Regulation 17, the Commission can impose fines upon undertakings participating in an infringement of Article 81(1) of the Treaty either intentionally or negligently. Then Recital 656 states:

The formal Decision comes at the end of the document. That identifies the “undertakings” that have infringed Article 81(1) of the Treaty and Article 53(1) of the EEA Agreement and in what respects. It also sets out the fines to be paid by the undertakings and how they are to be paid. (Footnote: ¹⁶)

There are two groups of proceedings. Each group consists of two actions. In each of the two groups one action is brought by Provimi Limited (“Provimi UK”), an English company. The other action is brought by two companies in the Trouw group. These are Trouw (UK) Limited (“Trouw UK”), which is an English company and Trouw Nutrition Deutschland GmbH (“Trouw Germany”), which is a German company. The defendants in one group of actions are companies in the Roche group. The defendants in the other group of actions are or were companies in the Aventis group.

I have therefore divided the actions according to which defendants are being sued. I have called Group A “the Roche Actions” and Group B “the Aventis actions”.

It is accepted by all sides that the question of whether the English Court has jurisdiction to hear these claims is to be determined by either Regulation 44 or the Lugano Convention. (Footnote: ¹⁷) It is also accepted that each of the defendants in the four actions is domiciled in a Member State of the EU or EFTA. Therefore everyone accepts that the general jurisdictional rule is that a party should be sued in the courts of the Member State in which it is domiciled. (Footnote: ¹⁸)

But the Roche and Aventis defendants also acknowledge that defendants domiciled in one Member State may, in another Member State, be sued, in matters relating to tort, “in the courts of the place where the harmful event occurred or may occur”. (Footnote: ¹⁹) The Roche and Aventis defendants are prepared to accept, for the purposes of these applications, that there is a “good arguable case” (Footnote: ²⁰) that if the tort alleged is established, then “the harmful event”, that is the damage to the claimants, occurred or may have occurred in England in a case when the claimant concerned is domiciled in England.

It is also accepted that claimants can rely on Article 6 (1) to found jurisdiction; ie. if one defendant is domiciled in England (being a Member State) and is sued here, then, if the Lugano Convention applies, another defendant may then also be sued in England. However, if Regulation 44 applies then the claimants accept that that they can only utilise Article 6(1) of the Regulation if they also establish that there is a good arguable case that:

The claimants accept that Articles 5 and 6 can be overridden by the jurisdictional rule in Article 23 of Regulation 44 (or Article 17 of the Lugano Convention). But a defendant must demonstrate that the requirements of Article 23 of the Regulation are fulfilled, (Footnote: ²²) and that the scope of the particular jurisdiction clause is wide enough to cover the dispute in question.

I set out below how this jurisdictional framework applies to each of the four actions. I have also noted the jurisdictional challenges and the challenge based on “no arguable case” that are made by the various defendants. Mr Hoskins and Mr de la Mare both produced very helpful illustrations which set out the various challenges in diagrammatic form. I have made these Annexes 1 to 4 of this judgment.

Group A: “The Roche Actions”: Folios 473 and 476.

Folio 473: The Claimant, Provimi Limited (“Provimi UK”), is an English company. It has sued Roche Products Limited, the first defendant (“Roche UK”), which is an English company. It has also sued Roche Vitamine Europa AG (Switzerland) (“Roche Vitamins Switzerland”), the second defendant, and F Hoffmann –La Roche AG (Switzerland) (“Roche Switzerland”), the third defendant. The second and third defendants are both Swiss companies.

Provimi UK has sued Roche UK in England, its place of domicile, relying on Articles 2 and 5 of the Regulation. Provimi UK says that it can sue Roche Vitamins Switzerland in England, relying on Article 5(3) and Article 6 of the Regulations. But Roche Vitamins Switzerland says that it can rely on Article 17 of the Lugano Convention to override the Article 5(3) and Article 6 bases for English jurisdiction. It invokes a Swiss jurisdiction clause in contracts with Provimi UK for the period after February 1998.

Folio 476: The First Claimant, Trouw (UK) Limited, (“Trouw UK”), is an English company. The Third Claimant, Trouw Nutrition Deutschland GmbH (“Trouw Germany”), is a German company. (Footnote: ²³) They are both part of the same group. There are now (Footnote: ²⁴) four defendants to this action. The first defendant, Roche Products Limited (“Roche UK”) is an English company. The second defendant is Roche Vitamine Europa AG, the same company that is the second defendant in Folio 473. It is a Swiss company. The third defendant is F. Hoffmann – La Roche AG. That is the same company that is the third defendant in Folio 473; it is Swiss. The fourth defendant is Hoffmann – La Roche AG, a German company (“Roche Germany”).

Trouw UK and Trouw Germany have both sued Roche UK, relying on Articles 2 and 5 to found jurisdiction in England. Trouw UK and Germany have also sued Roche Vitamins Switzerland, Roche Switzerland and Roche Germany. Trouw UK relies on Articles 5 and 6(1) of the Regulation (or the Lugano Convention in the case of the Swiss companies) to found jurisdiction in England as against those defendants. Roche Vitamins Switzerland relies on Article 17 of the Lugano Convention and a Swiss jurisdiction clause to override English jurisdiction conferred by Articles 5 and 6(1). Roche Germany relies on Article 23 of the Regulation and Swiss and German jurisdiction clauses with the same consequence. Trouw Germany accepts that it can only rely on Article 6(1) of the Lugano Convention (Footnote: ²⁵) to found jurisdiction in England against the defendants other than Roche UK. The Roche defendants argue that the claim by Trouw Germany against Roche UK has no reasonable prospect of success, so it must be struck out. If it is then it is accepted that there is no basis for English jurisdiction concerning the claims by Trouw Germany against all the other defendants. As an alternative, Roche Germany relies on Article 23 of the Regulations and on German and Swiss jurisdiction clauses to override English jurisdiction conferred by Article 6(1).

Group B: “The Aventis Actions”: Folios 470 and 475.

Folio 470: In this action there is one claimant, Provimi Limited (“Provimi UK”), an English company. It has sued, first of all, Aventis Animal Nutrition SA, a French company (the first defendant – “AAN France”). That company was formerly called Rhône – Poulenc Nutrition Animale SA and it is referred to by that name in the Commission’s Decision. Provimi UK has also sued Rhodia Limited (the second defendant), which is an English company (“Rhodia UK”). Lastly Provimi UK has sued Aventis SA (the fourth defendant – “Aventis France”). (Footnote: ²⁶) That company was created when Rhône– Poulenc SA merged with Hoechst AG in 1999 to form Aventis SA. It is the parent company of AAN France. Aventis France was one of the addressees of the Commission Decision.

Provimi UK has sued Rhodia Ltd (“Rhodia UK”) in England relying on Articles 2 and 5(3) of the Regulation. Provimi UK says that it can also sue AAN France in England, relying on Article 5(3) and 6(1) of the Regulation. There is no challenge to Provimi UK’s suit in England against Rhodia Ltd. But AAN France says that there are French jurisdiction clauses in its contracts with Provimi UK and so it can rely on Article 23(1) of the Regulation and insist that those actions are heard in the appropriate French court.

Folio 475: There are two claimants. The first is Trouw (UK) Limited, (“Trouw UK”), an English company. The second is Trouw Nutrition Deutschland GmbH (“Trouw Germany”), a German company. They have sued, first of all, Rhodia Limited (“Rhodia UK”), an English company. The second defendant is Aventis Animal Nutrition SA (“AAN France”), a French company, which is the same company that is the first defendant in Folio 470. The third defendant is Aventis SA (“Aventis France”), a French company which is also the fourth defendant in Folio 470. Aventis France was, at the time, the ultimate parent of both Rhodia UK, AAN France and the fourth defendant. The fourth defendant is Rhodia GmbH (“Rhodia Germany”), a German company.

Trouw UK relies on Articles 2 and 5(3) of the Regulation to found jurisdiction in England against Rhodia UK. Trouw UK relies on Articles 5(3) and 6(1) of the Regulation to found jurisdiction against AAN France, Aventis France and Rhodia Germany. AAN France alleges that there are French jurisdiction clauses in its contracts with Trouw UK and that it can invoke Article 23(1) of the Regulation to avoid English jurisdiction.

Trouw Germany relies on Article 2 to found English jurisdiction against Rhodia UK. Trouw Germany relies on Article 6(1) of the Regulation to found jurisdiction against the other three defendants. All the Aventis defendants in this action argue that the claim by Trouw Germany has no reasonable prospect of success against Rhodia UK. Therefore it should be struck out. If it is then (as with Folio 476), it is accepted that there would be no basis for English jurisdiction concerning the claims by Trouw Germany against all the other defendants. As an alternative to this plea, AAN France and Rhodia Germany rely on French and German jurisdiction clauses in their contracts with Trouw Germany and allege that they can invoke Article 23(1) of the Regulation to avoid English jurisdiction for the claims by Trouw Germany.

The format of the claims in each of the four actions is similar. But it is necessary to set out some details of each case because of the different parties involved, their different domiciles and the different applications that are made in each case.

Group A: “the Roche Actions”: Folios 473 and 476 of 2002.

In the re – amended Particulars of Claim, (Footnote: ²⁷) it is alleged that Provimi UK bought vitamins from Roche UK and Roche Vitamins Switzerland throughout the period September 1989 to December 1999. It is now accepted that Provimi UK did not make any purchases from Roche UK after 1 January 1999. (Footnote: ²⁸) It is said that the three defendants together formed part of one “undertaking” “… engaged in the same economic activity” so that for the purposes of EC competition law the defendants formed part of a “single economic entity”. (Footnote: ²⁹) The pleading alleges that the Commission Decision found that Roche Switzerland was a joint leader and instigator of the relevant cartel. (Footnote: ³⁰) It goes on to allege that the success of the cartels relied on the “implementation”, by Roche UK and Roche Vitamins Switzerland, of the prices as fixed by Roche Switzerland and its fellow members of the cartels. It alleges that the prices charged to the claimant were fixed by the cartel and that Roche UK and Roche Vitamins Switzerland “gave effect” to the cartel in the UK by selling products at those prices. (Footnote: ³¹) It is asserted that all three defendants participated in the cartels from September 1989 until December 1999, in breach of Article 81 of the EC Treaty. (Footnote: ³²) Alternatively the pleading alleges that the three defendants agreed to “implement” the cartels, with the consequence that the claimant, Provimi UK, was prevented from buying vitamins at a price lower than the cartel prices. (Footnote: ³³)

By its application notice dated 18 July 2002, (Footnote: ³⁴) Roche Vitamins Switzerland applies under CPR Part 11 for a declaration that the English Court has no jurisdiction to determine the claims of Provimi UK against it in respect of any claims arising out of purchases of vitamins since February 1998. (Footnote: ³⁵) Roche Vitamins Switzerland alleges that all purchases made from it by Provimi UK from February 1998 were made subject to Roche Vitamins Switzerland’s standard terms and conditions. These stipulated that the contracts were subject to Swiss law and that “controversies” that could not be settled amicably were to be brought before the competent courts of Arlesheim in Switzerland. (Footnote: ³⁶) There is no challenge to the jurisdiction by Roche UK. (Footnote: ³⁷)

Folio 476:

The re – amended Particulars of Claim (Footnote: ³⁸) allege that Trouw UK bought vitamins from Roche UK and/or Roche Vitamins Switzerland during the period 1989 to 1999. It also alleged that Trouw Germany bought vitamins from Roche Germany during this period. (Footnote: ³⁹) So it is not alleged that Trouw UK purchased any products from Roche Germany or that Trouw Germany purchased any products from Roche UK during the relevant period. It is alleged that the defendants were part of one “undertaking” and were, for EC competition law purposes, “one economic entity”. (Footnote: ⁴⁰) The pleading recites the Decision’s statement that Roche Switzerland was the joint leader and instigator of the cartels. (Footnote: ⁴¹) It alleges that the successful operation of the cartels depended on the implementation, by Roche UK and Roche Vitamins Switzerland (first and second defendants) of the prices fixed by the cartel and that that Roche UK, Roche Vitamins Switzerland “gave effect” in the UK to the cartels that had been entered into by Roche Switzerland and that Roche Germany “gave effect” to the cartels in Germany. It is said that this meant that all the defendants “participated” in the cartels from 1989 to 1999, in breach of Article 81. (Footnote: ⁴²) Alternatively it is pleaded that Roche UK, Roche Vitamins Switzerland and Roche Germany agreed with Roche Switzerland to “implement” the cartels and that this implementation prevented the claimants from purchasing vitamins for any price that was lower than the prices fixed by the cartels. (Footnote: ⁴³)

The defendants in this action have made two applications. The first is dated 18 July 2002. The second is dated 1 November 2002. Logically the second application should be considered first, as indeed it was in argument. So I will set it out first here.

