Arbitration and Antitrust An overview of EU and national case law

More documents

Recommendations

Info

On the other hand, in many cases contracts with consumers will not be enforceable as a matter of EU law. In Mostaza Claro [15] the ECJ held that the arbitration clause in a mobile telephone contract was not enforceable based on protections in the Unfair Contracts Terms Directive [16] . The judgment does not indicate what about the arbitration clause was unfair. In Asturcom [17] , however, the judgment points out that the arbitration clause was invalidated because of the disproportionately high cost of the arbitration, in this case in the consumer’s travelling to the place of arbitration, and the amount in dispute, as well as the fact that the institution which provided the standard-form contract which was the subject of the dispute was also the institution administering the arbitration. C. Swiss Law Under Swiss law, competition law is arbitrable [18] . 2. The Scope of Arbitration Clauses In Mitsubishi, the US Supreme Court rejected the argument that arbitration clauses are to be construed to exclude claims upon statutory rights, such as the rights under the Sherman Act there at issue, unless the arbitration clause expressly includes such claims. The Supreme Court saw no reason to depart from the general principle under the Federal Arbitration Act that “any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration”. In Louis Dreyfus v. Blystad [19] , the Court of Appeals for the Second Circuit held that in determining whether a claim based on the Sherman Act is within an arbitration clause the court should distinguish between broadly worded and narrowly worded arbitration clauses. For the former, even claims on matters “collateral” to the contract, such as those under the Sherman Act, should be presumed to be within the arbitration clause. In JLM Industries v. Stolt-Nielsen [20] , the Court of Appeals for the Second Circuit confirmed this approach, there concerning price-fixing conspiracy claims. Purchasers claiming losses due to horizontal anti-competitive conduct will often each have small value claims subject to arbitration. It is therefore not surprising that the case which came before the US Supreme Court raising the question of how to interpret arbitration clauses in relation to the availability of class action arbitrations involved an antitrust claim. The case was Stolt-Nielsen v. Animal feeds International Corp [21] . The 5 – 3 majority held that one cannot infer the parties’ acceptance of class arbitration from mere consent to arbitrate since class arbitration changes the nature of arbitration to such a great degree. The majority’s reasoning would not appear to apply to inferring intent to consolidate arbitrations providing the number of claimants was not too great. As pointed out by the minority, it would not appear to apply to consumer arbitrations either. There is a series of District Court decisions granting preliminary injunctions to prevent arbitrations by AT&T customers seeking to impede the merger between AT&T Mobility and T-Mobile. In all there were over 1,000 such arbitrations launched each by an individual customer, since the arbitration clause prohibited class arbitrations. The clause also expressly limited remedies in arbitration (and perhaps more generally, a point the court left open) to those necessary to relieve the individual’s prejudice. The best reasoned is the decision of the District Court for the District of Maryland in AT & T Mobility LLC v. Fisher [22] . The District Judge found that the remedy of a preliminary injunction to prevent a merger as in violation of §7 of the Clayton Act is by its nature a public remedy, and extends beyond the relief for any injury which may be caused to the individual plaintiff. As such, this claim is in the nature of a representative action, and is beyond the scope of the arbitration agreement. While this reasoning may not be entirely convincing, this case does raise the important question of the scope of antitrust remedies which may be granted in arbitration. 3. Annulment of and Refusals to enforce Arbitration Awards A. General As seen in section II.A.1. above, Mitsubishi v. Soler [23] contains a footnote about enforcement stating that courts will have no difficulty identifying arbitration awards which fail to deal adequately with antitrust law, and will refuse to enforce such awards. Eco Swiss [24] is a case on availability of annulment of an arbitration award contrary to EU competition law. Nonetheless, in that case the ECJ went out of its way to say that all of the then Member States were signatories to the New York Convention, and that EU competition law must be treated as public policy matters within the meaning of the New York Convention [25] . The Swiss Supreme Court held [26] that competition law is not of sufficient importance, is insufficiently applicable around the globe, and that there is too much variance among competition law systems for an arbitration award’s incompatibility with competition law to form the basis of a public policy annulment or refusal to enforce an arbitral award. B. Standard of Court Review of Arbitration Awards for Compatibility with Antitrust Law i. US Law As seen above, Mitsubishi v. Soler [27] is largely silent on the question of the standard of review of arbitration awards at the annulment and enforcement stages, in relation to antitrust law. Clearly though, the suggestion there is that the reviewing court need only verify that antitrust, where raised, has been dealt with by the arbitral tribunal, and need not enquire into how the tribunal dealt with it. Arbitration and Antitrust: An overview of EU and national case law PHILLIP LANDOLT l 13 April 2012 l e-Competitions l N°45083 l www.concurrences.com 3
