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Cite as: [2017] EWHC 374 (Ch), [2017] 5 CMLR 5

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Neutral Citation Number: [2017] EWHC 374 (Ch)


Case No: HC-2015-004110

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION


Royal Courts of Justice

Strand, London, WC2A 2LL


Date: 28/02/2017


Before :


THE HONOURABLE MR. JUSTICE MARCUS SMITH

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Between:

 

 

MICROSOFT MOBILE OY (LTD)

Claimant

 

- and -


 

(1)   SONY EUROPE LIMITED

(2)   SONY CORPORATION

(3)   PANASONIC CORPORATION

(4)   LG CHEM LIMITED

(5)   SANYO ELECTRIC CO LIMITED

(6)   SAMSUNG SDI CO LIMITED






Defendants

 

- - - - - - - - - - - - - - - - - - - - -

- - - - - - - - - - - - - - - - - - - - -

 

Mr. Kieron Beal, Q.C., Ms. Laura Elizabeth John and Mr. Andrew Scott (instructed by Mishcon de Reya LLP) for the Claimant

Mr. Thomas de la Mare, Q.C. and Mr. David Bailey (instructed by Cleary Gottlieb Steen & Hamilton LLP) for the First and Second Defendants

Ms. Marie Demetriou, Q.C. and Mr. Angus Rodger (instructed by Steptoe & Johnson LLP) for the Fourth Defendant

Mr. Daniel Beard, Q.C. and Mr. Henry Forbes Smith (instructed by Allen & Overy LLP) for the Sixth Defendant

 

The proceedings against the Third and Fifth Defendants have been withdrawn by the Claimant and they did not appear.

 

Hearing dates: 16, 17, 18 and 19 January 2017

- - - - - - - - - - - - - - - - - - - - -

Approved Judgment

I direct that pursuant to CPR PD para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

 

 

 

……………………………..

 

THE HONOURABLE MR JUSTICE MARCUS SMITH


 

Contents

 

 

A.

INTRODUCTION

Para. 1

(1)

          The Claimant

Para. 1

(2)

The Cartel

Para. 5

(3)

The Defendants

Para. 7

(4)

The factual case pleaded by Microsoft Mobile against the Defendants

Para. 10

(5)

Applicable law

Para. 16

(6)

Aggregation of claims and Microsoft Mobile’s pleaded case

Para. 17

(7)

Service of the proceedings on the Defendants and the present applications

Para. 22

B.

STAY OF THE PROCEEDINGS AGAINST D1/SONY EUROPE IN FAVOUR OF ARBITRATION

Para. 32

(1)

Introduction

Para. 32

(2)

The arbitration clause

Para. 34

(3)

Section 9 of the Arbitration Act 1996

Para. 37

(4)

The approach to construction

Para. 42

(5)

The relevant provisions of the PPA

Para. 55

(6)

The scope of the arbitration clause

Para. 67

(7)

Is Article 25.2 to be applied, even if wide enough to embrace the claims against D1/Sony Europe?

Para. 74

(8)

Can and should the court determine the scope of the arbitration clause?

Para. 82

C.

STAY OF THE PROCEEDINGS AGAINST D2/SONY CORPORATION IN FAVOUR OF ARBITRATION

Para. 85

D.

OBJECTIONS TO JURISDICTION: AN OVERVIEW OF THE RELEVANT PRINCIPLES

Para. 86

(1)

Three requirements

Para. 86

(2)

The duty to make full and frank disclosure

Para. 90

(3)

Challenging an order permitting service out of the jurisdiction

Para. 91

E.

THE FIRST REQUIREMENT: SERIOUS ISSUE TO BE TRIED

Para. 95

(1)

The law

Para. 95

(2)

The parties’ agreement to “park” the issue

Para. 97

F.

THE SECOND REQUIREMENT: A GOOD ARGUABLE CASE THAT THE CASE FALLS WITHIN ONE OR MORE OF THE GATEWAYS

Para. 99

(1)

Good arguable case regarding one or more Gateways

Para. 99

(2)

The Gateways relied upon by Microsoft Mobile

Para. 102

(3)

Gateway (3): whether D2/Sony Corporation, D4/LG Chem and/or D6/Samsung are necessary or proper parties to Microsoft Mobile’s claims against D1/Sony Europe

Para. 105

(i)

Requirements that have to be satisfied

Para. 105

(ii)

The first requirement: the claim against the anchor defendant

Para. 107

 

Sole reason for joining D1/Sony Europe was to found jurisdiction against the other Defendants

Para. 110

 

The arbitration clause and section 9 of the Arbitration Act 1996

Para. 112

 

Aggregation of claims

Para. 119

(iii)

The second requirement: necessary or proper party

Para. 126

 

Introduction

Para. 126

 

What does “proper” mean?

Para. 130

 

Are the Defendants “proper parties”?

Para. 139

(4)

Gateway (9)(a): damage within the jurisdiction

Para. 140

(i)

The wording of the Gateway

Para. 140

(ii)

Basis upon which Microsoft Mobile contended that there had been damage within the jurisdiction

Para. 144

(iii)

Legal aspects regarding the Gateway

Para. 147

 

The relevant law to determine whether the requirements of the Gateway are satisfied

Para. 149

 

Assignment and disaggregation

Para. 155

 

Substantial damage

Para. 161

 

Direct and indirect damage

Para. 164

(iv)

Application in the present case

Para. 166

 

Microsoft Mobile’s first contention: damage because Nokia and/or the Claimant purchased 12.1m units from D1/Sony Europe

Para. 167

 

Microsoft Mobile’s second contention: damage because the PPAs are governed by English law and Article 4(3) of Rome II applies

Para. 173

 

Microsoft Mobile’s third contention: damage through the sale of handsets in England and Wales and “volume effects”

Para. 177

 

Microsoft Mobile’s fourth contention: purchases by Nokia UK Ltd

Para. 182

(5)

Conclusion on Gateways

Para. 185

G.

CLEARLY AND DISTINCTLY THE PROPER FORUM FOR THE TRIAL

Para. 186

H.