The Application of 1 November 2002; (Footnote: ⁴⁴) This application is made by Roche UK, the first defendant. It asks the court to strike out the claim of Trouw Germany (the third claimant) against Roche UK (the first defendant) as disclosing no reasonable grounds for bringing that claim; (Footnote: ⁴⁵) alternatively Roche UK asks for summary judgment on this claim under CPR Part 24. The arguments on this application are complicated. But essentially Roche UK’s submission is that Trouw Germany does not assert that it bought any vitamins from Roche UK at the relevant time; Trouw Germany’s pleaded case against Roche UK does not and cannot, as a matter of EC competition law, show that Roche UK was in breach of Article 81 of the EC Treaty; moreover, even if Roche UK was in breach of Article 81, the breach did not cause any loss to Trouw Germany. It is accepted by the claimants that if the claim by Trouw Germany against Roche UK is struck out, then the English Court has no jurisdiction to hear Trouw Germany’s claims against Roche Switzerland (the third defendant) and Roche Germany (the fourth defendant), so that all Trouw Germany’s claims in Folio 476 would have to go. This is because the only basis on which Trouw Germany can assert that the English court has jurisdiction to hear its claims against the defendants is that one of them, Roche UK, is domiciled in England. Therefore the other defendants can be sued here on the basis of Article 6(1) of the Regulation. But if there is no arguable claim by Trouw Germany against Roche UK, then there is no other basis for Trouw Germany claiming jurisdiction against the other defendants.

The Application of 18 July 2002: (Footnote: ⁴⁶) In this application several orders are sought under CPR Part 11, as follows:

First, Roche Vitamins Switzerland (the second defendant) claims a declaration that the English Court should decline jurisdiction in relation to the claims made against it by Trouw UK (the first claimant). It does so on the basis that all contracts for the sale of vitamins by Roche Vitamins Switzerland to Trouw UK were on its standard terms and conditions, which contained clause 9 with the terms referred to in paragraph 17 above. Thus the clause provided for Swiss law and that “controversies” that were not settled amicably should be brought before the competent courts of Arlesheim in Switzerland. So Roche Vitamins Switzerland alleges that, pursuant to Article 17 of the Lugano Convention, the Swiss Courts have exclusive jurisdiction to determine the claims of Trouw UK against Roche Vitamins Switzerland.

Secondly, Roche Switzerland (the third defendant) applies for a declaration that the English Court has no jurisdiction to determine claims made against it by Trouw Germany (the third claimant). Originally Linklaters, solicitors for the Trouw claimants, had argued that Trouw Germany was entitled to rely on Article 6(1) of the Regulation to assert English jurisdiction against Roche Germany. That argument was not pursued. (Footnote: ⁴⁷) Subsequently Trouw Germany alleged that, as it had a claim against Roche UK, therefore it could also bring a claim against Roche Switzerland by virtue of Article 6(1) of the Lugano convention. This basis of jurisdiction is challenged by Roche UK in the second application of November 2002 – see above. Essentially Roche UK argues that Trouw Germany has no arguable claim against Roche UK. Therefore that claim should be struck out. If it is then there is no basis on which Trouw Germany can bring a claim against Roche Switzerland using Article 6(1) of the Lugano convention.

Thirdly, on behalf of Roche Germany (the fourth defendant) the application asserts that the English court has no jurisdiction to determine claims against it by Trouw Germany (the third claimant). It is said that the contracts for the sale of vitamins that were concluded between Trouw Germany (as buyers) and Roche Germany (as sellers) prior to 20 September 1999 contained a German jurisdiction clause; and the contracts between those companies after that date contained a Swiss jurisdiction clause. Therefore in relation to all relevant contracts the parties had agreed that all the current claims should be dealt with by courts other than the English courts. Accordingly, by virtue of Article 23(1)(a) of the Regulation, the English Court must decline jurisdiction to hear those claims.

Group B: Folios 470 and 475 of 2002: “the Aventis Actions”: Folio 470

In the re – amended Particulars of Claim (Footnote: ⁴⁸) Provimi UK alleges that it bought vitamins from AAN France and Rhodia UK during the period when the cartels were being operated. (Footnote: ⁴⁹) It is not alleged that any purchases were made from Aventis France. However it is asserted that all the defendants together formed one undertaking and, for the purposes of EC competition law, they constituted a “single economic entity”. (Footnote: ⁵⁰) It is alleged that Aventis France had entered into the cartels (with other, non – Aventis companies) and that the first, second and fourth defendants “gave effect” in the UK to the cartels entered into by Aventis France. (Footnote: ⁵¹) It is alleged that, in doing so, all the defendants, “as part of the same undertaking”, participated in the cartels and so acted in breach of Article 81 of the EC Treaty. (Footnote: ⁵²) Further it is alleged that Rhodia UK and ANN France agreed to “implement” the cartels and the effect of this “implementation agreement” was that Provimi UK was prevented from purchasing vitamins from any of the defendants at a price that was lower than the prices fixed by the cartels. (Footnote: ⁵³)

The application dated 20 August 2002 is made by AAN France, the first defendant. AAN France asserts that all the contracts made by it (Footnote: ⁵⁴) for the sale of vitamins to Provimi UK in 1998 and 1999 were subject to its standard terms and conditions. There was one version in 1998 and another in 1999. However the effect of each was, so it is asserted, that the Tribunal de Commerce de Paris has exclusive jurisdiction to determine the claims made by Provimi UK. Therefore, by virtue of Article 23(1) of the Regulation, the English Court should decline jurisdiction to hear the claims of Provimi UK against AAN France.

Folio 475:

In the re – amended Particulars of Claim, (Footnote: ⁵⁵) it is alleged that Trouw UK bought vitamins from Rhodia UK and/or AAN France during the period when the cartels were active. It is also alleged that Trouw Germany bought vitamins from AAN France and/or Rhodia Germany during this period. (Footnote: ⁵⁶) However in correspondence Linklaters, for the claimants, confirmed that there had been no purchases of vitamins by Trouw UK from Rhodia Germany, (Footnote: ⁵⁷) nor any by Trouw Germany from Rhodia UK. (Footnote: ⁵⁸) It has also been confirmed that no claims are made as between Trouw UK (the first claimant) and Rhodia Germany (the fourth defendant). (Footnote: ⁵⁹) However it is maintained that there is a claim between Trouw Germany (the second claimant) and Rhodia UK. There is no allegation that either claimant bought any vitamins from Aventis France, the parent company. It is asserted that all the defendants together formed one undertaking, and for the purposes of EC competition law, they constituted a “single economic entity”. (Footnote: ⁶⁰) It is alleged that Aventis France entered into the cartels with other (non – Aventis) companies and that the first, second and fourth defendants “gave effect” in the UK to the cartels entered into by Aventis France. (Footnote: ⁶¹) It is alleged that, in so doing, all the defendants, “as part of the same undertaking”, participated in the cartels and so acted in breach of Article 81 of the EC Treaty. (Footnote: ⁶²) Further it is alleged that Rhodia UK, AAN France and Rhodia Germany agreed to “implement” the cartels and the effect of this “implementation agreement” was that the two claimants were prevented from purchasing vitamins from any of the defendants at a price that was lower than the prices fixed by the cartels. (Footnote: ⁶³)

In this action there are two application notices. The first is dated 20 August 2002 (Footnote: ⁶⁴) and is made on behalf of all four defendants. The second is dated 4 November 2002 (Footnote: ⁶⁵) and is made by Rhodia UK (the first defendant) and Rhodia Germany (the fourth defendant). The nature of the applications is different. Logically those made in the second application should be dealt with first.

Application of 4 November 2002: There are three aspects to the application .

First of all, Rhodia Germany applies to strike out the claims of Trouw UK against it. As I understand it there are no such claims, so this aspect of the application notice is irrelevant, save possibly as to costs.

Secondly, Rhodia UK (the first defendant) applies to strike out the claim against it by Trouw Germany (the second claimant), pursuant to CPR Part 3.4. Alternatively Rhodia UK applies for summary judgment under CPR Part 24. The basis of this application is the same as that made by Roche UK against Trouw Germany in Folio 476 of Group A. Essentially, as in that other action, the argument is that Trouw Germany does not assert that it bought any vitamins from Rhodia UK during the relevant period; Trouw Germany’s pleaded case against Rhodia UK does not and cannot, as a matter of EC competition law, show that Rhodia UK was in breach of Article 81 of the EC Treaty; moreover, even if Rhodia UK was in breach of Article 81, the breach did not cause any loss to Trouw Germany. It is accepted by the claimants that if the claim by Trouw Germany against Rhodia Limited is struck out, then the English court has no jurisdiction to hear Trouw Germany’s claims against AAN France (the second defendant), Aventis France (the third defendant) and Rhodia Germany (the fourth defendant). This is for the same reason as in Folio 476: see paragraph 18(3) above.

The defendants raise a further argument under this application, although it is not expressly referred to in the wording of the application notice itself. It is that even if the claim by Trouw Germany against Rhodia UK is arguable, then the court should still decline jurisdiction to determine the claims of Trouw Germany against the other defendants because Trouw Germany cannot show, as it must to come within Article 6.1 of the Regulation, that:

Application of 20 August 2002: (Footnote: ⁶⁶) These applications are made by all the defendants, pursuant to CPR Part 11. The relevant applications asking the Court to decline jurisdiction are now the following:

Rhodia Germany (fourth defendant) submits that it traded with Trouw Germany (second claimant) between January 1995 to July 1998 and did so on Rhodia Germany’s standard terms and conditions. (Footnote: ⁶⁷) Paragraph 10 of those conditions contained a form of jurisdiction clause which Rhodia Germany alleges gives the courts of Frankfurt am Main jurisdiction to hear the claims of Trouw Germany against Rhodia Germany. Therefore, pursuant to Article 23(1) of the Regulation, the English court should decline jurisdiction on those claims.

