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Indirect harm sufficient to found jurisdiction for antitrust claim

15 January 2014

In the case of Deutsche Bahn AG & 30 ors v Morgan Advanced Materials plc (formerly Morgan Crucible Co plc) & 5 ors [2013] CAT 18, 15 August 2013, the Court of Appeal held that jurisdiction to bring a follow-on anti trust damages action can be established under Article 5(3) of the Brussels Regulation (the Regulation) even where the claimant is not an immediate (direct) victim of the harmful event in question. This is the first ruling of this type on Article 5(3) in the context of anti trust damages actions and will aid the establishment of English jurisdiction for such claims.


Under Rule 31 of the Competition Appeals Tribunal (CAT) Rules 2003, a claimant may bring a “follow-on” antitrust damages action in the CAT under s47A Competition Act 1998, ie following on from an infringement decision by the European Commission (the Commission) or Office of Fair Trading, within two years of that decision.

In a decision dated 3 December 2003 (the Decision), the Commission found that seven addressee companies of the Decision had breached Article 101(1) of the Treaty on the Functioning of the European Union by engaging in anti-competitive behaviour in relation to electrical and mechanical carbon graphite products. Thirty claimants, which either purchased the products that were the subject of the anti-competitive behaviour identified in the Decision, or goods or services incorporating those products, began a damages action in the CAT against six of the addressees of the Decision for damages in respect of an alleged “overcharge” the claimants suffered as a result of the anti-competitive behaviour identified in the Decision, ie the difference between the amounts actually paid by the claimants for the relevant products, goods or services, and the lesser amounts they claim they would have paid in the absence of the anti-competitive behaviour. Five of the 30 claimants are domiciled in the UK (the UK Claimants). Morgan Advanced Materials plc (Morgan) is the only defendant domiciled in the UK. The other defendants (the Non-UK Defendants) are each domiciled in other Member States of the EU.

Jurisdiction – Morgan an anchor defendant?

The claimants sought to establish jurisdiction against all of the defendants on the basis of Article 6(1) of the Regulation (namely, “a person domiciled in a Member State may…be sued…where he is one of a number of defendants, in the courts for the place where any one of them is domiciled, provided the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings”), making Morgan, as the only UK domiciled defendant, the “anchor defendant” on which jurisdiction of the English court for the claims against all of the Non-UK Defendants was established.

Morgan sought an order from the CAT that the claim against it had been brought out of time. That claim was successful before the CAT but unsuccessful before the Court of Appeal. Morgan obtained permission to appeal to the Supreme Court. That hearing is listed for March 2014. If Morgan’s appeal is successful before the Supreme Court, such that it is held that the claim against it was brought out of time, the claimants will no longer be able to rely on Article 6(1) to establish jurisdiction of the CAT against the Non-UK Defendants.

The CAT stayed the proceedings before it pending the Supreme Court’s judgment.

Alternative ground of jurisdiction: Article 5(3) – Place where harmful event occurred

The UK Claimants sought an order from the CAT lifting the stay of their claims against the Non-UK Defendants on the basis that regardless of Morgan’s appeal before the Supreme Court, the CAT would have jurisdiction in respect of the claims by the UK Claimants against the Non-UK Defendants under Article 5(3) of the Regulation because, in summary, the relevant harm was suffered in the UK.


Article 5(3) of the Regulation

Article 5(3) states:

“A person domiciled in a Member State may, in another Member State, be sued:….in matters relating to tort…in the court for the place where the harmful event occurred or may occur.”

In accordance with Case 21/76 Bier BV v Mines de Potasse d’Alsace SA [1976] ECR 1735, “…the place where the harmful event occurred…” has two limbs, ie:

(a) the place where the event which gave rise to the damage occurred; and/or

(b) the place where the damage occurred.

In their application to lift the stay of their claims, the UK Claimants relied only on the second limb.

The CAT’s decision

The CAT held that it had jurisdiction to hear the UK Claimants’ claims against the Non-UK Defendants under Article 5(3) and lifted the stay of these claims. Permission to appeal this decision was sought from the CAT. Permission was refused. Permission to appeal was subsequently sought from the Court of Appeal.

Application for permission to appeal before the Court of Appeal

The primary question raised in the application for permission to appeal before the Court of Appeal was whether it is arguable that it is only damage suffered by a direct purchaser from a cartelist which is sufficient to establish jurisdiction under Article 5(3). The Applicants submitted that damage suffered by an indirect purchaser is jurisdictionally irrelevant. In so doing, the Applicants claimed that the damage relied upon by the UK Claimants was indirect in two different senses:

(a) purchases from a subsidiary of a cartelist do not give rise to direct harm to the purchaser, ie damages suffered in consequence of purchases from a subsidiary which was not, itself, an addressee of the Decision could not be relied upon by the purchaser to establish jurisdiction under Article 5(3) in respect of a claim to recover damage or compensation from the cartelist; and

(b) some of the claims which the UK Claimants wished to bring related to purchases by them of alleged cartelised products from third parties, ie the third parties purchased cartelised products from the addressees of the Decision which were subsequently sold by the third parties to the UK Claimants, such that the UK Claimants were indirect purchasers of the cartelised products and, therefore, indirect victims of harm initially and directly suffered by the direct third party purchasers.

Court of Appeal’s decision – Damage can be direct or indirect

Refusing the application for permission to appeal, the Court of Appeal held that it could “…see no justification for imposing on Article 5(3) a gloss to the effect that…a harmful event must be one of which the putative claimant is an immediate victim. That would involve a search for a connecting factor between the claimant and the putative jurisdiction, rather than a connecting factor between the defendant and the putative jurisdiction, which is what the regulation is concerned with.” Key is whether the damage claimed (whether direct or indirect) occurred in the UK.

Separately, while not considering it a basis for permitting the application for permission to appeal, the Court of Appeal observed that the CAT’s procedure for dealing with applications for permission to serve out of the jurisdiction is evidently more informal than that prescribed in the CPR. In so doing, the Court of Appeal noted that, in their applications to serve the Non-UK Defendants out of the jurisdiction, the claimants relied only on Article 6(1). Only subsequently was Article 5(3) identified. In making its observation, the Court of Appeal commented “…that where one is concerned with the establishment of jurisdiction and thus with the establishment of the precise ambit of the dispute…there is something to be said for requiring a claimant to pin his colours to the mast so that it is clear from the outset over precisely what claims the [CAT] has jurisdiction.”

Finally, the Court of Appeal addressed the question whether, in taking steps in the proceedings as concerns the UK Claimants alone, the Non-UK Defendants will be found to have “entered an appearance” thereby vesting the CAT with jurisdiction in relation to the claims brought against them by the non-UK claimants pursuant to Article 24 of the Regulation (“…a court of a Member State before which a defendant enters an appearance shall have jurisdiction”). The Court of Appeal noted that the CAT thought this risk was fanciful and it agreed.


The judgment is important, particularly in the context of antitrust damages actions. In refusing to adopt a narrow interpretation of Article 5(3), the Court of Appeal gives claimants more options to try to establish jurisdiction in the UK, in turn allowing them to take advantage of the perceived “claimant-friendly” nature of the English judicial system.

Further information

This case summary is part of the Allen & Overy Litigation Review, a monthly update on interesting new cases and legislation in commercial dispute resolution. For more information please contact Sarah Garvey, or tel +44 20 3088 3710.