NOT FULL AND FRANK

Para. 201

 

 

 

Annex 1

Terms and Abbreviations used

 

Annex 2

Evidence relied upon by the Defendants

 


Mr. Justice Marcus Smith:

 


A.        INTRODUCTION

(1)        The Claimant

1.                  The Claimant, Microsoft Mobile Oy (Ltd) (the “Claimant” or “Microsoft Mobile”),[1] is a company established with limited liability under the laws of Finland. It is a wholly owned subsidiary of the Microsoft Corporation. It was, and is, a manufacturer and distributor of mobile telephone handsets, which contain lithium ion batteries (“Li-ion Batteries”). These Microsoft Mobile purchased from third parties.

2.                  Li-ion Batteries contain one or more lithium ion battery cells (“Li-ion Cells”).

3.                  By a Stock and Asset Purchase Agreement dated 2 September 2013 (the “SAPA”), the Microsoft group of companies acquired the mobile devices business of Nokia Corporation and its relevant subsidiaries (“Nokia”[2]). Nokia Corporation was a multinational communications and information technology company, established under the laws of Finland. Microsoft Mobile alleges that prior to the SAPA, when these activities transferred to the Microsoft group of companies, its activities included the manufacture, distribution and sale of mobile telephone handsets, which contained Li-ion Batteries purchased from third parties.

4.                  Microsoft Mobile alleges that both it and Nokia also sold replacement Li-ion Batteries in an after-market. Again, these were purchased from third parties.   

(2)        The Cartel

5.                  Microsoft Mobile brings these proceedings in its own right and as assignee of the rights of Nokia and its relevant subsidiaries. Microsoft claims damages for losses caused by allegedly anti-competitive conduct in relation to the sale to Nokia and/or to Microsoft Mobile of Li-ion Batteries (the “Cartel”).

6.                  More specifically, Microsoft Mobile contends that:

i)                   The products that were the subject of the Cartel were Li-ion Batteries. For the purposes of market definition, Microsoft Mobile identifies:

a)                  “Downstream Products”, being products into which Li-ion Batteries have been incorporated; and

b)                 “Upstream Products”, being Li-ion Batteries purchased on the upstream wholesale market either for incorporation into Downstream Products or for sale on the after-market.

ii)                 The relevant geographic markets are defined by Microsoft Mobile as follows:

a)                  For Upstream Products, global and/or regional, alternatively the EU and/or the EEA as a whole, alternatively national (including at least Finland, Germany, Hungary, Romania and the United Kingdom (within the EU/EEA) and Brazil, China, Hong Kong, India, Japan and South Korea (outside the EU/EEA)).

b)                 For Downstream Products, the relevant geographic markets are similarly defined.

iii)               The period over which the Cartel is said to have operated by Microsoft Mobile is from at least August 1999 to at least May 2011. Microsoft Mobile also pleads a “run-off” period, and seeks to claim damages “in so far as either the Cartel continued to operate and/or be implemented…and in so far as it continued to affect the prices charged for Li-ion Cells and/or Li-ion Batteries” (the “Run-Off Period”).[3]

(3)        The Defendants

7.                  There were, originally, six defendants to these proceedings. Proceedings against the Third Defendant, Panasonic Corporation, and the Fifth Defendant, Sanyo Electric Co Limited, were withdrawn by Microsoft Mobile. Save incidentally, these defendants do not feature in this Judgment: they did not appear before me.

8.                  As pleaded in the Amended Particulars of Claim, the remaining defendants are:

i)                   The First Defendant, Sony Europe Limited, a limited company established in England (“D1/Sony Europe”).

ii)                 The Second Defendant, Sony Corporation, a company established under the laws of Japan (D2/Sony Corporation). It is the parent company of the Sony group, including of D1/Sony Europe, and of the various other companies set out in paragraphs 20 and 21 of the Amended Particulars of Claim.

It is alleged by Microsoft Mobile that D1/Sony Europe and D2/Sony Corporation were part of a single economic unit, and so an “undertaking” for the purposes of EU and EEA competition law.

iii)               The Fourth Defendant, LG Chem Limited, a company established under the laws of South Korea (“D4/LG Chem”). D4/LG Chem is the ultimate parent company of LG Chem (Nanjing) I&E, and it is alleged by Microsoft Mobile that these entities were part of a single economic unit and so an undertaking for the purposes of EU and EEA competition law.

iv)               The Sixth Defendant, Samsung SDI Co Limited, is a company established under the laws of South Korea (“D6/Samsung”). It is the parent company of the companies set out in paragraphs 34 and 35 of the Amended Particulars of Claim. It is alleged by Microsoft Mobile that these companies were part of a single economic unit, and so an undertaking for the purposes of EU and EEA competition law.

9.                  Collectively, D1/Sony Europe, D2/Sony Corporation, D4/LG Chem and D6/Samsung are referred to herein as the “Defendants”.

(4)        The factual case pleaded by Microsoft Mobile against the Defendants

10.              It is unnecessary, for the purposes of this Judgment, to set out in detail the facts and matters pleaded by Microsoft Mobile in support of its claims. Paragraph 37 of the Amended Particulars of Claim provides a summary of the operation of the Cartel, as follows:

“Unknown to the Claimant and/or Nokia at the material times, the Defendants and/or the undertakings of which they were a part, together with other undertakings (collectively ‘the Cartelists’) in the period from at least August 1999 to May 2011 entered into agreements and/or arrangements and/or concerted practices by which they or two or more of them:

37.1   exchanged commercially sensitive information; and/or

37.2   agreed to fix prices; and/or

37.3   agreed to restrict their output; and/or

37.4   agreed to limit their technological development; and/or

37.5   agreed to share or allocate markets and/or customers; and/or

37.6   engaged in bid-rigging.”

 

11.              It is specifically averred – in paragraph 38 – that “[s]uch conduct took place in secret in the course of the conclusion, implementation and/or operation of the Cartel and the Defendants deliberately took steps to avoid detection”.

12.              It is also averred – in paragraph 40 – that “the Cartel was a single and continuous infringement of the prohibition contained in Article 101 TFEU (formerly Article 81(1)EC) and/or Article 53 of the EAA Agreement”.