AAN France submits that the contracts that it made in 1998 and 1999 (Footnote: ⁶⁸) with Trouw UK and Trouw Germany were subject to standard terms and conditions. The terms in the 1998 contracts differed from those in the 1999 contracts, but effectively both provided for French law to govern and that disputes would be determined by the Tribunal de Commerce de Paris. Accordingly AAN France says that the English court should decline jurisdiction of the claims of Trouw UK (first claimant) and Trouw Germany (second claimant) against AAN France (second defendant), pursuant to Article 23 of the Regulation. (Footnote: ⁶⁹)

The Issues that arise

Group 1: In this group there are three sub – issues. First, both the Roche and Aventis defendants make the same challenge to Trouw Germany’s claim against, respectively, Roche UK and Rhodia UK. Both claim that, on the pleadings, these actions have no prospect of success. Secondly both groups of defendants say that the claim put forward by Trouw Germany is hopeless on causation grounds. In addition, in Folio 475, the Aventis defendants argue the further point that even if there is an arguable cause of action, the extra conditions of the new wording of Article 6(1) of the Regulation cannot be met by Trouw Germany, so jurisdiction against the other defendants cannot be asserted. I deal with all these issues in Section D below.

Group 2: Next, in both the Roche actions (Folios 473 and 476), there are challenges to English jurisdiction based on Swiss jurisdiction clauses in the contracts. This issue is dealt with in Section E below.

Group 3: In Folio 476 (second Roche action) and in Folio 475 (second Aventis action) there are challenges to English jurisdiction based on German jurisdiction clauses in the contracts. The clauses are different and the two groups of defendants have relied on different expert evidence, but the issues are broadly the same. I deal with those together in Section F below.

Group 4: in Folio 475 AAN France relies on French jurisdiction clauses in its contracts with the two Trouw claimants to challenge English jurisdiction. I deal with that argument in Section G below.

There is no dispute as to the legal test to be applied in relation to this part of the applications. If the claimants have a reasonably arguable claim, then it must be allowed to proceed. The Roche and Aventis defendants also both accept that where the nature of the claim raises new issues of law, then the court has to be careful before dismissing the claim as unarguable.

The Claimants’ argument: Mr Carr QC for the claimants submits that the claims of Trouw Germany against Roche UK and Rhodia Ltd have a reasonable prospect of success. He puts the claimants’ case as follows:

Article 81(1) of the Treaty provides that:

The Article therefore imposes obligations on “undertakings”. The EU competition law concept of an undertaking is not equivalent to a corporate entity. It is much wider and can include a number of corporate entities, so long as they are acting as a single economic unit and the corporate entities within this unit do not act as functionally separate units operating independently. Mr Carr relies on the discussion of “undertaking” in Recitals 633 to 644 of the Decision. He also relies on the Decision of the Commission in Re the Cartonboard Cartel: The Commission v Buchmann GmbH and others, (Footnote: ⁷⁰) which was upheld by the Court of First Instance. (Footnote: ⁷¹) Mr Carr submits that these decisions emphasise that, for competition law purposes, an “undertaking” can consist of a whole group of companies, including indirect subsidiaries, providing that they are acting as a single economic entity. And, he submits, the fact that a Decision of the Commission is addressed to a parent company does not mean that the subsidiary within a single economic entity is outside the undertaking or that it is not part of the cartel that is contrary to Article 81.

In all the actions the Roche and Aventis defendants have admitted in their pleadings that the defendants in the respective actions formed one economic entity and so one “undertaking”. Therefore it is at least arguable that Roche UK and Rhodia Ltd must be taken as being part of the “undertakings” that the Decision records were infringing Article 81 by that fact alone. But the claimants need not go so far as this.

The claimants rely on their pleaded case that Roche UK and Rhodia UK “gave effect” in the UK to the cartels entered into by Roche Switzerland and Aventis France; that all the companies in the relevant group were part of the same undertaking and so Roche UK and Rhodia UK acted in breach of Article 81. (Footnote: ⁷²) On the question of what constitutes an “infringement” of Article 81, Mr Carr relies on the decision of the European Court in Re Woodpulp Cartel: A.Ählström Osakeyhtiö and others v Commission, (Footnote: ⁷³) in particular at paragraph 16, where the Court stated:

If there is an infringement of Article 81 (consisting of “implementation” of the agreement) by a corporate entity that is part of an “undertaking” that made the cartel, then, as a matter of English law, that is a breach of a statutory duty that is owed by the company that is part of the “undertaking”. This is because the obligations imposed by Article 81 are directly enforceable in England by and against legal entities by virtue of section 2(1) of the ECA, so that a breach of that obligation must be a breach of statutory duty: Garden Cottage Foods Ltd v Milk Marketing Board. (Footnote: ⁷⁴) The claimants have a right of action for damages based on a “private law cause of action” upon simple proof of breach of the statutory duty by a particular legal entity. (Footnote: ⁷⁵)

Therefore if Roche UK and Rhodia Ltd were a part of “undertakings” that have been held to have infringed Article 81 and those two companies were in fact participating in the infringement by “implementing” the infringing agreement, then they must have been committing a breach of statutory duty under English law, albeit as one of a number of tortfeasors. But as such they must be equally liable for any damages suffered by a claimant, so they can be sued in the English court for damages in a private law action. It is immaterial whether those companies sold vitamins to Trouw Germany.

The Defendants’ arguments: The main submissions on this point were made by Mr Hoskins, but Mr de la Mare adopted them and added some of his own points. Their arguments were as follows:

There is nothing in the Decision to suggest that Roche UK or Rhodia Ltd had infringed Article 81. Recital 1 of the actual Decision (Footnote: ⁷⁶) only identifies Roche Switzerland and Aventis France as the “undertakings” that have infringed Article 81.

Whether any corporate entity has been in breach of EU competition law, eg. in breach of Article 81, is a matter of EU competition law. Roche UK and Rhodia Ltd are indirect subsidiaries of the “undertakings” identified in the Decision as infringers of Article 81. Before the claimants can make a claim for damages (in English law) for breach of statutory duty against those two companies, the claimants must show that there is an arguable case that Roche UK and Rhodia Ltd have themselves infringed Article 81.

There can be no breach of Article 81, as a matter of EU Competition law, unless an “undertaking” is a party to an infringing “agreement”. (Footnote: ⁷⁷) But any entity can only be a party to an “agreement” for the purposes of Article 81 if there is a “concurrence of wills” between that entity and others that are concerned with the “agreement”. (Footnote: ⁷⁸) There cannot be a “concurrence of wills” unless it is shown, at the least, that one entity was aware of the other’s state of mind that it was going to enter into or carry out an infringing agreement. If there is no knowledge of the state of mind of another party, then there can be no infringement of Article 81.

If a subsidiary simply implements the agreement to a cartel by a parent, without any knowledge of the infringing agreement on the part of the subsidiary, that in itself cannot amount to an infringement of Article 81 by the subsidiary. The claimants, by amendments to their pleadings, have acknowledged that the agreement by Roche UK with Roche Switzerland to implement the cartels was not, in itself, a breach of Article 81(1). (Footnote: ⁷⁹) That amended pleading accepts the principle set out by the European Court in Viho v Commission (Footnote: ⁸⁰) that a price fixing or market sharing agreement between companies within an “undertaking” that is part of a single economic unit, cannot amount to an infringement of Article 81. This is because Article 81 is concerned only with agreements between undertakings, not with internal agreements within an undertaking. (Footnote: ⁸¹)

Therefore the claimants cannot successfully assert that a subsidiary such as Roche UK or Rhodia UK is a party to the cartels and so infringes Article 81(1), unless the claimants can show that the subsidiary was aware or should have been aware of the state of mind of the parent company, ie. Roche Switzerland or Aventis France, who have been found to be a party to the infringing agreements. There is no plea that Roche UK or Rhodia UK had knowledge (actual, implied or imputed) of the agreements. (Footnote: ⁸²) Moreover EU Competition law will not impute to a subsidiary the knowledge of facts known to a parent. (Footnote: ⁸³)

Without any plea of knowledge on the part of the subsidiaries Roche UK and Rhodia Ltd, a case of infringement of Article 81(1) by them cannot possibly succeed. Therefore the claim against them by Trouw Germany must be struck out.

Discussion: Everyone assumed in argument that English law applied. (Footnote: ⁸⁴) The nature of the cause of action, characterised according to English law, is that of a private law claim for damages for the tort of breach of statutory duty: see the Garden Cottage case. So the broad issue is: what are the ingredients of a cause of action (in English law) for damages for infringing Article 81(1) of the Treaty. It is clear that the cause of action is a mixture of EU Competition law and English “domestic” law. Thus what is a breach of Article 81(1) is a matter of EU law. But a claim for breach can only be made against an entity recognised by English domestic law. That entity must be shown to have been in breach of Article 81(1). And it must be shown, as a matter of English law, that the entity that is in breach of Article 81 is liable in damages to this particular claimant for that breach.

The decision of the European Court in Re Woodpulp Cartel (Footnote: ⁸⁵) indicates that the implementation of an infringing agreement is itself an infringement of Article 81(1) by a company. But the defendants say, relying on the Viho case, that there is no infringement if the implementation of the agreement consists simply of obeying the orders of a parent company to sell at “cartel” prices that have been agreed by the parent (with other “undertakings” in the cartel) without the knowledge of the subsidiary. (Footnote: ⁸⁶)

In my view the principle in the Viho case is not relevant to the present situation. In that case the prices were not set by a cartel consisting of the parent company and other, independent, “undertakings”. They were set only by the parent and then implemented by subsidiaries which were part of the same economic unit. The subsidiaries had no independence of action. I would have thought that it is obvious that one economic unit cannot be said to prevent or distort competition under Article 81 when it is only controlling prices within its own economic unit and not dictating those of (or paid by) other “undertakings”.

But in the present cases the issue is whether there is an infringement by a subsidiary when it carries out the cartel agreement which has been entered into by the parent and other, independent, “undertakings”. I understand that the defendants accept that if it were shown that there was a “concurrence of wills” as between Roche UK or Rhodia UK and other “undertakings” that are a party to the infringing agreements, then, (if they are wrong on the Viho point), it is arguable that Roche UK or Rhodia UK would themselves be infringing Article 81(1). I also understand that the defendants accept that there would be a cause of action for damages against any legal entity that knew or ought to have known of an agreement that infringes Article 81(1).

In both Folios 475 and 476 it is pleaded that particular legal entities, Roche UK and Rhodia Ltd, “implemented” the cartel by selling vitamins at prices that were fixed as a result of infringing agreements entered into by “parent” companies in their respective groups, ie. Roche Switzerland and Aventis France. But there is no plea that Roche UK or Rhodia Ltd had express, implied or imputed knowledge of the infringing agreements entered into by the “parent” companies.

Therefore the point comes down to this: what knowledge of the infringing agreement by the legal entity being sued, if any, does a claimant have to plead and prove in order to succeed in a claim for damages for infringement of Article 81(1)? There are no cases or even textbook opinions to provide me with a ready answer. Moreover there is a tension between English law and EU Competition law concepts. In English law the separate identity of corporations is respected and knowledge of one corporation will not be readily imputed to another. But EU Competition law maintains the concept of an “undertaking”, which is more flexible than a legal entity. It can embrace a number of legal entities, so long as they act as a single economic unit and no legal entity acts independently for any relevant purpose.

