Arbitration and Antitrust An overview of EU and national case law

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that it was contradictory that the award declared the contract void while still ordering payment, and annulled the award. The Cour de Cassation reversed, on the basis that the payment was not in the nature of damages for breach of contract, but rather an attempt to reconstruct the position that would have prevailed if the parties had not acted in accordance with the contract. In a 2004 decision [40] concerning proceedings to enforce an arbitration award, the Court of Appeal of Düsseldorf considered the compatibility with EC competition law of an arbitration award rendered in Zurich. It conducted an extensive examination of the evidence, including the hearing of witnesses, and, after a detailed and wide-ranging examination of the legal aspects of the case, concluded that the award accurately applied EC competition law, finding, in particular, that the commercial contract fell within the 1989 know how licensing agreement block exemption. The Court of Appeal of Thüringen, Germany was requested to deny the enforcement of a Swiss arbitration award in the case of A.G. Co v. Sch. AG [41] on the basis, inter alia, that it was contrary to German and EC competition law. The Court determined, even upon “a summary plausibility review” of the award, that the arbitral tribunal in fact had correctly applied German and EC competition law. In coming to this conclusion it referred to the “comprehensive examination” in the arbitral award. The Court moreover observed that at the enforcement stage it was not appropriate to conduct a “new comprehensive examination” of the award’s compliance with competition law. In the Demkolec case [42] the Dutch state agreed principles of compensation to the parent company of the Demkolec coal gasification plant, for its loss in the sale of the plant following an EU regulatory change. The Dutch government assessed this loss within a range, and notified this range to the European Commission as State aid under what is now Article 108 (3) TFEU. The Commission issued a decision approving this State aid, and the Dutch government then made a compensation payment to Demkolec’s parent well toward the high end of the range. Demkolec’s parent felt that this assessment did not reflect a proper application of the agreed principles of compensation, due to a change in circumstances, and claimed for more. The Dutch government and Demkolec’s parent agreed to submit this claim to arbitration in the Netherlands under the rules of the Dutch Arbitration Institute. The arbitral tribunal issued an award granting Demkolec’s parent company much of what it was seeking, as well as compensation for its costs commensurate to its success. The Dutch government resisted enforcement of this award before the Hague District Court, contending that it was contrary to the Commission’s decision. It also notified the payment of the award to the Commission as further State aid. The Hague District Court carefully reviewed each of the alleged points of departure from the Commission’s decision, and found that in fact there was no incompatibility. Moreover, it refused to request the opinion of the Commission, and to defer deciding the matter until the Commission’s decision on the further State aid, on the basis that it could not be ascertained when that would come. This case is therefore one where the court reviewed the arbitration award intensively to ensure that it complied with principles approved by the Commission, but declined to subject it to the higher level control of compatibility with a concrete application of the principles by the Commission since that “evidence” of the law was not available to it within a certain and brief time. In view of the State aids requirements under EU law, it cannot be conceived that the arbitration agreement between the Dutch government and Demkolec’s parent company did not foresee repayment of any State aid which the Commission did not subsequently approve of, although the record of the case gives no such indication. Marketing Displays International v. Van Raalte [43] has the distinction of being the only case to date where a EU Member State court has annulled an arbitration award. In a 2005 decision the Hague Court of Appeal upheld a decision of the Hague District Court [44] denying enforcement of a foreign (unspecified, but apparently somewhere in the US) arbitration award under the public policy g r o u n d i n t h e N e w Yo r k C o n v e n t i o n . Both MDI and VR produced and sold signage products. Under the contract at issue, MDI granted VR a licence to produce and to be the exclusive seller of the products of a German subsidiary of MDI in Benelux. The contract entailed transfer of intellectual property from MDI to VR, and it required that VR transfer the entire interest to MDI of any improvements which VR developed on the intellectual property. This contract was not notified to the Commission under Regulation 17, then in force. During the arbitration, VR did not raise any EC competition law defence. The Court agreed with the court below that the contract did not fall within any block exemption during its lifetime because of the requirement to transfer back IP developments, and that this clause could not be severed. As did the court below, the Court of Appeal of the Hague conducted a searching legal analysis of the impugned contract. It did not need to consider effects on markets though to reach its conclusions. iv. German Law In a decision concerning the enforcement of an arbitral award dealing with German competition law [45] the Oberlandesgericht Dresden accepted that if a German arbitral award offended or neglected to apply German competition law (“verletzt oder übergeht”) it must be annulled as in violation of public policy. Upon a detailed analysis, the Court found this not to obtain in the case before it. The requirement that arbitration awards must not neglect to apply German competition law would suggest a rather searching standard of review is indicated. Under the EU law principle of equivalence, German courts would be required to apply that same intensive standard of review in examining arbitration awards for compatibility with EU competition law. 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 5