13.              As a result of the Cartel, it is said that Microsoft Mobile and Nokia suffered loss and damage. This loss and damage manifested itself in:

i)                   Higher prices paid by Nokia and/or Microsoft Mobile for Li-ion Batteries. In this regard, it is important to note that although it is Microsoft Mobile’s case that the Defendants all sold Li-ion Batteries to Microsoft and/or Nokia at prices higher than they would have been absent the Cartel, Microsoft Mobile’s case goes further than this. Microsoft Mobile contends that prices for Li-ion Batteries generally – including those sold by non-Cartelist undertakings – were higher than they would have been in a competitive market: see paragraphs 181.1 and 184 of the Amended Particulars of Claim.   

ii)                 Additional costs, incurred by Nokia and/or Microsoft Mobile, to finance the overcharge suffered by them: see paragraph 181.2 of the Amended Particulars of Claim.

14.              It was not Microsoft Mobile’s primary case that the overcharge incurred by it was passed on by Microsoft Mobile and/or Nokia to its customers: see paragraph 195 of the Amended Particulars of Claim. However, in the alternative, if such costs were passed on, then it is contended (in paragraph 196) that “the necessary price increases would have reduced demand for Nokia’s and/or the Claimant’s products accordingly”.

15.              Microsoft Mobile contends that the Defendants or any of them are jointly and severally liable for the loss and damage claimed including (to quote from paragraph 197 of the Amended Particulars of Claim):[4]

“…the loss and damage caused by purchases at an overcharge during the Cartel Period and in the Run-Off Period from:

197.1 The other Defendants;

197.2 Other participants in the infringement; and

197.3 The other undertakings engaged in the manufacture and/or supply of Li-ion Batteries, who did not participate in the infringement or who did not participate throughout the entirety of the Cartel Period, but where prices were nonetheless inflated as a result of the effect of the infringement.”

 

(5)        Applicable law

16.              The precise nature of the liability of the Defendants depends not only on the facts alleged by Microsoft Mobile (and its ability to make good those facts) but also on the applicable law. This Judgment does no more than describe the contentions advanced by Microsoft Mobile in the Amended Particulars of Claim, without expressing any view as to those contentions. Essentially, the position is as follows:

i)                   The causes of action pleaded by Microsoft Mobile are entirely tortious in nature.

ii)                 The tortious causes of action pleaded by Microsoft Mobile fall within two broad camps:

a)                  Torts based upon infringement of applicable competition laws; and

b)                 Other torts – what Mr de la Mare, Q.C., leading counsel for D1/Sony Europe and D2/Sony Corporation called “economic” torts, which term, faut de mieux, I adopt – arising out of the same facts but not being directly for breach of applicable competition laws.

iii)               Because of the period of time covered by the Cartel, the choice of law rules governing the applicable law were:

a)                  For conduct from 1 May 1996 to 10 January 2009, the Private International Law (Miscellaneous Provisions) Act 1995 (the “1995 Act”).

b)                 For conduct after 11 January 2009, Regulation (EC) No. 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obligations (“Rome II”).

iv)               The applicable laws contended for by Microsoft Mobile are set out schematically in the table below:

 

Torts based upon infringement of applicable competition laws

Torts based upon economic torts

For the period 1 May 1996 to 10 Jan 2009, the 1995 Act applies:

Primary case

Amended Particulars of Claim, para 156

Pursuant to ss.11 and 12 of the 1995 Act, Finnish law.

Amended Particulars of Claim, para 173

Pursuant to ss.11 and 12 of the 1995 Act, Finnish law.

Alternative case.

Amended Particulars of Claim, para 159

To the extent that the relevant affected market is found to be that of another EEA State other than the UK or Finland or that of a country outside the EEA, then the Claimant relies on the law of each such country to support its claim for loss to the extent that such laws recognise a tortious claim for damages arising from the operation and/or implementation of the Cartel.

Amended Particulars of Claim, para 173

Pursuant to ss.11 and 12 of the 1995 Act, English law.

For the period after 11 Jan 2009, Rome II applies:

Primary case

Amended Particulars of Claim, para 153.1

Pursuant to Art 6(3)(a) of Rome II, the national law of each country where the market is, or is likely to be, affected by the Defendants’ conduct. That is each country in which Nokia and/or the Claimant bought Li-ion Batteries whose price was affected by the Cartel.

Amended Particulars of Claim, para 171.1.

Pursuant to Art 6(3)(b) of Rome II, English law.

 

Alternative case

Amended Particulars of Claim, para 153.2

Pursuant to Art 6(3)(b) of Rome II, the law of England and Wales.

Amended Particulars of Claim, para 171.2

Pursuant to Art 4(3) of Rome II, English law.

Further alternative case

Amended Particulars of Claim, para 159.

To the extent that the relevant affected market is found to be that of another EEA State other than the UK or Finland or that of a country outside the EEA, then the Claimant relies on the law of each such country to support its claim for loss to the extent that such laws recognise a tortious claim for damages arising from the operation and/or implementation of the Cartel.

Amended Particulars of Claim, para 172.1

Pursuant to Art 4(1) of Rome II, Finnish law.

Yet further alternative case

 

Amended Particulars of Claim, para 172.3

Pursuant to Art 4(3) of Rome II, Finnish law.

 

(6)        Aggregation of claims and Microsoft Mobile’s pleaded case

17.              As described in paragraph 5 above, Microsoft Mobile brings these proceedings in its own right and as assignee of the rights of Nokia. As described in paragraph 3 above, Nokia is not a single legal person, but comprises “Nokia Corporation and its relevant subsidiaries” (to quote from paragraph 1 of the Amended Particulars of Claim). Appendix 1 to the Amended Particulars of Claim lists the relevant Nokia subsidiaries “which purchased Li-ion Batteries from the Defendants in the Cartel Period and/or Run-Off Period” (see paragraph 10 of the Amended Particulars of Claim).

18.              Appendix 1 lists some 16 Nokia subsidiaries which purchased Li-ion Batteries. They are set out below, together with the place in which they are pleaded as being established:

1.

Nokia GmbH

Germany

2.

Nokia do Brazil Technologia Ltd

Brazil

3.