It seems to me to be arguable that where two corporate entities are part of an “undertaking” (call it “Undertaking A”) and one of those entities has entered into an infringing agreement with other, independent, “undertakings”, then if another corporate entity which is part of Undertaking A then implements that infringing agreement, it is also infringing Article 81. In my view it is arguable that it is not necessary to plead or prove any particular “concurrence of wills” between the two legal entities within Undertaking A. The EU competition law concept of an “undertaking” is that it is one economic unit. The legal entities that are a part of the one undertaking, by definition of the concept, have no independence of mind or action or will. They are to be regarded as all one. Therefore, so it seems to me, the mind and will of one legal entity is, for the purposes of Article 81, to be treated as the mind and will of the other entity. There is no question of having to “impute” the knowledge or will of one entity to another, because they are one and the same.

In my view the fact that, in the Decision, the Commission identifies only one particular legal entity as the “infringing undertaking” does not detract from my conclusion. EU competition law has to bow to the practical fact that in national laws it is legal entities that exist; and it is legal entities that own the funds from which fines are paid. So particular entities need to be identified in order to enforce the Decision. But those practical considerations cannot determine a prior question which is whether, if one entity of an undertaking is an infringer by agreeing to fix prices, another entity that has implemented the same infringing agreement, is also an infringer.

I have not forgotten the fact that the claimants have removed from their pleadings the allegation that the agreement to implement the cartels, made between the defendants in each group is, by itself, a breach of Article 81. (Footnote: ⁸⁷) Given the decision in the Viho case, they were bound to do so. But the claimants have maintained their case that the UK company in each of the groups “implemented” and “gave effect” to the cartel agreements entered into by the “undertaking” identified in the Decision. If my analysis of the legal position under EU competition law is correct, that is all the claimants have to plead.

Accordingly I have concluded that the claimants (in particular Trouw Germany) have an arguable case against Roche UK and Rhodia Ltd. It is that those companies are infringers of Article 81(1), as a matter of law. If so, then it must be arguable that Roche UK and Rhodia Ltd are in breach of a statutory duty not to infringe Article 81(1), following the Garden Cottage case. The next question must be whether Trouw Germany can recover damages from Roche UK and Rhodia Ltd, given that Trouw Germany did not buy vitamins from either company.

(2) The Causation Argument

The response of both sets of defendants is that this hypothesis fails to take account of the way prices would have been set in the two groups even if there had been no cartels. Both groups of defendants say that a group price would have been set; individual companies, trading in different countries, would not have been free to set their own price levels below those of others in the same group. (Footnote: ⁹⁰) That practice, provided it is confined to the group, does not infringe Article 81: see the Viho case. Therefore there would not have been any price undercutting by one company in the group as against another one. Therefore participation in the cartel by individual companies cannot have caused any loss to Trouw Germany.

At this stage all that the claimants have to do is satisfy me that there is an arguable case or “triable issue” on the merits of their claim. It seems to me that the right question to ask is: what would the situation have been if there had been no cartels? There may still have been centralised pricing within the groups of companies. If so, then Mr Aries’ argument would be met by the answers given by Mr Daniels in his statement. But it must be arguable that, without the cartels, there would have been competition between, say, the Roche group and the Aventis group. As a consequence, the various claimants, including Trouw Germany, may have been able to buy vitamins from another group at a lower price than the price fixed by the cartels.

If, as I have held, it is arguable that all companies within an “undertaking” who “implemented” the cartel are infringers of Article 81, then their action in “implementing” the cartel could cause the loss that the claimants allege. On this analysis, each infringing entity is a tortfeasor. I do not think it matters whether they are to be regarded as joint or several tortfeasors for the purpose of the causation argument. Each entity would have contributed to a situation where it took part in the cartel, upheld the cartel prices and so (arguably) caused loss.

The claimants have pleaded both the particular point set out in Mr Aries’ witness statement and a more general plea of causation of loss. (Footnote: ⁹¹) In my view, even if there are problems with the particular argument set out by Mr Aries, at the lowest the more general plea is arguable.

Accordingly I have concluded that there is a “real issue” (Footnote: ⁹²) as between Trouw Germany and Roche UK and Rhodia UK. Therefore those claims by Trouw Germany are not artificial or advanced solely so that Trouw Germany can take advantage of Article 6(1) of the Lugano Convention or Regulation 44 so as to bring proceedings in England against other, non UK domiciled defendants. However, that still leaves the third part of this jurisdiction argument to be dealt with.

(3) Do the claimants satisfy the terms of Article 6?

The new wording only applies to defendants that are affected by Regulation 44. This means that in Folio 476, Roche Vitamins Switzerland and Roche Switzerland (the second and third defendants) cannot take advantage of it, as Switzerland is still governed by the Lugano Convention. Perhaps because of their position, Mr Hoskins did not address any argument on this “Article 6(1) point” to me on behalf of Roche Germany, the fourth defendant in Folio 476.

However, Mr de la Mare submitted, on behalf of AAN France, Aventis France and Rhodia Germany, (Footnote: ⁹⁵) that Article 6 is a “Special Jurisdiction” which derogates from the general jurisdictional rule of the defendant’s domicile which is established by Article 2 of Regulation 44. Therefore Article 6 must be construed so as to interfere with the general rule as little as possible. Thus there had to be a very close connection between the claims against the different defendants. Further, the risk of irreconcilable judgments resulting from separate proceedings had to be substantial, rather than just a possibility. Mr de la Mare pointed out that Trouw BV, the parent company of Trouw Germany, had started proceedings in the Netherlands claiming damages in respect of the same alleged infringements of Article 81. He submitted that this action showed that the Trouw group as a whole must be unconcerned with the prospect of irreconcilable judgments on the same topic. Mr de la Mare submitted that there was no risk of German, French and English Courts taking different views on what constituted an infringement of Article 81 or whether Trouw Germany was entitled to damages from AAN France, or Aventis France or Rhodia Germany.

Mr de la Mare submitted that a claimant must show that it has “much the better of the argument” that the requirements of the proviso of the new Article 6(1) are satisfied before it can invoke that jurisdiction. I will assume that is the correct test for the present. (Footnote: ⁹⁶) Mr de la Mare pointed out that there was no evidence of how French or German courts might approach the issue of infringement of Article 81 or whether the claimant could maintain a private law claim for damages for infringement against companies within an “undertaking” for breach of Article 81.

Although there is no such evidence, I think that the claimants have amply demonstrated that they have the better of the argument that the requirements of the proviso of Article 6(1) are satisfied. First, the claims of Trouw Germany against all the defendants in Folio 475 are very closely connected. They all arise out of the same alleged infringements of Article 81. They are all private law claims for damages for those infringements. The nature of the claims against all the defendants is identical.

Secondly, as counsel for both the Roche and Aventis groups have had to accept in argument, the law on the scope for making claims of this type is very undeveloped. I was not shown any French or German case law on this topic. (Footnote: ⁹⁷) So I have no idea how German or French courts might approach the issue of when or how a company within an “undertaking” would infringe Article 81; nor the circumstances in which a claimant could recover damages for an infringement. In particular I have no idea how those courts might approach the key issue of “knowledge” which I have discussed above. Therefore it seems to me that it is highly arguable that different courts would take different approaches to these issues and that those different approaches could result in irreconcilable judgments.

Thirdly, therefore, I think that it must follow that it is expedient to hear and determine all these claims together to avoid the risk of irreconcilable judgments. Ultimately the question of when and how an infringement of Article 81 takes place and the circumstances in which a private law claim for damages can be maintained may need to be considered by the European Court. But it does not seem sensible to me that, in the meantime, there should be different views from different national courts which are given in relation to the same factual background and the same cartels, simply because the different defendants are of different domiciles. Therefore I reject Mr de la Mare’s argument that the claimants have not satisfied the tests in the proviso of Article 6(1) of Regulation 44.

Conclusion on the application to strike out or dismiss claims as having no reasonable prospect of success

The effect of these conclusions is as follows:

in Folio 476 Trouw Germany’s action against Roche UK can proceed and Trouw Germany is entitled to use Article 6(1) to join Roche Vitamins Switzerland, Roche Switzerland and Roche Germany. However Roche Germany still relies on Article 17/23 and Swiss and German jurisdiction clauses to defeat Trouw Germany’s attempt to bring its claims against them in the English Courts: see Sections E and F below;

In Folio 475, Trouw Germany’s action against Rhodia UK can proceed and Trouw Germany is entitled to use Article 6(1) to join AAN France, Aventis France and Rhodia Germany to the action. However AAN France relies on Article 23 and French jurisdiction clauses to defeat Trouw Germany’s attempt to bring claims against AAN France in the English Courts. And Rhodia Germany relies on Article 23 and German jurisdiction clauses to defeat Trouw Germany’s attempt to bring claims against Rhodia Germany in the English Courts.

Swiss jurisdiction clauses appear in the following contracts:

In Folio 473: There is a Swiss jurisdiction clause in the standard terms and conditions contained in contracts for the purchase of vitamins between Provimi UK and Roche Vitamins Switzerland that were concluded after February 1998, when Roche Vitamins Switzerland was incorporated. The jurisdiction provision is in Clause 9 of the standard terms. It provides:

In Folio 476: There is a Swiss jurisdiction clause in the contracts between Trouw UK and Roche Vitamins Switzerland. It is in the same terms as set out above.

Article 17 of the Lugano Convention provides:

The Defendants’ arguments: Mr Hoskins, for the Roche defendants, made the following principal submissions:

It is for the Claimants to demonstrate that they can establish the English Court’s jurisdiction using either Article 5(2) (Footnote: ⁹⁸) or Article 6(1). (Footnote: ⁹⁹) The Claimants must satisfy the court that they have “much the better of the argument” that Articles 5(2) and 6(1) govern and that the jurisdiction clauses do not apply, on all the material available to the court on these applications. (Footnote: ¹⁰⁰)

It is accepted that the relevant companies traded during the relevant periods on the standard terms and conditions which contained the Swiss jurisdiction clause.

The jurisdiction clauses satisfy the two formal requirements of Article 17/23. (Footnote: ¹⁰¹) The first is that the disputes which have arisen “…arise in connection with a particular legal relationship”, ie. the contracts between Provimi UK or Trouw UK and Roche Vitamins Switzerland and the contracts between Trouw Germany and Roche Germany. The second requirement is that the clauses be “in writing”, which they are.

The only remaining issue is therefore whether the present disputes between the parties fall within the scope of the Swiss jurisdiction clause. For this purpose “the disputes” are to be characterised (in terms of the law of the current forum, ie. English law) as private law claims in tort for breach of statutory duty in infringing Article 81(1) of the Treaty.