!!!"#$%&'(')#*%# Treatment of +,-.-/01-#2(3#4)# Arbitral Tribunals 1. Preliminary References to the European Court of Justice In Almelo [46] the ECJ declared that a Member State court reviewing an arbitration award for compatibility with EU law is not disentitled or released from the obligation to make a preliminary reference under what is now Art. 267 TFEU by virtue of the fact that the arbitral tribunal was authorized to decide according to equitable principles, and in its award in fact did so. In Nordsee [47] the issue arose whether an arbitral tribunal constituted under an arbitration clause in a commercial contract could make a preliminary reference to the ECJ. The ECJ decided that it could not as it was not “a court or tribunal” within the meaning of Art. 267 TFEU, in view notably of the lack of State involvement in the decision to submit the matter to arbitration. On substantially the same reasoning as in Nordsee, in Denuit [48] the ECJ confirmed that arbitral tribunals constituted under an arbitration clause in a commercial contract were not entitled to make preliminary references. 2. Requirements that Arbitral Tribunals raise Antitrust Issues of own Motion Where a state will annul or refuse to enforce an arbitral award for its failure to apply antitrust law, in effect that state is placing the arbitral tribunal under a duty to raise antitrust matters of its own motion. This is because, although it would be rare for an annulment of an arbitral award to have direct personal consequences for an arbitrator, in practice arbitrators do endeavour to render enforceable awards. Thus if they are sitting in a state which will annul the award or if the award is likely to be enforced in a state that will refuse such enforcement, then arbitrators will very often take the necessary measures to ensure the validity of their award. Mitsubishi [49] requires arbitrators to determine any antitrust issues that a party raises. It contains no requirement that courts interfere with arbitration awards in violation of antitrust law where the antitrust argument has not been raised by a party. By consequence, Mitsubishi places no duty upon arbitrators to raise antitrust law of its own motion. Eco Swiss [50] , by contrast, results in a duty under EU law for arbitrators to apply EU competition law, although because of the severely restricted nature of the review of arbitration awards by courts of some Member States transposing that requirement, it may not be a meaningful duty. Under Swiss law, there is no duty on an arbitrator to raise antitrust questions of its own motion. This results in the Swiss Supreme Court’s determination [51] that antitrust is not within the set of norms comprising public policy review. On the other hand, if the antitrust law is part of the law of the contract, and, it would appear even if it is not, Swiss law will not invalidate or refuse to enforce an award on the basis that the arbitral tribunal applied antitrust law on its own motion [52] . !"#$% [1] A number of extracts from ICC arbitration awards dealing with competition law were published in 14/2 (2003) ICC Bulletin. [2] Mitsubishi v. Soler Chrystler-Plymouth, 473 U.S. 614 (USSC, 1985). [3] American Safety Corp. v. J. P. Maguire & Co., 391 F.2d 821 (2nd Cir., 1968). [4] Mitsubishi, case cit. in note 1. [5] Vimar Seguros Reaseguros S.A. v. M/V Sky Reefer, 515 U.S. 528 (USSC, 1995). [6] AT&T Mobility LLC v. Vincent Concepcion et ux., 131 S.Ct. 1740 (USSC, 2011). See Jeffrey May, The US Supreme Court overturns a court of appeal’s decision in the mobile sector holding that federal law preempts state law banning class action waiver in arbitration agreements (AT&T Mobility/Concepcion), 27 April 2011, e-Competitions, n° 39906 and David Draigh, Bryan Merryman, Eric Grannon, The US Supreme Court holds that consumer arbitration clause containing a class action waiver is enforceable (AT&T Mobility, Concepcion), 27 April 2011, e-Competitions, n° 37098. [7] Case cit. in note 5 above. [8] Green Tree Financial Corp.-Alabama and Green Tree Financial Corporation v. Larketta Randolph, 531 U.S. 79 (USSC, 2000). [9] In re American Express Merchants’ Litigation, 634 F.3d 187 (2nd Cir. 2011). See Jeffrey May,A US Court of Appeals holds that a class action waiver provision contained in commercial contracts between merchants and charge card issuer/servicer provider was unenforceable (American Express), 8 March 2011, e-Competitions, n° 36047. [10] Kristian and Masterman v. Comcast Corporation, 446 F.3d 25 (1st Cir. 2006). [11] See case cit. in note 42 below. [12] 505 F.3d 274 (4th Cir. 2007). See Kristen J. McAhren, The US Court of Appeals for the Fourth Circuit holds that parties to an arbitration agreement that prohibited joinder of jointly and severally liable defendants did not alter any substantive right under the Sherman or Clayton Acts (Cotton Yarn Antitrust Litigation), 12 October 2007, e-Competitions, n° 37106. [13] ECJ, June 1st, 1999, Eco Swiss, Case C-126/97, [1999] ECR I-3055. [14] See for example, for France, decision of 19 May 1993 of the Court of Appeal of Paris (Cour d’appel de Paris) in Labinal SA v. Mors and Westland Aerospace Ltd, (1993) Rev. Arb. 645; for Italy, decision of 21 August 1996 of the Italian Supreme Court (Corte di Cassazione) in Telecolor SpA v. Techniocolor SpA (1997), 47 Giustizia Civile (Giust Civ) I-1373; for England & Wales, ET Plus SA and others v. Welter and others [2006] Lloyd’s Rep (Comm) 251; for Sweden, Section 1 (3) of the Swedish Arbitration Act, 1999 expressly recognizes the arbitrability of competition law,see decision of 29 December 2003 of the Court of Appeal for Western Sweden, in Dirland Télécom SA v. Viking Telecom AB,decision T 4366-02, [2005] E.C.L.R. 432, 438. [15] ECJ, October 26th, 2006, Mostaza Claro, Case C-168/05, [2006] ECR I-10421. [16] Council Directive 93/13/EC of 5 April 1993 on unfair terms in consumer contracts ; OJ L 95, 21.4.1993, p. 29–34. [17] ECJ, October 6th, 2009, Asturcom Telecomunicaciones, Case C-40/08. 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 6
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