Nokia Capitel Telecommunications Ltd

China

4.

Dongguan Nokia Mobile Phones Company Ltd

China

5.

Nokia Komarom Kft

Hungary

6.

Nokia TMC Limited

Republic of Korea

7.

Nokia Inc

United States under the laws of Delaware

8.

Nokia UK Limited

United Kingdom

9.

Nokia India Pvt Ltd

New Delhi, India

10.

Nokia Romania SRL

Romania

11.

Nokia (China) Investment Co Ltd

China

12.

Nokia Communications Equipment (Shanghai) Ltd

China

13.

Nokia Telecommunications Ltd – Dong Guan Branch

China

14.

Nokia (HK) Ltd

Hong Kong

15.

Nokia Mobile Phone Manufacturing (HK) Ltd

Hong Kong

16.

Nokia Mobile Communications KK (formerly Nokia Mobile Phone Japan)

Japan

 

19.              The averments in the Amended Particulars of Claim aggregate the claims made by Nokia and/or Microsoft Mobile (as claimants) against the Defendants without differentiating between them. Thus, by way of example:

i)                   The purchase of Li-ion Batteries is pleaded as follows:

“13.   Prior to the execution of the SAPA, during the Cartel Period, Nokia, whether by itself, its subsidiaries or its servants or agents, purchased from the Defendants components for the manufacture of handsets, including Li-ion Batteries; constructed and/or arranged for the construction of handsets; and distributed the said handsets and replacement Li-ion Batteries to mobile telephone wholesalers, and/or retailers worldwide.

14.     Thereafter, during the Run-off Period, Nokia whether by itself, its subsidiaries or its servants or agents, continued to purchase and, following the execution of the SAPA, the Claimant purchased in like manner to Nokia, Li-ion Batteries from the Defendants for incorporation into their handsets and/or for sale as replacements.”

 

In paragraph 150.2, it is averred that “Nokia was the most significant purchaser, globally, of Li-ion Batteries. During the Cartel Period, and the Run-Off Period, Nokia held a market-leading position in the manufacture and distribution of handsets. Its global market shares were approximately 30% and 40% of the relevant market for Downstream Products during the Cartel Period”. Paragraph 150.1 avers:

“Nokia was a direct purchaser of Li-ion Batteries”.

ii)                 The Cartel is pleaded (in paragraph 37) in the following terms: “…the Defendants and/or the undertakings of which they were a part, together with other undertakings (collectively “the Cartelists”) in the period from at least August 1999 to May 2011 entered into agreements and/or arrangements and/or concerted practices…”.

iii)               Finally, causation loss and damage is pleaded in paragraph 181 as follows:

“As an intended and/or foreseeable consequence of the conduct set out above, the Defendants and the undertakings of which they formed part caused the Claimant loss and damage, in that:

181.1 they caused the prices paid by Nokia and/or the Claimant for Li-ion Batteries, to be higher than they would have been absent the infringement. The prices charged by the infringing undertakings for Li-ion Batteries, were higher than they would have been absent the infringement; and

181.2 they caused Nokia and/or the Claimant to incur the additional cost of financing the overcharge it suffered, from the date on which it was paid up until the date of judgment.”

 

20.              Precisely what Microsoft Mobile could, and could not, establish in terms of the purchases of Li-ion Batteries between Nokia and Microsoft Mobile and the Defendants was explored with Mr. Beal, Q.C., leading counsel for Microsoft Mobile, during the course of submissions. Essentially, the position was as follows:

i)                   Microsoft Mobile has been able to identify a certain number of purchases from D1/Sony Europe by Nokia and/or Microsoft Mobile:[5]

Q (Marcus Smith J.)

“In the jurisdiction, there are no purchases at all from any of the other Defendants that you can evidence, none from D2 for example?

A (Mr Beal, Q.C.)

I am not sure that the data disaggregation has gone that far. What we have identified is purchases from D1. D1 is established here. D1 is, quite clearly, selling from its premises where they are located in the UK. Therefore, we have attributed that to a sale within the UK segment of the EEA market.”

 

 

ii)                 Microsoft Mobile has also been able to suggest that entities within Nokia made purchases of Li-ion batteries, which include one of the Appendix 1 entities, Nokia UK Ltd (number 8 on the list set out in paragraph 18 above), which is established in the UK. Mr. Beal, Q.C. made the following point in this regard:[6]

“We make the point here that Nokia UK is one of the subsidiaries listed in Appendix 1. At paragraphs 10 and 13 [of the Amended Particulars of Claim] we have pleaded that Nokia UK Ltd has made purchases and has sustained loss. It has sustained loss through selling handsets in the United Kingdom.”

 

iii)               However, Microsoft Mobile was unable to state or identify any specific link between Li-ion Batteries sold by D1/Sony Europe in the UK and Li-ion Batteries purchased by any Nokia specific entity, as became apparent in a dialogue commenced by Ms. Demetriou, Q.C., leading counsel for D4/LG Chem:[7]

Q (Ms. Demetriou, Q.C.)

“My Lord, because this is new evidence and just so I can understand the point that is made against us, so I can look at these documents properly, could I just ask Mr. Beal to identify where, if anywhere, in these new documents there is evidence showing that Nokia UK purchased the batteries itself?

Q (Marcus Smith J.)

I think that that is a point that Mr. Beal is moving slightly away from. It is a question that I, myself, was going to raise.

A (Mr. Beal, Q.C.)

The answer I gave, my Lord, was paragraph 13.

Q (Marcus Smith J.)

I have looked at that. We have so far had a bifurcation between indirect purchases and direct purchases. It all depends on how you define “direct purchases”. If one looks at the supply chain…we have at the one end, where the batteries are being sold, D1.

A (Mr. Beal, Q.C.)

Yes.

Q (Marcus Smith J.)

I think that that is a fixed end for present purposes, because that is what we are interested in for jurisdiction. The question is whether one is talking about direct purchases by Nokia UK from D1, which I think was the point being addressed yesterday by Ms Demetriou.

A (Mr. Beal, Q.C.)