In Baxter v. Abbott Laboratories [28] , Easterbrook, Circuit Judge for the majority of the Court of Appeals for the Seventh Circuit cited Mitsubishi as authority for declining to review the treatment of antitrust law in an arbitral award on the basis that the arbitrators had dealt with antitrust law in the arbitration, and moreover, there was no violation anyhow. Cudahy, Circuit Judge dissented, contending that the court was obligated “[to] examine the effect of the outcome commanded by the arbitral award”. ii. EU Law The standard of review under EU law is a much more debated matter. In Eco Swiss the ECJ refers to such review as being “more or less extensive depending on the circumstances” [29] . But this comment is made in the context of the Member State court’s review as it exists without regard to whatever requirements there may be under EU law. By consequence, Eco Swiss is entirely silent on the issue of standard of review. Subsequent cases dealing with the review of international arbitration awards add extremely little. This is not the same as saying that the EU legal order makes no demands as regards Member State courts’ standard of review. Rather, the matter is almost entirely open and on appropriate occasion will be settled by the ECJ. The case of Mostaza Claro [30] is often taken to have built upon Eco Swiss, but the requirements upon EU Member States issuing from the latter operate upon the EU law principle of equivalence, whereas Mostaza Claro is a case where EU law norms apply to require Member State courts pro-actively to ensure consumer protection by raising such matters of their own motion. In that case the consumer participated in the arbitration, and did not there impugn the arbitration clause as unenforceable under the directive until the stage of enforcement before the Spanish courts. So the significance of Mostaza Claro is limited to consumer arbitrations. On the other hand, Asturcom [31] does build upon Eco Swiss in the sense that it is relevant to international arbitration generally, and not just in the consumer protection context. This is because it operates upon the principle of equivalence, which of course is generally applicable in relation to Member State review of international arbitration awards. It would appear to stand for the proposition that the court requested to enforce an arbitration award is required to raise the public policy point of its own motion, “where it has available to it the legal and factual elements necessary for the task” and insofar as “under national rules procedure, it can carry out such an assessment in similar actions of a domestic nature”. The source of the limitation where it “has available to it the legal and factual elements necessary for the task” is an earlier consumer protection case relating to choice of court jurisdiction (and not arbitration) [32] . It would appear that this wording will be relevant when the question of the standard of Member State public policy review of international arbitrations finally arrives before the ECJ. iii. EU Member State Law transposing EU Law There is by now a significant corpus of Member State court decisions on the standard of public policy review of EU law aspects of international arbitration awards. In Thalès [33] the Paris Court of Appeal expressed the surprisingly absolutist view that EU law does not interfere with the procedural rules governing the enforcement of arbitral awards by EU Member State courts. From this it concluded that EU law permits Member State public policy review of arbitration awards to operate in regard to EU competition law indistinguishably from how it operates generally. The court then recited the French standard of review of international arbitration awards, which are thereby left undisturbed insofar as they disclose no “flagrant effective and concrete” violation of public policy. The court found that there was no such violation on the following evidence. First, the basic features of the arbitration, like the counsel of the party now raising the competition law point, the arbitrators, and the arbitral institution did not suggest any incapacity to deal with EC competition law such that if there had been an obvious competition law problem on the facts it would have been raised in the arbitration. Secondly, the court turned to the evidence of violation extending from the parties’ submissions before it. The court noted that there may be a competition law justification for the restrictive provisions, for example the development of a new missile and that the parties may actually be active in two different but adjacent markets. Somewhat inappositely, the court added that Thalès, the party seeking the competition law remedy, might bear “significant responsibility” for any viol a t i o n , a p p a re n t l y w i t h i n t h e m e a n i n g o f Courage v. Crehan [34] , although the issue here was invalidity of the contract, and not a claim in damages. The Cour de cassation confirmed this uniquely lax standard of review in the Cytec [35] case. It also found there that damages aspects of EU competition law are not public policy matters for the purpose of the review of international arbitration awards. In Italy, the Milan Court of Appeal examined [36] whether an arbitral award “neglected, failed to apply, or was contrary” to EU competition law. It examined the “logical progress” and “legal foundations” of the award in coming to this conclusion. The analysis there was therefore purely legal, with an acceptance of the facts as found in the court below. This case follows a decision of the Court of Appeal of Florence on the same issue, of confusing reasoning, but at all events tending to the conclusion that review must be tightly circumscribed [37] . In SNF v. Cytec first the Brussels Court of First Instance [38] and then the Brussels Cour de Cassation [39] considered a request for annulment of an arbitration award in which the arbitral tribunal, a member of which was a former Competition Commissioner of the EU, found that a contract was invalid as in violation of Art. 101 TFEU, but still awarded damages. Contradiction in an award is a specific ground of annulment under Belgian arbitration law. The Brussels Court of First Instance found Arbitration and Antitrust: An overview of EU and national case law PHILLIP LANDOLT l 13 April 2012 l e-Competitions l N°45083 l www.concurrences.com 4
Page 1 and 2: Arbitration and Antitrust: An overv
Page 3: tions, but the one it considered th
Page 7 and 8: !!!"#$%&'(')#*%# Treatment of +,-.-
Page 9 and 10: e-Competitions is the only online r

Arbitration and Antitrust An overview of EU and national case law

Create successful ePaper yourself

Delete template?

Save as template?