The scope of the jurisdiction clauses must be determined by the English Court, but in accordance with the law applicable to determine the scope of the clauses. (Footnote: ¹⁰²)

Swiss law must be the “applicable” law. By Swiss law a tort claim for infringement of Article 81 will fall within the scope of this form of jurisdiction clause so long as “but for” the contractual relationships, the tort claim would not have arisen. It is not necessary that the tort claim should be based on facts that would also, simultaneously, constitute a breach of the contract. (Footnote: ¹⁰³) Furthermore the tort claim does not have to have been “foreseeable” at the time that the parties concluded the contracts. (Footnote: ¹⁰⁴)

Therefore the current claims fall within the terms of the Swiss jurisdiction clause and so, by Article 17/23, the English Court must decline jurisdiction to hear and determine any claims concerning the contracts that contain that clause.

The Claimants’ arguments: Mr Carr QC, for the Claimants, submitted that:

The Claimants have to satisfy the English Court that they have a “good arguable case” that they can take advantage of one of the jurisdictional provisions, whether it is Article 2, 5(2) or 6(1) of Regulation 44 or the Lugano Convention. The “good arguable case” test is a flexible one. As Waller LJ emphasised in the Canada Trust case, (Footnote: ¹⁰⁵) the key question is whether the court is satisfied, or as satisfied as it can be having regard to the limitations which the interlocutory process imposes, that factors exist which allow the court to take jurisdiction. That means in these cases that the court has to take a view, on the material it has, on whether the Claimants have satisfied the court that it has jurisdiction based on Articles 5(2) and 6(1).

It is accepted that the formal requirements of Article 17/23 have been fulfilled in relation to the Swiss jurisdiction clauses.

It is also accepted that the claims are properly characterised (by English law) as private law claims in tort for breach of statutory duty in infringing Article 81(1).

Thus the issue, in relation to the Swiss jurisdiction clause contracts, is whether the scope of the jurisdiction clause is broad enough to include such claims. It is accepted that this issue must be determined by the applicable law. That must be Swiss law. It is accepted that the Swiss Courts have not considered the issue of whether claims for a breach of Article 81 of the Treaty could fall within the scope of a Swiss jurisdiction clause.

However, it is clear from general principles of Swiss law that it has principles of construction of the scope of jurisdiction clauses in contracts. The first is that the clauses must be construed in a way that reflects the “declared true intention” of the parties. If this is in doubt, then the clause must be construed according to the principle of “bona fides”. This means that the extent of a stipulation in a contract is limited to what the opposing party could reasonably foresee when entering into the contract. (Footnote: ¹⁰⁶) The second is that jurisdiction clauses will be narrowly construed so that a claim in tort will only fall within the scope of the jurisdiction clause when a “close interdependence” exists between the claim in tort and the contract. That means that there must be a close factual relationship between the claim in tort and the contract. Furthermore, only those tort claims that are reasonably foreseeable by the parties when entering the contract will be subject to the jurisdiction clause. (Footnote: ¹⁰⁷)

Therefore applying these Swiss law principles of construction and application, the contractual jurisdiction clause would not extend to claims in tort which are based on the defendants’ violations of anti – cartel laws. (Footnote: ¹⁰⁸)

Issues between the parties

what is the proper approach of the English Court in deciding whether it should accept or decline jurisdiction under Articles 5(3), 6(1), and 17/23 of the Regulation/Convention, particularly where the point turns on expert evidence of foreign law that has not been tested in oral evidence?

What is the “applicable law” to be applied here?

What, if any, are the principles of construction of jurisdiction clauses under Swiss law and how are they to be applied in these cases?

Discussion: (1) The proper approach

The application of these tests is more difficult when I have not been able to evaluate the experts on foreign law by seeing and hearing them in the witness box. They are all distinguished jurists on their own laws. None have put forward palpably false or flawed arguments. And in the case of the Swiss jurisdiction clauses it is accepted that the Swiss Courts have not had to rule on the scope of a Swiss jurisdiction clause when the claim in question is one for damages for the infringement of anti – cartel laws.

(2) What is the “applicable law”?

(3) Principles of construction of jurisdiction clauses under Swiss Law: Professor Vischer and Professor Schwander agree that in Swiss law a contract is always to be construed according to the “declared true intention” of the parties. (Footnote: ¹¹³) They also agree that Swiss precedent gives significant importance to the principle of “bona fides” as between contracting parties. Professor Schwander also appears to accept that in some circumstances this will limit the extent of a provision in a contract to what the opposing party may have “foreseen” at the time that he entered the contract. But he takes the view that this principle is not relevant in the context of a jurisdiction clause. This is because Article 17 of the Lugano Convention does not impose a requirement of “foreseeability”. (Footnote: ¹¹⁴)

There is some confusion here, in my view. Article 17 of the Lugano Convention is concerned with what English lawyers would probably call the “formal” and “material” validity of a jurisdiction clause. (Footnote: ¹¹⁵) It is clear that Article 17 defines the necessary and sufficient requirements for formal and material validity of jurisdiction clauses. Those requirements replace any requirements imposed by the various national laws. (Footnote: ¹¹⁶) But neither party argued, at least in relation to the Swiss jurisdiction clause, that the jurisdiction clause lacked either formal or material validity. The only issue is as to its scope. On that issue Article 17 is irrelevant, because the European Court of Justice has made it clear (Footnote: ¹¹⁷) that this issue is to be determined by the “applicable law”, as opposed to any autonomous principles of construction or application laid down by the European Court of Justice.

So it seems to me that on this point Professor Vischer has “much the better of the argument”. In other words, I accept that much the better argument is that the scope of the Swiss jurisdiction clause is limited to the types of claim that the opposing party could reasonably foresee when entering the contract that contains the jurisdiction clause.

Professor Vischer and Professor Schwander disagree on the topic of whether, in Swiss law, a jurisdiction clause intended to cover a claim in tort can be agreed in advance of the alleged tortious act. I am not going to take sides on that issue, because the factual position here is that if the defendants had infringed Article 81(1), then they must have done so before the contracts were concluded. Moreover, I think I must also assume that because the cartels were secret, then the claimants did not (and could not) know of the infringements at the time that they entered the contracts with the defendants.

Both experts agree that there is a Swiss law principle of construction that a jurisdiction clause will only cover a claim in tort if those claims arise in connection with the contract that contains the clause. (Footnote: ¹¹⁸) Professor Schwander accepts that there is a difference of views amongst writers on Swiss law as to the necessary degree of connection. He relies on some German authority for a view that the connection need not be close. But in doing so he appears to stray from principles of Swiss law on the construction of jurisdiction clauses and invokes both German law and Article 17 of the Lugano Convention. There is no positive support amongst the authors cited by Professor Schwander (Footnote: ¹¹⁹) for the view that the connection between the contract and the tortious act need only be broad or loose.

Professor Schwander expresses the view that the jurisdiction clause will cover a claim in tort if the claim in tort could not have arisen “but for” the existence of the contract containing the clause. (Footnote: ¹²⁰) He argues that the fact that the claim in tort would not have arisen “but for” that contract provides sufficient connection between the tort and the contract for the clause to cover that type of claim. This is, so far as I can see, only his opinion, which is not based on any particular decision of the Swiss Courts. Nor is it the unanimous or even majority view of Swiss jurists.

Where does this all lead to? It seems to me that the crucial issue is: what, as a matter of construction and application, is covered by the phrase “any controversies” in clause 9(b) of the standard terms and conditions. If this phrase is given its widest construction, then it must include any and all disputes that have arisen between the two parties to the contract that contains this provision. That must include a dispute on whether one party to the contract can claim against the other damages for infringing Article 81(1) of the Treaty.

But it seems to me that, on the material available to me, “much the better of the argument” on the Swiss law principles of construction and application leads to a narrower construction of the wording of clause 9(b) of the Swiss terms and conditions. I think that the highest Swiss Courts would hold that the phrase “any controversies” must be confined to those controversies that would be foreseen by the parties at the time that they concluded the relevant contract. I think it fair to assume that when the present claimants entered the contracts for the supply of vitamins, they would have assumed that there were no secret cartels on price and market fixing and that the prices that they would have to pay for vitamins were not those fixed by a secret cartel that infringed Article 81. I have concluded that “much the better of the argument” on the proper construction of the clause 9(b) of the terms and conditions leads to the conclusion, based on Swiss law principles, that a claim for damages for infringement of Article 81(1) of the Treaty is not within the scope of the phrase “any controversies” in the jurisdiction clauses 9(b).

Conclusion: I conclude, on the basis of the material available to me now, that the scope of the Swiss jurisdiction clauses is not sufficiently wide to include the present claims, in tort, for damages for infringement of Article 81(1). Therefore the defendants cannot invoke Article 17/23 and the claimants can invoke Article 5(2) and/or 6(1) of the Regulation/Convention and sue the defendants in England.

German jurisdiction clauses appear in the following contracts:

Roche Group: Folio 476: the contracts between Trouw Germany and Roche Germany that were concluded prior to 20 September 1999 were subject to standard terms, which contained a German jurisdiction clause. The claimants and the defendants produced differing translations of the clause. The claimants’ version is:

Aventis Group: Folio 475: The contracts between Trouw Germany (second claimant) and Rhodia Germany (fourth defendant) made between January 1995 and July 1998 were on Rhodia Germany’s standard terms and conditions. Paragraph 10 of those conditions provides:

Article 23(1) of Regulation 44 provides as follows:

The Roche defendants’ arguments: Mr Hoskins’ principal submissions were as follows:

The claimants have to show that they have “much the better of the argument” that the jurisdiction clause does not apply. They cannot do so.

The clause fulfils the formal requirements of Article 23(1) of the Regulation. Therefore the only issue is as to the scope of the clause. The question is: does it embrace claims for damages for infringement of Article 81(1) of the Treaty?

The German law principles on the construction of contracts must apply. These are set out in Articles 133 and 157 of the German Civil Code. The court has to determine how this jurisdiction clause is to be understood by the parties, taking into consideration the underlying intention of the parties, the principles of good faith and the customary habits of the particular business. (Footnote: ¹²¹) Furthermore the German Statute on General Terms (now part of the German Civil Code) provides that general terms are to be interpreted objectively and in a uniform way taking into account the understanding of an average buyer. (Footnote: ¹²²) As this clause refers to “all disputes” that wording has a clear meaning; there is no need to investigate further what types of dispute are embraced by the clause, so long as they are “based on” the contract containing the jurisdiction clause. A claim based on a tort is not excluded from the scope of the clause so long as the tortious act is connected to the contract. (Footnote: ¹²³)

It is accepted that the particular courts identified in the clause are not competent to deal with competition matters. However that does not mean that, as a matter of construction of the clause, it does not extend to claims in tort for an infringement of Article 81(1). Nor does it invalidate the clause. The view of German jurists is that German courts would “manipulate” the clause so that the appropriate competition court would have jurisdiction. (Footnote: ¹²⁴)

As a matter of construction the clause covers claims in tort, even where, as here, it must be assumed that the tort was intentionally committed by the defendants. German law would regard the present claim as one in tort rather than a matter of fraud. So long as the claim is based on the contract, then it would fall within the scope of the clause. (Footnote: ¹²⁵)

The Aventis defendants’ arguments: Mr de la Mare’s principal submissions were:

The European Court of Justice (“ECJ”) has held that the courts of Member States must examine jurisdiction clauses in two stages. First, the national courts must consider the validity of the clause by reference only to the criteria set out in Article 23 of the Regulation, as interpreted by the ECJ. No national rules can be relied on in relation to the issue of validity.