When I have said D1, D1 is, obviously, one of the people from whom we purchased batteries. This analysis is not looking at specific purchases from D1. That was the prior point based on the 12 million units of batteries purchased from D1. This point is looking at purchases more generally from each of the Defendants, which we have pleaded have been purchased by each of the claimants and their subsidiaries. Paragraph 13 says we have purchased these batteries, whether by servants, agents or otherwise.

We are not an indirect purchaser case. We have bought these batteries. Nokia has bought these batteries.

Q (Marcus Smith J.)

That is my point though. How you define “indirect purchaser” depends on whether you count Nokia as a single entity or whether you disaggregate it into the various little Nokia legal persons that form part of the overall Nokia undertaking.

I want to be clear in my own mind as to how we are establishing, or how you are contending, damage is sustained within the jurisdiction. One way you are putting it is that one has direct purchases by Nokia UK from D1.

A (Mr Beal, Q.C.)

No.

Q (Marcus Smith J.)

No?

A (Mr Beal, Q.C.)

No. There are purchases from D1, which we have identified at 12 million units, which are within the market. Therefore, that is market harm, and we put it that way. It is loss deriving from the segment of the EEA market that is in the UK…

Q (Marcus Smith J.)

Looking simply at the 12 million, the chain is very short? It is Nokia UK to D1?

A (Mr Beal, Q.C.)

Not necessarily Nokia UK. We have pleaded that the Nokia companies have purchased 12 million units from D1. That evidence comes from looking at sales data that we have where D1 is the seller.

Q (Marcus Smith J.)

And some Nokia entity is the purchaser?

A (Mr Beal, Q.C.)

Some Nokia entity is the purchaser.

Q (Marcus Smith J.)

So if one is seeking to disaggregate the Nokia corporation, or Nokia undertaking – let us call it that – it could be, on that basis, indirect, because you might find that D1 sells to Nokia Undertaking 1, who sells on to Nokia Undertaking 2, who sells on to Nokia Undertaking 3, who eventually puts it into a phone that is sold?

A (Mr Beal, Q.C.)

My Lord, that is not what is being pleaded. What is being pleaded is that the purchases took effect by each of the claimants when they are the purchaser by themselves or using an agent. The contractual chain is, as a matter of analysis, going to be a Nokia company and D1. The fact that the purchasing entity may be a Nokia company but that Nokia company is acting as an agent for the company that has the battery and puts it in the handset and sells the handset does not change that analysis,

The analysis is the reason why we have not disaggregated all of these claims is for precisely this reason in many ways. There is a practical problem which is that it is incredibly difficult to do so because we would need all of the disclosure from all of the defendants to re-piece some of the transaction chain…

 

Q (Marcus Smith J.)

Let us pretend, for the moment, because I am quite anxious to avoid questions of assignment, if I possibly can, that the acquisition of the mobile devices division by Microsoft did not occur and we are simply talking about Nokia Corporation.

I think you are telling me that if you are seeking to formulate a specific claim by an individual, a Nokia entity, against D1, you would not actually be able to do that, but you would be able to formulate a claim by aggregating the Nokia entities, as you have done in Appendix 1 to the pleading, together, and you could say the claimants, being those Nokia companies, leaving assignment entirely on one side, have suffered a loss, but cannot tell as between those claimants which one it is?

A (Mr. Beal, Q.C.)

Could I posit a situation in which there are, perhaps, 20 claimants on the claim form, which I think would do the job of the thought experiment that your Lordship is engaged in. You have 20 claimants on the claim form. The claim is, therefore, brought on the basis of a pleaded claim on behalf of those 20 claimants. The claim in tort – say it is only established by one claimant against all of the defendants, that would satisfy the gateway…

Q (Marcus Smith J.)

Just to put a little bit of meat on the skeleton of our mutual thought experiment, the claimants would be the 16 that you have listed in Appendix 1 as being Nokia subsidiaries, which purchased Lithium Ion Batteries at page 202?

A (Mr. Beal, Q.C.)

Yes.

 

 

Pressed on precisely what was being alleged in paragraph 13 of the Amended Particulars of Claim as to how Nokia purchased Li-ion Batteries, Mr. Beal, Q.C. was unable to be more specific. It was possible either that Nokia subsidiaries acquired batteries through or via a common purchasing agent so that there was a direct purchase between that subsidiary and the vendor of the battery or that there was a chain of sales and purchases within Nokia, whereby one subsidiary purchased the Li-ion Battery from the vendor, and then on-sold it within Nokia.[8] 

21.              It is necessary to set out exactly what Microsoft Mobile was alleging in the Amended Particulars of Claim for the purposes of dealing with Microsoft Mobile’s contentions on jurisdiction. 

(7)     Service of the proceedings on the Defendants and the present applications

22.              D1/Sony Europe is sued in the jurisdiction of its domicile – England and Wales – and Microsoft Mobile contends that this court has jurisdiction by virtue of Article 4 of Regulation (EU) No. 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition of judgments in civil and commercial matters (recast) (“the Brussels I Regulation (Recast)”).

23.              By an application dated 3 June 2016, D1/Sony Europe seeks a stay of the proceedings against it pursuant to section 9 of the Arbitration Act 1996 and/or under the inherent jurisdiction of the court, on the grounds that the dispute between Microsoft and D1/Sony Europe is subject to a valid arbitration clause.

24.              The other Defendants are all companies domiciled in Japan and the Republic of Korea. Since none of these Defendants is domiciled in the EU or the EEA, this was not a case falling within the Brussels I Regulation (Recast), and Microsoft Mobile needed permission to serve the claim out of the jurisdiction pursuant to Part 6.36 of the Civil Procedure Rules. An application was made on 23 December 2015, supported by a witness statement of Mr. Robert Murray (“Murray 1”).

