29/10/2009 - Judge declines stay under Article 28 of the Judgments Regulation

In Cooper Tire & Rubber Company & ors v Shell Chemicals UK Ltd & ors [2009] EWHC 2609 (Comm), Teare J accepted that the English courts had jurisdiction over an action seeking damages in respect of a European cartel and, notwithstanding ongoing Italian proceedings, refused to grant a stay pursuant to Article 27 or Article 28 of the Judgments Regulation.  

The action arose out of the decision of the European Commission (COMP/F/38.638 - Butadiene Rubber and Emulsion Styrene Butadiene Rubber) in which various rubber manufacturers (including the Enichem, Bayer, Dow, Trade-Stomil and Synthos groups of companies) were found to have infringed Article 81(1) of the EC Treaty by entering into an anti-competitive cartel. In July 2007, Enichem brought proceedings in Italy against various tyre manufactuers (that had purchased rubber from the cartel members) seeking negative declarations that (amongst other things) no loss or damage had been caused by the cartel. In December 2007, thee same tyre manufacturers that were defendants in the Italian proceedings (and their affiliates) brought the present proceedings in the English High Court.  The proceedings are brought against the participants in the cartel with the exception of Enichem and seek damages in respect of overcharges said to have been caused by the cartel.  The proceedings brought by Enichem in Italy were subsequently dismissed by the Italian court of first instance but that dismissal has been appealed to the Italian Court of Appeal.

The Dow Defendants contested the jurisdiction of the English Courts to hear the claims against them. Teare J agreed that the Claimants could not establish English jurisdiction on the basis of Article 5(3) of the Judgments Regulation.  Declining to follow Sandisk Corporation v Koninklijke Philips Electronics NV [2007] EWHC 322 (Ch), he found that, in the context of a Europe-wide cartel orchestrated at meetings in several countries, it was not appropriate to find that the place where the harmful event occurred was England on the basis that the first cartel meeting had taken place here. However, the Judge held that the English courts did have jurisdiction on the basis of 6(1) of the Judgments Regulation because, he held, there was a valid claim against at least one UK domiciled defendant.  In particular, following the judgment of Aikens J in Provimi Limited v Roche Products Ltd. [2003] EWHC 961 (Comm), the Judge found that it did not matter that the three English defendant companies (who had been joined as a tactical devise to establish jurisdiction) were not addressees of the Commission Decision and were not alleged to have themselves participated in (or even known about) the cartel.  It was sufficient, the Judge held, that the English subsidiaries were to be regarded as part of the same "undertaking" as the addressees of the Comission decision and that the English subsidiaries had "implemented" the cartel by  selling some of the product in question.

The Dow Defendants further sought a stay under Article 27 of the Judgment Regulation on the basis that, as alleged joint tortfeasors, Enichem and the Defendants should be regarded as the same "party" within the terms of that provision.  Teare J declined to grant a stay on the grounds that it would not be just in the present case to regard Enichem as bound by a decision against the Defendants or as indissociable from them.  However, in respect of certain of the claims against Dow Europe (where the Italian court was first seised) the Judge held that he was obliged to grant a stay under Article 21 of the Lugano Convention (the equivalent of Article 27).

Both the Dow and Bayer Defendants further sought a stay under  Article 28.  In this regard, Teare J granted permission to the Bayer Defendants to bring their application for a stay out of time but declined to grant such a stay in favour of the Italian courts.  The Judge recognized that the Italian courts were first seised, accepted that the English and Italian proceedings were very closely related and that Italy was more proximate to the dispute. However, having specific regard in particular to the dismissal of the claims in Italy at first instance and to the length of time it would take to obtain a judgment on the merits in Italy, the Judge held that it was not appropriate to grant a stay. 

The Judge granted permission to appeal (on the application of Articles 6, 27 and 28 of the Judgments Regulation) and permission to cross appeal (on the application of Article 21 of the Lugano Convention)