The second job of the national court is to examine the scope of the jurisdiction clause. It does this by reference to the criteria of Article 23 as interpreted by the ECJ and by national rules which must be interpreted in a manner that is consistent with Article 23.

These propositions are established by three ECJ decisions: Powell Duffryn plc v Wolfgang Petereit; (Footnote: ¹²⁶) Francesco Benincasa v Dentalkit Srl; (Footnote: ¹²⁷) Trasporti Castelletti Spedizioni Internazionali SpA v Hugo Trumpy SpA. (Footnote: ¹²⁸)

By these cases, the ECJ has emphasised that it is impermissible to use a national court’s rules to determine the validity of jurisdiction clauses in contracts. But that is what Professor Wolf, the claimants’ expert on German law, has done.

Moreover, it is impermissible to use a national court’s rules on the “presumed intention” of the parties to determine whether a clause is valid or not. That is contrary to the Hugo Trumpy decision, particularly paragraph 51. (Footnote: ¹²⁹)

Therefore the arguments of the claimants’ expert, Professor Wolf, on the German law approach as to (a) the presumed intention of the parties on the validity of the clause, (b) whether this clause is valid to cover an alleged tort of intent or an alleged fraud or an alleged infringement of Article 81(1), are all beside the point.

As to the scope of the clause, Mr Hoskin’s arguments are adopted.

The claimants’ arguments in response: Mr Carr’s submissions were:

Under German law the interpretation of general terms in contracts is governed by the interpretation rules set out in Articles 133 and 157 of the German Civil Code. Those rules are supplemented by a further rule that interpretation must accord with the general and typical understanding of reasonable customers. In a case of doubt, the interpretation most favourable to the customer that did not introduce the clause must prevail. (Footnote: ¹³⁰)

The questions that arise for interpretation of the jurisdiction clause here are: (a) does the clause apply to disputes concerning violations of Article 81(1) of the Treaty; and (b) does the clause apply to a claim based on an intentionally committed tort? (Footnote: ¹³¹)

In relation to (a), German legislation concerning anti – trust matters has assigned exclusive jurisdiction to particular courts. The courts identified in the Roche contracts do not have jurisdiction to deal with cartel disputes. Therefore, as a matter of construction, the jurisdiction clause in the Roche contracts does not extend to cartel disputes at all. (Footnote: ¹³²) Moreover, contrary to the view of the Roche group’s expert, Dr Seiler, German courts would not re – interpret this jurisdiction clause to include cartel disputes. This is because the general rule of construction (in what was the German statute on General Terms, now part of the German Civil Code) is that the courts do not remake the terms of contracts for the parties when there has been no change in the relevant circumstances. Here there is none. And there is no evidence that the claimants intended to include cartel matters in the jurisdiction clause. (Footnote: ¹³³)

In relation to the Aventis group contracts, Professor Wolf accepts that the jurisdiction clause is broad enough to include the Landgericht am Main, which does have jurisdiction over cartel matters. (Footnote: ¹³⁴) However, the rules of interpretation of contracts and their clauses remain. A court has to assume that “the intention of the parties were fair and reasonable”. (Footnote: ¹³⁵) A fair interpretation of the jurisdiction clause is that its scope is limited to disputes concerning the place of delivery and the fulfilment of obligations under the contract. (Footnote: ¹³⁶) It cannot be assumed that a reasonable buyer would have agreed to an exclusive jurisdiction clause in cartel matters where the seller dishonestly hides the cartel agreement, which results in unjustifiably high prices for the products sold. This approach is supported by the decision of the Court of Appeal in Hamburg: OLG Hamburg 12.2.1981. (Footnote: ¹³⁷)

In relation to both the Roche and Aventis group actions, the German courts would construe the jurisdiction clause so that it could not be relied upon by a party that has committed a tort of intent. This is because a party that acts fraudulently or unfairly may not exercise and misuse the literal wording of a clause. (Footnote: ¹³⁸) This approach is supported by the decision of the Higher Regional Court of Stuttgart of 14 December 1973. (Footnote: ¹³⁹) It is, on analysis, a rule of interpretation rather than a public policy rule of German law.

In his first report for both groups of actions Professor Wolf raised a further argument. This is that because the contracts were between two German companies, (Footnote: ¹⁴⁰) the jurisdiction clause is confined to where, as between possible German courts, disputes should be heard. He argued that the clause does not determine issues of international jurisdiction, eg. between English and German courts. Therefore, he submitted, Article 23 of Regulation 44 does not apply at all. So, issues of the validity and scope of the clauses must be dealt with exclusively by German law. (Footnote: ¹⁴¹) Dr Seiler and Professor Welter responded to this in detail and Professor Wolf returned to the matter in his second reports.

In his oral submissions Mr Carr did not take up the arguments of Professor Wolf that the clauses dealt only with national jurisdictional issues, so that Article 23 was irrelevant. He was, in my view, correct not to do so. First, Article 23 of Regulation 44 does not contain a requirement that the “agreement conferring jurisdiction” should expressly relate to international jurisdiction issues. Nor is there any case law of the ECJ that has held that Article 23 (or its predecessor Article 17) only applies to jurisdiction clauses that refer expressly to international jurisdiction issues. In my view the wording of Article 23 is sufficiently broad to apply to all jurisdiction agreements. It would be contrary to the objective of providing legal certainty if some jurisdiction agreements were within Article 23 but some fell outside its scope and their validity were to be determined by national laws. Therefore, secondly, all issues of formal validity and, I think, material validity (Footnote: ¹⁴²) of the jurisdiction clauses, must be dealt with by reference only to the requirements of Article 23, rather than the requirements of any system of national law.

Professor Wolf also argues that on the proper construction of the jurisdiction clauses they are intended only to decide where, within Germany, disputes should be determined, as opposed to determining where, internationally, they should be heard. This might be the case, but it seems to me that this is an issue as to the scope of the clauses. That issue must be dealt with in accordance with the “applicable law”, ie. any German law rules of construction as applied (by the English court in this case) to the contracts. I deal with this below.

The Issues between the parties on the “German jurisdiction clauses”.

To what extent, if any, is national law relevant to questions of the validity of the clauses, in particular when it is alleged that under national law a jurisdiction clause will not be valid in relation to a particular type of dispute because of (a) the nature of the allegations made; and (b) national law rules as to the “presumed intention” of the parties?

What are the German law rules as to the interpretation of jurisdiction clauses?

How are those rules to be applied in these cases? In particular:

Does the current dispute arise out of the legal relationship in connection with which the jurisdiction agreement was made?

What is the effect, if any, of the fact that the courts identified in the Roche group contracts do not have jurisdiction to determine cartel matters?

Does the fact that the claimants allege fraud or a tort of intent have any bearing on the scope of the jurisdiction clauses?

Discussion: (1) relevance of national law to the validity of the clauses.

But Mr de la Mare’s argument was, in effect, that all issues as to the “material validity” (Footnote: ¹⁴⁶) of a jurisdiction clause are also to be determined exclusively by the rules laid down in Article 23, making national law irrelevant on that issue as well. He pointed in particular to passages at paragraphs 49 to 51 of the ECJ’s judgment in the Hugo Trumpy case.

In that case the ECJ was concerned with the effect of a jurisdiction clause set out on the reverse of bills of lading. Claims were brought by the receivers of the goods which had been shipped from Buenos Aires to Savona, Italy. The receivers had brought proceedings for compensation against Hugo Trumpy in the Genoa courts. Trumpy relied on a jurisdiction clause on the reverse of the bills of lading and claimed that the proceedings should have been brought in the High Court in London. The Corte Suprema di Cassazione posed fourteen questions to the ECJ. The only relevant ones for present purposes are the seventh and sixth questions. These are summarised in paragraph 46 of the ECJ’s judgment as being:

The Court stated, in paragraphs 48 to 51 of its judgment:

As I read those passages they state that the material validity of a jurisdiction clause has to be determined exclusively by reference to the terms of Article 23. Thus there has to be an “agreement conferring jurisdiction” which is one to settle any disputes “which have arisen or which may arise in connection with a particular legal relationship”.

In Powell Duffryn plc v Wolfgang Petereit (Footnote: ¹⁴⁷) the ECJ held that the phrase “agreement conferring jurisdiction” had an autonomous meaning, so was not to be interpreted according to national laws. (Footnote: ¹⁴⁸) However, in the same case the ECJ has also held that there is still scope for national laws to determine two particular questions concerning an “agreement conferring jurisdiction”. The first is whether the dispute in issue arose out of the legal relationship in connection with which the jurisdiction agreement was made. That “is a question of interpretation which is a matter for the national court to resolve”. (Footnote: ¹⁴⁹) The second question is whether the scope of the jurisdiction agreement applied to the dispute before the court. The ECJ held that “it is for the national court to interpret the clause conferring jurisdiction invoked before it”. (Footnote: ¹⁵⁰)

Given these pronouncements of the ECJ I must conclude that when a jurisdiction clause is subject to Article 23, then the court seised of the issue of whether it is valid and applicable in the instant case must not apply national laws at all to the issue of the validity of the clause. So national laws are irrelevant to the issue of whether a clause can be valid at all if invoked in a dispute where fraud is alleged or it is alleged that the dispute concerns a tort of intent.

However the ECJ’s judgment in the Powell Duffryn case establishes that relevant national laws will determine two issues. The first is whether the dispute concerned arises out of the legal relationship in connection with which the jurisdiction agreement was made. The second is the scope of the jurisdiction agreement when applied to the dispute before the court. In relation to the German jurisdiction clauses, there was no dispute that German law should be considered on those two issues if there were any relevant German law principles involved.

(2) The German law rules as to the interpretation of jurisdiction clauses.

(3) How are the German law principles of interpretation to be applied?

The Aventis jurisdiction clause: The scope of the Aventis group clause is not at all clear. It does not attempt to define the types of dispute that are within the “agreed place of jurisdiction”. There is certainly nothing to indicate that the parties have agreed that a dispute concerning a claim for damages for breach of Article 81(1) of the Treaty would be within its scope. As the scope of the clause is not clear, then the next principle of interpretation of contract terms under German law is that the clause must be given a meaning according to the understanding of typical and reasonable customers, under the special circumstances of the case. I think that a reasonable customer would assume that the other party would have entered the contracts acting in good faith. The issue is, therefore, whether one party would have intended to agree to the jurisdiction of a particular court in respect of a claim that arises from the fact that, at the time the contracts were concluded, the other party was also party to a secret cartel and fixed the sale prices under the contracts accordingly. I think that if the question was asked: was it the underlying intention of the parties that a claim based on excessive prices resulting from a cartel should be within the scope of this jurisdiction clause, the answer would be likely to be “no”. If there are any doubts about the clause’s scope, then they have to be resolved in favour of the party who did not introduce the general terms, ie. Trouw Germany.

Therefore I have concluded that, in relation to the Aventis group jurisdiction clause, the claimant has “by far the better of the argument” as to the scope of the jurisdiction clause. I think that it does not apply to claims for breach of Article 81(1) of the Treaty.

The Roche group clause: Roche argues first, that “all” must be interpreted literally as “all” (Footnote: ¹⁵²) and secondly, that the current disputes arise out of the contracts between Trouw Germany and Roche Germany that contain the jurisdiction clauses. This is because if no contracts had been concluded, then there could not be any claims. Therefore, applying German principles of interpretation, two results must follow. First, the scope of the jurisdiction clause was broad enough to include the current claims. Secondly, the present disputes arose out of the legal relationships in connection with which the jurisdiction clause was made.