25.              As is considered in greater detail below, three requirements must be shown before the court will permit service of a claim or claims out of the jurisdiction:

i)                   The claimant must satisfy the court that in relation to the foreign defendant there is a serious issue to be tried on the merits, i.e. a substantial question of fact or law or both.

ii)                 The claimant must satisfy the court that there is a good arguable case that the claim falls within one or more classes of case in which permission to serve may be given. These classes – referred to in this Judgment as “Gateways” – are presently listed in paragraph 3.1 of Practice Direction 6B of the Civil Procedure Rules. The Gateways relied upon by Microsoft Mobile were two:

a)                  Gateway (3) (i.e. paragraph 3.1(3) of Practice Direction 6B), where there is a necessary or proper party to a claim made against a defendant susceptible to the jurisdiction of the court (the so-called “anchor defendant”). In this case, the anchor defendant, for the purposes of Gateway (3), was D1/Sony Europe.

b)                 Gateway (9(a)) (i.e. paragraph 3.1(9)(a) of Practice Direction 6B), where the claim is made in tort and the damage is sustained or will be sustained within the jurisdiction. To be clear, Microsoft Mobile did not rely upon Gateway (9)(b) (i.e. paragraph 3.1(9)(b) of Practice Direction 6B), which is satisfied where the claim is made in tort and the damage sustained resulted from an act committed within the jurisdiction.

iii)               The claimant must satisfy the court that England and Wales is clearly and distinctly the proper forum for the trial of the claims.

26.              The application was heard by Master Clark, who made an order for service out of the jurisdiction on 19 January 2016.[9]

27.              D2/Sony Corporation, D4/LG Chem and D6/Samsung all object to this court assuming jurisdiction:

i)                   D2/Sony Corporation does so on the same basis (and pursuant to the same application) as D1/Sony Europe: it seeks a stay of the proceedings against it pursuant to section 9 of the Arbitration Act 1996.

ii)                 By applications dated 17 June 2016 and 27 June 2016, D4/LG Chem and D6/Samsung respectively seek orders:

a)                  Declaring that this court has no jurisdiction against them; and/or

b)                 Declaring that this court will not exercise any jurisdiction which it may have over them; and

c)                  Setting aside service out of the jurisdiction.

28.              I shall refer to these applications of the Defendants as the “Applications”.[10] D2/Sony Corporation – as a fall-back to its stay application – also challenges the court’s jurisdiction. This application, however, was not before the court on this occasion, the parties having agreed that (given the points raised by D2/Sony Corporation’s application) there would be insufficient time. The somewhat unsatisfactory basis on which this particular application was “parked” is described further in Section E below. The upshot is that the Defendants contend:

i)                   That there is no good arguable case that the claims against them fall within either of the Gateways relied upon by Microsoft Mobile.

ii)                 That England and Wales is not clearly and distinctly the proper forum for the trial of the claims.

As has already been noted, the satisfaction of the first requirement – that there was a serious issue to be tried on the merits – was “parked”, but it certainly cannot be said that the Defendants were conceding that this requirement was met in respect of all parts of the claim.

29.              The Applications were supported by the evidence listed in Annex 2 hereto, to which I shall refer using the abbreviations set out in Annex 2. This evidence was responded to by a further statement of Mr. Murray (“Murray 2”).[11]

30.              The Applications were heard over four days (16 to 19 January 2017). This Judgment determines the Applications and is structured as follows:

i)                   Section B deals with the application for a stay sought by D1/Sony Europe pursuant to section 9 of the Arbitration Act 1996 and/or the court’s inherent jurisdiction.

ii)                 Section C deals with the similar stay application made by D2/Sony Corporation.

iii)               Section D considers in broad terms the relevant principles that apply when considering the sort of jurisdictional objections raised by the Applications. Thereafter, the three requirements for service out are considered in greater detail:

a)                  Section E considers the first requirement (serious issue to be tried).

b)                 Section F considers the second requirement (good arguable case that the claim falls within one or more of the Gateways).

c)                  Section G considers the third requirement (whether England and Wales is clearly and distinctly the proper forum for the trial of the action).

31.              It was also contended by the Defendants that the statement in support of Microsoft Mobile’s application to serve D2/Sony Corporation, D4/LG Chem and D6/Samsung out of the jurisdiction (Murray 1) made material non-disclosures and that the order of Master Clark and the service out of the proceedings should be set aside on that ground alone. This aspect is considered in Section H below.

B.        STAY OF THE PROCEEDINGS AGAINST D1/SONY EUROPE IN FAVOUR OF ARBITRATION

(1)        Introduction

32.              D1/Sony Europe is domiciled in the United Kingdom within the meaning of Article 63 of the Brussels I Regulation (Recast). It is common ground that the claims advanced by Microsoft Mobile against D1/Sony Europe are civil and commercial matters within the scope of Article 1 of the Brussels I Regulation (Recast) and that – but for the arbitration clause described in paragraph 35 below – the claims against the D1/Sony Europe were commenced as of right by Microsoft Mobile under Article 4 of the Brussels I Regulation (Recast).

33.              By Article 1(2)(d), the Brussels I Regulation (Recast) does not apply to arbitration. D1/Sony Europe contends:

i)                   That an arbitration clause subsisted between it and Nokia, was unaffected by the assignment to Microsoft Mobile and continued to bind Microsoft Mobile.

ii)                 That the claims brought in these proceedings against D1/Sony Europe fall within the scope of that arbitration clause.

On this basis, D1/Sony Europe sought a stay of the proceedings as against it pursuant to section 9 of the Arbitration Act 1996 and/or pursuant to the court’s inherent jurisdiction.

(2)        The arbitration clause

34.              Product Purchase Agreement No. 000247 (the “PPA”) is an agreement made in writing and becoming effective on 1 July 2001 (see Article 23.1) between Nokia Mobile Phones Ltd (as “BUYER”) and “Sony Corporation” i.e. D2/Sony Corporation (as “SELLER”). These parties contracted on behalf of themselves and:

i)                   In the case of Nokia Mobile Phones Ltd, “its Affiliated Companies listed in Appendix 1”. “Affiliated Companies” is a defined term under Article 1 of the PPA:

“…means any other entity controlled by, or under control with, a Party[12] (or in case of BUYER, Nokia Corporation, BUYER’s parent company formed under the laws of Finland). For purposes of this definition “control” shall mean the direct or indirect ownership of fifty (50) percent or more of the shares or interests which are entitled to vote for the directors of an entity or the equivalent, for as long as such entitlement subsists, or which mean equivalent power over management of an entity.”

