The one sorry outcome of [2017] EWHC 374 (Ch) Microsoft (Nokia) v Sony is that by rejecting jurisdiction, the Commercial Court did not have an opportunity to review the application of Rome II’s provisions on applicable law in the case of infringement of competition law.
The following background is by Kirsty Wright, who also alerted me to the case: the claim centred on allegations by Microsoft (who had acquired Nokia of Finland) that the Defendants had caused loss by engaging in anti-competitive conduct relating to the sale of Li-ion Batteries over a period of 12 years. In 2001 Nokia and the Sony Corporation (the mother corporation: with seat outside of the EU) concluded a Product Purchase Agreement for Li-ion Batteries. This agreement contained an English choice of law clause and required any dispute to be resolved by way of arbitration in the International Chamber of Commerce (ICC). Microsoft became the assignee of these rights following its purchase of parts of Nokia in 2013 and therefore could bring claims in contract against Sony Corporation and claims in tort against the other three Defendants. Sony Corporation is a subsidiary of Sony Europe Limited: it is the anchor defendant in this case: none of the corporations other than Sony Europe are domiciled in the EU.
Smith J in a lengthy judgment determined that the agreement between Microsoft and Sony Corporation to arbitrate in the ICC also extended to the parent company Sony Europe. Therefore proceedings against all defendants were stayed in favour of ICC arbitration subject to English law. This required him first of all to hold that under English law, the arbitration agreement (as opposed to, under EU law, for the issue of choice of court: see CDC) extends to non-contractual obligations (infringement of competition law evidently not being part of one’s contractual rights and obligations; see here for a review of the issues; in Dutch I’m afraid: must find time for an EN version) but also that the clause extended to the mother company: hence releasing the jurisdictional anchor.
Microsoft had anticipated such finding by suggesting such finding may be incompatible with EU law: its contention was that the operation of the Brussels I Regulation (Recast) must permit the effective protection of rights derived from competition law, including private law rights of action for infringement, these being rights accorded by EU law, and that an arbitration clause which caused the fragmentation of such rights of action was, for that reason, in breach of EU law (at 76). It made extensive reference to Jaaskinen AG’s call in CDC for the Brussels I Recast to be aligned with Rome II’s ambition to have one single law apply to the ensuing tort. (The jurisdictional regime as noted leads to a need to sue in various jurisdictions).
As I have noted in my review of the CJEU’s judgment, on this point the Court however disagreed with its AG. Indeed while the AG reviews and argues the issue at length (Smith J recalls it in the same length), the Court summarily sticks to its familiar view on the application of (now) Article 7(2) in competition cases; it is the CJEU’s view which the Commercial Court of course upholds.
A great case, extensively argued.
Geert.
(Handbook of) EU Private International Law, Chapter 2, Heading 2.2.9.1; Heading 2.2.9; Chapter 4, Heading 4.6.2).
Image may be NSFW.
Clik here to view.