Although the arguments are closer in the case of the Roche group clauses, I have concluded that ultimately the claimants have “much the better of the argument” to the extent that I am satisfied that the jurisdiction clause should not prevail over the jurisdiction provisions of Articles 5 and 6 of the Regulation. This is for a number of reasons.

First, I have concluded that the claimants have much the better of the argument on the issue of whether the jurisdiction clause applies at all to cartel matters. This is a matter of construction of the clause, bearing in mind that it has to be interpreted according to the will of the parties. The parties have agreed to give jurisdiction for all disputes arising out of the legal relationship to two named courts. It is agreed by Professor Wolf and Dr Seiler that those courts do not have jurisdiction to hear cartel matters. The parties may not choose the Local Court of Lörrach or the District Court of Freiburg to hear a claim based on breach of Article 81(1) of the Treaty. The court nominated in the appropriate regulations to deal with cartel claims, including alleged breaches of Article 81(1) of the Treaty, is the District Court of Mannheim. (Footnote: ¹⁵³)

Dr Seiler suggests (Footnote: ¹⁵⁴) that if the Commission has already decided that there has been a breach of Article 81, then the choice of the local courts will be upheld because the expertise of the District Court will not be needed. But the issues of whether Roche Germany is in breach of Article 81(1) and whether Trouw Germany has a private law claim against Roche Germany, are very much in issue. So this argument has no force.

Dr Seiler then suggests that the jurisdiction clause will be valid :

I find these arguments very unsatisfactory. I note that the jurisdiction clause refers to two courts; one local and one district. Those were presumably chosen to reflect the jurisdictions that they have. It shows that Roche Germany was sufficiently astute as to the jurisdictional limits of the various courts. If there had been any intention to give a particular court jurisdiction over cartel matters then I would have expected some thought to be given to choosing an appropriate court, ie. the District Court of Mannheim in this case. (Footnote: ¹⁵⁶) The fact that this was not done suggests to me strongly that neither party was considering cartel disputes at all in framing this jurisdiction clause.

Furthermore I find equally unsatisfactory the argument that the clause could be “manipulated” or re – written so that if there is a cartel dispute then the clause should be read so as to refer to the Mannheim court. It goes against the general rule of German law as to the interpretation of contracts that the courts do not remake contracts for the parties. There has been no change in the law or the relevant circumstances under which a court could consider rewriting the contract in order to fit in with the new circumstances. Moreover, as Dr Seiler accepts, such rewriting is only permissible in order to reflect the intention of the parties. (Footnote: ¹⁵⁷) But there is nothing either in the contract or anywhere else to signify that the parties “….wanted to confer jurisdiction in cartel matters to the District Court of Mannheim”. (Footnote: ¹⁵⁸)

My second reason for concluding that the claimants have much the better of the argument that the jurisdiction clause does not apply to this type of dispute is based upon the German courts’ approach to the scope of jurisdiction clauses in cases involving fraud or torts of intent. Professor Wolf relied on two cases in particular: the decision of the Higher Court of Hamburg of 12 December 1981 (“the Hamburg case”), (Footnote: ¹⁵⁹) and the decision of the Higher Court of Stuttgart of 14 December 1973 (“the Stuttgart case”). (Footnote: ¹⁶⁰) Dr Seiler said that the Hamburg case could be distinguished, because it was dealing with an issue of fraud (the issue of fraudulent bills of lading), whereas the claims here are in tort, which is something different. Moreover the court’s decision was “motivated” by the fact that the jurisdiction clause nominated the Ethiopian courts and the court hesitated before forcing a claimant to sue in such courts. (Footnote: ¹⁶¹)

In my view the Hamburg case cannot be so easily dismissed. The jurisdiction provision stated that “all actions under this contract of carriage must be brought before the Ethiopian Court”. The claimant sued the shipowners, “a state owned shipping company”, and asserted that there had been a “wilful false issue of the bill of lading”. The court accepted that the parties would have intended that disputes concerning the terms of the bill of lading fell within the jurisdiction clause and also “unlawful acts” such as damage to the cargo, even if done wilfully. The court’s judgment continued:

The Stuttgart case goes further. In that case the contract contained a clause “place of performance and venue are both Munich”. So far as I can tell from the translation of the report, the claimant alleged that it had been induced into concluding a contract through “wilfully illegal conduct”. The issue was whether the claim was within the scope of the jurisdiction clause or the general rules for jurisdiction in section 32 of the German Code of Civil Procedure prevailed. The court held that the claim did not come within the scope of the jurisdiction clause. It stated the procedural law provided the jurisdictional rules for a claim both in contract and for “unlawful acts”. If these were to be replaced by the agreement of the parties, then:

In my view these two cases show that the German courts’ approach to the interpretation of jurisdiction clauses is much more restricted than that of the English courts. The German courts require a clear and unambiguous indication from the parties that claims involving either fraud or some tort of intent are to be within the scope of a jurisdiction clause that has been agreed. In this case there is no clear indication that the parties have agreed that a claim for breach of Article 81(1) should fall within the jurisdiction clause. The claim is founded on the allegation that before the contracts were concluded, Roche Germany was party to a secret cartel to impose an illegal price regime on all contracts concluded thereafter. The claim is effectively based on an allegation of fraud by Roche Germany; or at least a deliberate intent to deceive Trouw Germany into thinking that the contracts, including the price, were on competitive terms and had been agreed after a free bargaining process.

Therefore I have concluded that the claimants have much the better of the argument with their proposition that, following German principles of interpretation, this jurisdiction clause is insufficiently clear and unambiguous to include within its scope disputes concerning claims for breach of Article 81(1) which are based on allegations of fraud or a tort of intent.

The third reason for my conclusion that the claimants have much the better of the argument is that I think that, looking at things from a German court’s point of view, it would be more likely to conclude that the current dispute does not “arise out of the legal relationship in connection with which the jurisdiction agreement was made”. (Footnote: ¹⁶²) Obviously in one sense the dispute arises out of the contracts because if there had been no contracts there would have been no claims. But the claims can also be said to arise out of the fact that, as the claimants allege, before the contracts were concluded Roche Germany was party to a pre – existing cartel which had fixed vitamin prices. (Footnote: ¹⁶³) As I have already noted, it seems to me that the German courts’ approach to the interpretation of phrases such as “arises out of the contract” is not as broad as the English courts’ might be when considering arbitration or jurisdiction clauses. (Footnote: ¹⁶⁴) In my view it is more likely that German principles of interpretation would lead to a German court concluding that the present dispute did not arise out of the legal relationship in connection with which the jurisdiction clause was made (ie. the contracts). Rather, it arose out of the fact that Roche Germany had entered into an unlawful price -fixing agreement with others. (This assumes, as I think I must for this purpose, that the claimants’ allegation that Roche Germany was in breach of Article 81(1) is at least arguable).

I should emphasise that in the preceding discussion I have been considering the intention of the parties as a guide to determine the scope of the jurisdiction clauses. I am conscious of the statement of the ECJ in the Hugo Trumpy case at paragraph 51 that the intention of the parties or the party that inserted the jurisdiction clause is not to be considered when determining the validity of the clause. I have not done so in my analysis. But it is quite clear that the intention of the parties is something that can be taken into account when considering the scope of the clause, if that is permitted by the relevant national law.

Conclusion: I conclude, on the basis of the material available to me now, that the scope of the German jurisdiction clauses is insufficiently wide to include the present claims, based on a tort of intent and, effectively, fraud, for breach of Article 81(1) of the Treaty. Therefore the defendants Roche Germany and Rhodia Germany cannot invoke Article 23 of the Regulation and rely on the German jurisdiction clauses. It follows that the claimants can rely on Article 6(1) of the Regulation to sue those defendants in England.

French jurisdiction clauses appear in the following contracts in the Aventis group actions only:

Folio 470: Contracts were concluded between Provimi Ltd and AAN France in 1998 and 1999 on AAN France’s standard terms and conditions.

Paragraph VII of the 1998 edition of the conditions provides (in translation):

Paragraph 9 of the 1999 edition of the conditions provides:

In Folio 475: Contracts were concluded by AAN France with Trouw UK and Trouw Germany during both 1998 and 1999. These incorporated both the 1998 and 1999 editions of the standard terms of AAN France, as set out in (1) above.

The Aventis’ defendants’ arguments: Mr de la Mare’s principal submissions were as follows:

The jurisdiction clauses fulfil the formal requirements of Article 23 of the Regulation. Therefore it is for the claimants to show that they have “much the better of the argument” that, applying French law principles, the present claims do not fall within the scope of the jurisdiction clauses. The claimants do not have the better of the argument at all.

The arguments between the experts on French law centre on the nature of the claims that are made by the claimants in these actions. Both experts have analysed the character of the claims by reference to French law principles and concepts. The Aventis defendants’ expert, Professor Hélène Gaudemet – Tallon, argues that, as a matter of French law, these claims are formally contractual.

Professor Gaudemet – Tallon offers two analyses, whilst making no comment as to which one is to be accepted. In the first the contracts are regarded as valid but the price fixed by the defendant companies at the time of the sale of the vitamins was not fixed “in good faith” because of the cartel agreement. This means that there has been a contractual failure to fix a fair price, so that the claim for compensation is a contractual one, not a delictual one. (Footnote: ¹⁶⁵) Alternatively if the contracts for the sale of the vitamins are to be regarded as invalid because the consent of the buyers was vitiated (because the prices were fixed by a secret cartel) then the remedy of the buyers is founded on unjust enrichment. The claim would be in quasi – contract. As a matter of French law, if there is no contract, then as far as the effects of the obligations are concerned, “everything occurs as if the contract had been concluded”. Therefore, as the jurisdiction clause is a part of the contract, the action has to proceed as if that had been concluded. (Footnote: ¹⁶⁶)

Professor Gaudemet – Tallon argues that contractual claims are clearly within the scope of the 1999 jurisdiction clause terms, although she does not rely on any particular principles of French law in reaching that interpretation. She relies on the wording of the clause which refers to the Paris court having exclusive jurisdiction “over all and any disputes arising herefrom”. (Footnote: ¹⁶⁷) So far as the 1998 terms are concerned, if it is assumed that the contracts were invalid, then the claims would still be within the terms of the jurisdiction clause, even though it covers only “disputes relating to the fulfilment or interpretation of our sales agreement”. This is because (a) the parties must have intended to give the French courts exclusive jurisdiction over all potential disputes concerning the contracts of sale; or (b) as the claim is one for compensation rather than a declaration that the contract is invalid, it should be assumed that the clause covers such claims. (Footnote: ¹⁶⁸)

To the extent that the claimants’ expert, Professor Hervé Lécuyer attempts to argue that in French law a jurisdiction clause is not valid in respect of claims in tort, this must be wrong, since all issues concerning the validity of jurisdiction clauses are determined exclusively by Article 23 of the Regulation. (Footnote: ¹⁶⁹)

The claimants’ arguments: Mr Carr’s main submissions were:

The issue concerns the scope of the jurisdiction clauses. The Aventis defendants appear to accept that if the nature of the claims is delictual then the scope of both the 1998 and the 1999 versions of the jurisdiction clauses is not broad enough to cover the current claims. (Footnote: ¹⁷⁰)

Professor Lécuyer’s evidence is that, as a matter of French law, an action for damages for breach of Article 81 of the Treaty is an action in delict, based on Article 1382 of the French Civil Code. (Footnote: ¹⁷¹) This is because the wrong (or “dol”) is committed by virtue of the pre – existing secret cartel, which fixed the price even before the various contracts were concluded. Moreover the sellers’ silence about the cartels constituted fraudulent non – disclosure. A claim for damages based on fraudulent non – disclosure is based on either Article 1382 or Article 1116 of the French Civil Code. (Footnote: ¹⁷²) Neither is contractual.