Appendix 1 lists various Nokia Affiliated Companies. No-one – in particular not Microsoft Mobile – sought to contend that Nokia was not bound by the terms of the PPA.

ii)                 In the case of D2/Sony Corporation, “its Affiliated Companies [are] listed in Appendix 1”. “Affiliated Companies” bears the same meaning as above, and Appendix 1 lists D1/Sony Europe.

35.              Article 25 of the PPA provides as follows:

“25.1 This Agreement shall be governed by and construed in accordance with United Kingdom law.”

 

Pausing there, it was common ground between the parties that this was a reference to English law. I agree, and so hold.

“25.2 Any disputes related to this Agreement or its enforcement shall be resolved and settled by arbitration in the English language in United Kingdom, in accordance with the Arbitration Rules of the International Chamber of Commerce in United Kingdom. However, any disputes related to BUYER’s Intellectual Property Right(s)[13] or Confidential Information,[14] or for injunctive relief, may, at BUYER’s sole election, be resolved by a court of competent jurisdiction. The decision of the arbitrators shall be final, binding and executable. The arbitration shall be the exclusive remedy of the Parties to the dispute.”

 

36.              Although the scope of this arbitration clause was contested between Microsoft Mobile and D1/Sony Europe, two matters were common ground:

i)                   First, that the arbitration clause was binding as between D1/Sony Europe (who sought to rely on it) and Nokia. This is plain from the facts I have stated, and (had it not been common ground) I would have reached this conclusion in any event.

ii)                 Secondly, that the assignment of Nokia’s rights to Microsoft (referred to in paragraph 5 above) could not change this position. Here, the position is a little less clear-cut:

a)                  Paragraph 1 of the Amended Particulars of Claim avers that Microsoft Mobile claims in its own right and also as the assignee of the rights of Nokia.

b)                 Paragraph 11 of the Amended Particulars of Claim avers that by the SAPA, the Microsoft group of companies acquired the mobile devices business of Nokia.

c)                  Paragraphs 9.2 and 11 of the Amended Particulars of Claim aver that various causes of action – including of necessity those Nokia claims advanced in the Amended Particulars of Claim – were assigned by Nokia to Microsoft International Holdings BV.

d)                 Paragraph 12 of the Amended Particulars of Claim avers that “[t]he entitlement to bring these claims was assigned by Microsoft International Holdings BV, to the Claimant, by an agreement dated 20 September 2014.”

Neither the SAPA nor any of the other documents relating to these assignments were before the court nor disclosed to the other parties by Microsoft Mobile. That, in itself, does not matter, for the Amended Particulars of Claim are verified by a statement of truth. However, had Microsoft Mobile sought to contend that the effect of these assignments was to enable an assignee in some way to escape the effect of an arbitration clause binding on the assignor (whether through a single assignment or a chain of assignments), I would have required considerable persuasion that this point could be correct. I would also have needed to see all of the underlying documents in order to determine the point. As it was, Microsoft Mobile accepted that the assignments in this case could not have this effect, and I proceed on that basis.

(3)        Section 9 of the Arbitration Act 1996

37.              It will be necessary to consider other provisions of the PPA in due course. For present purposes, however, all that needs to be noted is that D1/Sony Europe relied upon Article 25.2 (set out in paragraph 35 above) to contend that these proceedings should be stayed as against it pursuant to section 9 of the Arbitration Act 1996.

38.              Section 9 provides as follows:

“(1)   A party to an arbitration agreement against whom legal proceedings are brought (whether by way of claim or counterclaim) in respect of a matter which under the agreement is to be referred to arbitration may (upon notice to the other parties to the proceedings) apply to the court in which the proceedings have been brought to stay the proceedings so far as they concern that matter.

(2)     An application may be made notwithstanding that the matter is to be referred to arbitration only after the exhaustion of other dispute resolution procedures.

(3)     An application may not be made by a person before taking the appropriate procedural step (if any) to acknowledge the legal proceedings against him or after he has taken any step in those proceedings to answer the substantive claim.

(4)     On an application under this section the court shall grant a stay unless satisfied that the arbitration agreement is null and void, inoperative or incapable of being performed.

(5)     If the court refuses to stay the legal proceedings, any provision that an award is a condition precedent to the bringing of legal proceedings in respect of any matter is of no effect in relation to those proceedings.”

 

39.              D1/Sony Europe contended that all or some of the claims pleaded against it in the Amended Particulars of Claim were matters to be referred to arbitration under Article 25.2, and it sought a stay of the proceedings against it on this basis.

40.              Microsoft Mobile disputed this, and advanced two points in response:

i)                   First, it contended that none of the claims pleaded in the Amended Particulars of Claim fell within the scope of Article 25.2.

ii)                 Secondly, and in the alternative, it contended that even if some or all of the claims pleaded against D1/Sony Europe in the Amended Particulars of Claim fell within the scope of Article 25.2, the arbitration clause was not to be applied.

41.              These points are considered in turn below. There was a third point: this was a question as to who should determine these questions, this court or whatever arbitral tribunal is in due course established.[15] I should say at the outset that I have decided to determine these questions myself: my reasons for doing so are set out at paragraphs 82 to 84 below.

(4)        The approach to construction

42.              It was common ground between the parties that arbitration clauses, as contractual provisions, fall to be construed according to the precepts laid down in Investors Compensations Scheme v. West Bromwich Building Society [1998] 1 WLR 896, Rainy Sky SA v. Kookmin Bank [2011] UKSC 50 and Arnold v. Britton [2015] UKSC 36.

43.              Additionally, the parties recognised that whilst arbitration clauses had, in the past, been subject to a series of specific and technical rules, the starting point now for the construction of an arbitration clause was Fili Shipping Co Ltd v. Premium Nafta Products Ltd [2007] UKHL 40, better known as Fiona Trust (from its name before the Court of Appeal: Fiona Trust and Holdings Corp v. Privalov).[16]

44.              In Fiona Trust, Lord Hoffmann stated:[17]

“5.     Both of these defences raise the same fundamental question about the attitude of the courts to arbitration. Arbitration is consensual. It depends upon the intention of the parties as expressed in their agreement. Only the agreement can tell you what kind of disputes they intended to submit to arbitration. But the meaning which parties intended to express by the words which they used will be affected by the commercial background and the reader’s understanding of the purpose for which the agreement was made. Businessmen in particular are assumed to have entered into agreements to achieve some rational commercial purpose and an understanding of this purpose will influence the way in which one interprets their language.

