This paper – which can be found here – contains a discussion of the recent CDC decision by the Court of Justice of the European Union.
It begins with an overviews of debates about the arbitrability of competition law. Whether competition law matters are arbitrable is a question that is connected to a longstanding debate on the ‘public policy’ nature of competition law (which flows from the wording of the New York convention, but we do not need to go there now). It is widely accepted that while many matters may be subject to arbitration, difficulties arise where a dispute concerns a matter of public importance – such as criminal law or insolvency.
For a long time, competition law matters were not allowed to be subject to arbitration on both sides of the Atlantic. In the 1980’s, the US Supreme Court reversed course and explicitly held that competition matters were arbitrable. In Europe, the arbitrability of competition law was implicitly acknowledged by the Eco Swiss case (and a few other cases since then). This section further reviews case law from a number of Member States confirming the arbitrability of competition law.
Secondly, the paper describes the debate on the arbitrability of disputes relating to Art. 101(3) TFEU, which was also resolved in favour of arbitrability. This debate arose as a consequence of the European Commission’s exclusive competence to assess Art. 101(3) TFEU exemptions before 2004. There is not much to say here: as far as I can tell, the arbitrability of Art. 101(3) TFEU is no longer in doubt.
Thirdly, the author discusses the impact of contractual clauses on the arbitrability of tort claims. This section begins with the observation that, in the absence of a pre-existing contractual relationship between the parties, it is highly unlikely that a claim based on competition law will be go to arbitration. Claims for damages by a competitor against colluding undertakings or against a dominant company will generally not be covered by an arbitration clause. This is the case even though a substantial number of jurisdictions contain ‘pro-arbitration’ presumptions, whereby an arbitration clause should be interpreted expansively to include disputed claims in the event of doubt.
In short, the wording of arbitration clauses – which are unlikely to explicitly refer to competition matters – is crucial to determine whether a claim can be subject to arbitration.
This brings us to the recent CDC case, where the question for the court was: ‘whether the principle of effectiveness of EU competition law allowed account to be taken of arbitration and jurisdiction clauses contained in contracts for the supply of goods, where this has the effect of excluding the jurisdiction of a court’.
The paper first reviews the Advocate General’s Opinion – who held that: ‘it would be contrary to the effectiveness of the prohibition of anti-competitive agreements to allow a defendant to rely on an arbitration clause to exclude the jurisdiction of a national court under the Brussels I Regulation when the party against whom that clause is relied upon was, at the time of entering into the contract containing the arbitration clause, unaware of the unlawful agreement in question and of its unlawful nature and could not have foreseen that the arbitration clause would apply to a claim for damages in tort based on such an agreement.’
The European court held, in turn, that the: ‘exclusive jurisdiction clauses […] contained in the supply contracts between the claimants and the defendants could not cover claims in tort for breach of competition law unless competition disputes were expressly covered by the clause.’
The next section is devoted to a discussion of what impact – if any – this decision may have on the construction of arbitration clauses. For reasons too technical to describe here, the author argues that the judgment should have no impact on the prevailing interpretation of arbitration clauses as regards the arbitrability of competition matters.
However, the Attorney General’s opinion could be read as implying that the principle of effectiveness of EU law may require, in exceptional circumstances, national courts not to enforce an arbitration agreement which would otherwise cover a cartel damages claim if to make the claim in arbitration would render the exercise of rights conferred by EU law impossible or excessively difficult. This, however, is a question to be answered on a case-by-case basis.
According to the author, the threshold for the court not to apply an arbitration agreement is a very high one. The claimant must prove that to arbitrate the claim would make the exercise of rights conferred by EU law impossible or excessively difficult. Given that arbitrators routinely decide tort and contractual damages claims, including claims involving issues of a technical or economic nature, it is difficult to conceive of circumstances in which such a burden may ever be satisfied.
You may remember that in a previous post of 24 March 2017 I had discussed the interpretation of arbitration clauses. It looks to me as the old battlefield between proponents and opponents of arbitration of competition law is being redrawn – and that the frontline is now a debate on how to construe arbitration clauses. W
hile the previous debate was played in the international sphere – to a large extent, the debate was about whether competition law fell within the public interest exception contained in the New York Convention – the current debate is being played out at the national level by reference to national rules of contractual interpretation (even though there is a school of thought that argues that arbitration clauses are autonomous from the rest of the contract, and may be subject to specific, transnational interpretation principles). I expect we will see more cases on the topic shortly.