Limitation and foreign follow-on actions
19 October 2016
Two recent attempts to hedge limitation risk in follow-on claims by commencing proceedings in the UK High Court and the UK Competition Appeal Tribunal have failed. The Tribunal ruled that a claim, based on foreign law, brought before the Tribunal is subject to the same limitation rules applicable in court (based on the Foreign Limitation Periods Act). The limitation regime contained in the Tribunal rules (which may be more favourable) does not oust applicable foreign law limitation rules under the Act: Deutsche Bahn AG & ors v MasterCard Incorporated & ors;  CAT 13, 27 July 2016; Peugeot Citroen Automobiles UK Ltd & ors v Pilkington Group Ltd & anr & Asahi Glass Co Ltd & ors (Rule 39 Defendants)  CAT 14.
Two recent cases have given rise to similar issues regarding limitation periods in follow-on claims involving foreign law (eg a claim for breach of Belgian competition rules). In both cases the claimants sought to take advantage of a potentially more favourable limitation regime in the Tribunal, than in the English High Court.
Limitation for foreign law claims in English court
A foreign law claim brought before the English courts is subject to foreign law rules on limitation, unless it is a matter where the foreign law and English law are required to be taken into account (with a saving for public policy).1
Special limitation provisions before the Tribunal
A special limitation regime applied to claims in the CAT prior to 1 October 2015, due to the fact that its jurisdiction was limited to follow on competition claims (claims based on a decision of the regulator). Instead of the standard court rules on jurisdiction, claimants were entitled to bring claims within two years of the relevant decision becoming final.
It was the potential difference between the limitation regimes in the High Court (based on the Foreign Limitation Period Act 1984) (FLPA) and in the Tribunal (under the 2003 Tribunal Rules) that the claimants in two recent cases sought to exploit. In each case the claims arose pre-1 October 2015 so the limitation regime before the Tribunal was as described above. In both cases the claimants commenced proceedings in the Tribunal as well as the High Court (the former being a strategic hedge in case the foreign law limitation rules, applied in court, did not apply before the Tribunal). The key issue was whether the Tribunal limitation regime precluded the application of the FLPA by the Tribunal.
Deutsche Bahn v MasterCard
The Deutsche Bahn case is a "follow-on" action (ie a claim based on a finding of a regulator), based on a decision of the European Commission adopted on 19 December 2007 with a final appeal dismissed by the Court of Justice of the European Union on 11 September 2014.
The Commission found that the MasterCard payment organisation and the legal entities representing it (the defendants) infringed competition law by arrangements relating to the "Intra-EEA fall-back interchange fee". In effect, these arrangements were found to set a minimum price merchants had to pay their bank for accepting MasterCard or Maestro branded cards in certain circumstances. The claimants, comprising around 1000 entities from six large corporate groups, claim for losses suffered in 17 countries between 1992 and 2007.
In the High Court, MasterCard had a valuable limitation defence, based on foreign law limitation rules.
Tribunal proceedings were therefore commenced on a protective basis by the claimants, in case the applicable limitation rules before the Tribunal were more favourable.
Peugeot Citroen v Pilkington
The Pilkington case is another "follow-on" action based on a decision of the European Commission adopted on 12 November 2008 relating to a cartel operating in the automotive glass sector from 1998 to 2002. Pilkington’s appeal to the General Court was dismissed on 17 December 2014, and no further appeals on the findings are pending.
The claimants commenced proceedings in the High Court on 4 November 2014, and then in the Tribunal on 18 December 2015. The claimants contended that the applicable law was English law, but the defendants contended that the governing law was French law for eight out of the nine claims and Swedish law for the final ninth claim. If the defendants were right about the governing law, there was therefore arguably a more favourable limitation regime for the claimants before the Tribunal because the French and Swedish limitation rules were stricter.
Tribunal limitation rules do not oust foreign limitation rules
In both cases the claimants argued that the 2003 Tribunal Rules provided a complete and comprehensive code, and that the FLPA did not apply. As a consequence of the 2003 Tribunal Rules (which permitted a claim to be brought within two years of the relevant decision becoming final), said the claimants, both the present proceedings were within time, irrespective of any foreign law rule. In each case the relevant decision had become final within two years of the start of proceedings in the Tribunal.
The defendants, by contrast, argued that the position on limitation before the Tribunal should be no different from the position before the High Court. Even if the claimants were entitled to start their claims before the Tribunal by virtue of the 2003 Tribunal Rules, the foreign law rules on limitation were available as a defence to the action, and nothing in the Competition Act or the Tribunal Rules suggested otherwise.
The Tribunal agreed with the defendants. It found that the wording of the FLPA was not limited, and applied generally to proceedings in England and Wales. The limitation regime in the Tribunal Rules meant that the claimants were entitled to start their claims in the Tribunal (as they were within time for the purpose of the 2003 Tribunal Rules), but those Rules did not oust the limitation defence available to the defendants, based on the general applicability of the FLPA. The words of the Competition Act and the Tribunal Rules were not enough to create a complete code that ruled out the application of the FLPA.
One interesting point that was clarified by the Tribunal, is that the effect of its decision is that a "stand-alone" claim brought after 1 October 2015, but which arose before 1 October 2015, may be in time by reason of the foreign limitation period, where it would not otherwise be in time under the Tribunal Rules. The Tribunal also noted that a claim for collective proceedings, if governed by foreign law, could be in time in circumstances where it would be otherwise barred under the Tribunal Rules. The Tribunal noted that this disparity was inherent in the fact that rules on limitation are different in different legal systems, but it means that the Tribunal’s jurisdiction is "wider" for certain foreign law claims than it would be for domestic law claims.
The decision is important as it clarifies that foreign law limitation defences apply to foreign law competition claims brought in the Tribunal, as before the High Court. The availability of this defence may favour defendants, but it is also potentially advantageous to claimants, depending on the terms of the relevant foreign law. For example, the current statutory limitation period for a damages claim based on the Swedish Act on Competition 2008 is ten years from the time the damage was caused.
The potential applicability of foreign law limitation periods to collective actions will also be of interest to claimants and defendants, although it remains to be seen how frequently this point will arise in practice. For "opt-out" collective proceedings, class members are restricted to UK domiciled persons, so the number of potential foreign law claims in that form of collective proceedings may be limited.
1 Section 1 of the Foreign Limitation Period Act 1984 (FLPA), Equivalent provision is made in Scotland by the Prescription and Limitation (Scotland) Act 1984, and in Northern Ireland.
2 This does not consider the period prior to 20 June 1997. This falls under a different rule, which is not considered in this judgment.
This case summary is part of the Allen & Overy Litigation and Dispute Resolution Review, a monthly publication. For more information please contact Amy Edwards firstname.lastname@example.org, or tel +44 20 3088 3710.