Professor Lécuyer submits that French case law is unanimous that jurisdiction clauses “do not apply” in the context of a tortious action. He accepts that under the regime of the Brussels Convention (now Regulation 44) the validity of a jurisdiction clause in a contract cannot be attacked simply because a party makes a claim to annul a contract. But, he submits, the Cour de Cassation has now stated in two cases that the scope of a jurisdiction clause depends on its wording; and the present wordings do not cover claims in delict. (Footnote: ¹⁷³)

Discussion

The problem of “characterisation” of the claim. Both parties’ French law experts have written reports analysing the nature of the claims, upon which, they both say, depends whether the jurisdiction clauses will apply to the claims as characterised by each expert. I asked both Mr Carr and Mr de la Mare whether there was any guidance, either from the ECJ, or in English domestic law, on which system of law should be used in the current circumstances to decide on the nature, or characterisation, of the claims made by the claimants for the purposes of determining whether the claims were within the scope of the jurisdiction clauses.

Both replied that they were unaware of any case law on the subject, other than the broad principles laid down by the ECJ in the Powell Duffryn, Benincasa and Hugo Trumpy cases. They do not take the matter beyond the general observations that it is for a national court to consider, according to its laws, the issues of (a) whether the dispute arises out of the legal relationship in connection with which the jurisdiction agreement was made and (b) the scope of the jurisdiction agreement.

Traditionally the process of “characterisation” of a claim or an issue has been undertaken by courts in order to decide which rule of conflicts of laws applies to provide the “connecting factor” between the issue and the system of law to determine it. Then the appropriate choice of law will be applied. (Footnote: ¹⁷⁵) It is accepted in English conflicts of laws that the question of “characterisation” should be undertaken using the concepts of the law of the forum. But when an English court has the task of finding the appropriate law to apply to a particular issue it should employ a “broad internationalist spirit” (Footnote: ¹⁷⁶)

In the present case the aim is not to decide and apply the correct system of law to an issue. It is to decide whether jurisdiction clauses in various contracts, governed by French law and entered into by parties of different domiciles, cover a claim that has been framed in English proceedings according to English law concepts. For the present the defendants have not attacked the conceptual basis on which the claimants have put their case for damages for breach of Article 81. In other words the defendants appear to accept that it is theoretically possible for these claimants to make a claim against some or all of these defendants for damages for breach of Article 81, using the English law concept of a claim for breach of statutory duty. (The defendants have, of course, argued that the claimants cannot establish the necessary ingredients in order to succeed against some defendants, but that does not detract from their acceptance of the “cause of action” in English law in principle).

It seems to me that, given the general guidance of the ECJ in the cases referred to above, I have to start the enquiry by asking: what is the particular issue at stake here? The answer is: the scope of the jurisdiction clauses in contracts which, it has been assumed, are governed by French law.

The next question must be, I think: are there any principles by which the French courts determine the scope of a jurisdiction clause in contracts. The answer, which is implicit in the approach of both French law experts, although neither of them spells it out, is: the character of the claim must be ascertained. That “characterisation” will assist in answering whether the particular dispute falls within the scope of the jurisdiction clause in question.

At one stage in the argument it seemed to me (although not encouraged by either side) that this issue of “characterisation” should be done by asking, what is the nature of the principal claim as characterised by the law of the forum, ie. English law. (Obviously, if the claimants’ principal claim were characterised using English law concepts then it would be regarded as a claim in tort). But I have concluded that this approach would be wrong. It forgets the object of the exercise, which is to determine whether the present dispute falls within the scope of the jurisdiction clauses being considered.

Approach of the French Experts: There is an immediate difficulty for the French lawyers, of course, because the claims are pleaded in exclusively English law terms. There is the further difficulty in that, whilst both Professor Lécuyer and Professor Gaudemet – Tallon have said that the key issue is the nature of the claim, neither has analysed the claim by reference to the pleadings in the Aventis actions. Moreover, neither expert has pointed to any Articles in the French Civil Code or other general doctrine of French law which might assist me in ascertaining the principles on which a French court would proceed when characterising the present claim. Effectively each has simply argued that a French court would regard the claim as either tortious or contractual in nature.

On consideration of the arguments, I do not find those of Professor Gaudemet - Tallon convincing. On the first assumption Professor Gaudemet – Tallon makes, that the contracts were valid and subsisting, she argues that the claim must be contractual in nature because the Cour de Cassation has stated, (in its decision of 1 December 1995), that if there has been an abuse in setting a price that can only give rise to a claim for rescission of the contract or for compensation. (Footnote: ¹⁷⁷) But that was a case where the price was fixed unilaterally after the conclusion of a valid contract. It is not this case. (Footnote: ¹⁷⁸)

Professor Gaudemet – Tallon’s alternative suggestion is also not persuasive. The claimants have not asserted that the contracts were invalid, or that they seek rescission of them. (Footnote: ¹⁷⁹) Moreover, Professor Gaudemet – Tallon does not positively assert that this is the proper analysis of the claim using French law principles. On the contrary, she specifically “makes no comment as to which one is to be accepted”. (Footnote: ¹⁸⁰)

In her second report, Professor Gaudemet – Tallon suggests that, by virtue of some principle of law of the ECJ, it must be concluded that the current claim is contractual. (Footnote: ¹⁸¹) This is not a matter of French law, but EU law and so not a matter for her to comment upon. However I also note that there is no authority backing this statement, which seems to me to be clearly contrary to the principles laid down by the ECJ that the scope of jurisdiction clauses is a matter for national laws.

As for Professor Lécuyer’s argument, my reaction, inevitably considered from an English lawyer’s standpoint, is that it appears to be more persuasive. The points are not developed much in his two reports, but then there is not much to develop. Overall, for the reasons that Professor Lécuyer has given, I conclude that the probability is that a French court would hold that the nature of the claim in these actions is one in tort.

Have the present disputes arisen out of the relationship in connection with which the jurisdiction agreement was made?

An English court would almost certainly conclude that the present disputes have arisen out of the legal relationship in connection with which the jurisdiction clauses were made. That is because an English court would say that, broadly speaking, the present disputes arise out of the contracts for the sale of the vitamins. But I doubt whether I am entitled to take simply the English court’s approach. I think that I have to have regard to the fact that if the nature of the claim is tortious, then a French court would be inclined to say that the dispute arises out of the tort, ie. the fact that the sellers allegedly entered into illegal cartels and imposed illegal prices as a result. However, I propose to leave this issue as undecided, given the lack of French expert evidence on the point.

What is the scope of the jurisdiction clauses?

The 1998 wording is undoubtedly not as broad as the 1999 wording. It gives exclusive jurisdiction to various French courts for “any disputes relating to the fulfilment or interpretation of our sales agreements”. If I were interpreting this clause simply from the standpoint of English law, then I would hold that it is insufficiently broad to encompass a claim for damages based on an alleged breach of statutory duty because of an infringement of Article 81. A dispute about such a claim does not relate to the “fulfilment” or the “interpretation” of he sales contract. It relates to the alleged fixing of prices before the contracts were concluded by virtue of an illegal cartel.

There is nothing in any of the French experts’ reports to indicate that the French courts would interpret the scope of the clause any more widely. So I hold that the scope of the 1998 edition is insufficiently wide to cover a claim for breach of statutory duty based on an infringement of Article 81. I reach the same conclusion, for comparable reasons, insofar as the claim is based on unjust enrichment.

The 1999 edition wording is broader. It provides for exclusive jurisdiction over “all and any disputes arising herefrom”. “All and any disputes” is a very broad phrase. So the issue is how to interpret the words “arising herefrom”. As I have already stated, an English court might well hold that the present dispute arises from the contracts for the sale of the vitamins. Historically the courts have given the words “arising from” a broad meaning, particularly in the context of arbitration clauses. However, there can be debate on whether a dispute over a claim for damages for breach of statutory duty based on infringement of Article 81 constitutes a dispute “arising from” a contract. It can be argued that the dispute arises from the pre – existing illegal cartel which set the allegedly exorbitant prices for the vitamins. If, as I have held, such a claim would be characterised by a French court as tortious, then it is implicit in the approach of both French law experts that a French court would hold that the 1999 edition of the jurisdiction clause is insufficiently broad in scope to cover the present claims.

Conclusion: Looking at the position overall I have to ask: have the claimants got “much the better of the argument” that the French jurisdiction clauses do not apply to the claim as it is currently pleaded? In my view they have. My conclusion is based, ultimately, on two points. First, that the principal claim is a tortious one, not a contractual one. Secondly, given that characterisation of the claim, then the scope of the two forms of jurisdiction clause, as they would be interpreted by a French court, is insufficiently wide to embrace the claims as pleaded. Accordingly AAN France is not entitled to rely on Article 23 of the Regulation and the French jurisdiction clauses. Therefore the claimants Provimi UK (in Folio 470) and Trouw UK and Trouw Germany (in Folio 475) can rely on Articles 5(3) and/or 6(1) of the Regulation to sue AAN France in England.

My conclusions on the various issues are therefore as follows:

I reject the applications of the Roche and Aventis groups (in Folios 473 and 475) to strike out or dismiss the claims of Trouw Germany against, respectively, Roche UK and Rhodia UK.

I reject the submission, made in Folio 475, that Trouw Germany cannot invoke Article 6(1) of the Regulation to join AAN France, Aventis France and Rhodia Germany in that action.

I hold that the Swiss jurisdiction clauses are insufficiently wide to include the present claims in tort for damages for alleged infringement of Article 81(1). Therefore the defendants Roche Switzerland and Roche Vitamins Switzerland (in Folios 473 and 476 respectively) cannot invoke Articles 17and the claimants can invoke Article 5(2) or 6(1) of the Lugano convention and sue those defendants in the English courts.

The German jurisdiction clauses are insufficiently wide to include the present claims, which are (effectively) based on a tort of intent and fraud, for damages for infringement of Article 81(1). Therefore the defendants Roche Germany and Rhodia Germany (in, respectively, Folios 476 and 475), cannot invoke Article 23 of the Regulation and rely on those clauses. It follows that the claimants can rely on Article 6(1) of the Regulation and sue those defendants in the English proceedings.

The French jurisdiction clauses are insufficiently wide to cover the present claims, which would be characterised by a French court as claims in tort. Therefore AAN France is not entitled to rely on Article 23 of the Regulation and the French jurisdiction clauses. The claimants Provimi UK (in Folio 470) and Trouw UK and Trouw Germany (in Folio 475) can rely on Articles 5(3) and/or 6(1) of the Regulation to sue AAN France in England.

Once again I express my thanks to all counsel for their helpful and very interesting submissions in this case.