6.       In approaching the question of construction, it is therefore necessary to inquire into the purpose of the arbitration clause. As to this, I think there can be no doubt. The parties have entered into a relationship, an agreement or what is alleged to be an agreement or what appears on its face to be an agreement, which may give rise to disputes. They want those disputes decided by a tribunal which they have chosen, commonly on the grounds of such matters as its neutrality, expertise and privacy, the availability of legal services at the seat of the arbitration and the unobtrusive efficiency of its supervisory law. Particularly in the case of international contracts, they want a quick and efficient adjudication and do not want to take risks of delay and, in too many cases, partiality, in proceedings before a national jurisdiction.

7.       If one accepts that this is the purpose of an arbitration clause, its construction must be influenced by whether the parties, as rational businessmen, were likely to have intended that only some of the questions arising out of their relationship were to be submitted to arbitration and others were to be decided by national courts. Could they have intended that the question of whether the contract was repudiated should be decided by arbitration but the question of whether it was induced by misrepresentation should be decided by a court? If, as appears to be generally accepted, there is no rational basis upon which businessmen would be likely to wish to have questions of the validity or enforceability of the contract decided by one tribunal and questions about its performance decided by another, one would need to find very clear language before deciding that they must have had such an intention.

8.       A proper approach to construction therefore requires the court to give effect, so far as the language used by the parties will permit, to the commercial purpose of the arbitration clause…”.

13.     In my opinion the construction of an arbitration clause should start from the assumption that the parties, as rational businessmen, are likely to have intended any dispute arising out of the relationship into which they have entered or purported to have entered to be decided by the same tribunal. The clause should be construed in accordance with this presumption unless the language makes it clear that certain questions were intended to be excluded from the arbitrator’s jurisdiction. As Longmore L.J. remarked, at para. 17: “if any businessman did want to exclude disputes about the validity of a contract, it would be comparatively easy to say so.”[18]

 

45.              The importance of having a “one-stop-shop” for all disputes – and the likelihood that the parties to an agreement would intend this – is clear. But that is true only to the extent that disputes arise out of the parties’ relationship. Thus, absent extremely clear wording, a court would presume that the parties would have intended the same tribunal to deal with contractual disputes arising out of the relationship, as well as any “parallel” claims in tort. But, what would not be covered, absent extremely clear wording, would (to take a somewhat extreme hypothetical case) be Party A’s case against Party B (Party A and Party B being in a contract with each other containing an arbitration clause) for Party B negligently, but coincidentally and unrelated to the contract, running Party A over in the street. That would not be a dispute arising out of the parties’ contractual relationship.

46.              The spectrum of cases falling within and without a “relationship” was considered in Aggeliki Charis Compania Maritima SA v. Pagnan SpA, the “Angelic Grace” [1995] 1 Lloyd’s 87. This decision was cited to the House of Lords in Fiona Trust, but not mentioned in their Lordships’ opinions. As it pre-dates Fiona Trust, The Angelic Grace must be treated with a degree of caution. I have, nevertheless, derived some assistance from the case, in particular the following passage:[19]

“The question in a nutshell is whether the relevant claims and cross-claims arise out of the contract. It is common ground that the question must be answered in the light of The Playa Larga [1983] 2 Lloyd’s Rep. 171, in which this court upheld the dictum of Mr. Justice Mustill that a tortious claim does “arise out of” a contract containing an arbitration clause if there is a sufficiently close connection between the tortious claim and a claim under the contract. In order that there should be a sufficiently close connection, as the Judge said, the claimant must show either that the resolution of the contractual issue is necessary for a decision on the tortious claim, or, that the contractual and tortious disputes are so closely knitted together on the facts that an agreement to arbitrate on one can properly be construed as covering the other.

 

47.              All of the parties before me contended that Ryanair Ltd v. Esso Italiana Srl [2013] EWCA Civ 1450 was of particular relevance to the present case, no doubt because it involved competition law claims. It is necessary to consider this decision at some length.

48.              In Ryanair Ltd v. Esso Italiana Srl, Ryanair had entered into a contract with Esso for the purchase of jet fuel in Italian airports. The contract was made on the basis of English law and the non-exclusive jurisdiction of the English courts. Subsequently, Esso and other oil companies were found to have been operating an illegal cartel in Italy for the supply of jet fuel to Italian airports in breach of Article 101 of the Treaty on the Functioning of the European Union (“TFEU”).

49.              Ryanair then brought a claim in England for damages against Esso alleging breach of the fuel supply contract in relation to Esso’s cartel activities in inflating the price of the fuel at Italian airports (i.e. a contractual claim) and a claim for breach of statutory duty based upon Article 101 TFEU (i.e. a tortious claim). The question was whether (to use the terms of Eder J. at first instance) the tortious claims were so closely knitted together with the contractual claims that a rational or sensible businessman would expect them to be subject to determination by a single tribunal.

50.              Rix L.J. set out the essential facts:[20]

“1.     This appeal concerns the scope of an English jurisdiction clause and arises on a challenge to jurisdiction in the English courts. Does the clause embrace a claim against a member of an Italian cartel selling jet fuel in Italian airports, a claim advanced on the basis of a statutory tort under English law in vindication of rights arising out of article 101 of the Treaty on the Functioning of the European Union (“TFEU”).

2.       The claimant is Ryanair Ltd (‘Ryanair’), the well-known Irish airline. The defendant is Esso Italiana Srl (‘Esso Italiana’), part of the world-wide Exxon-Mobil group. The jurisdiction clause is contained in their contract, entered into through the agency of ExxonMobil Aviation International Ltd (‘EMAIL’), for the purchase of jet fuel in Italian airports. The jurisdiction clause is found in article 12.1 of Part II of a master contract, made by EMAIL on behalf of group subsidiaries supplying fuel in various countries of the world, which was originally entered into with Ryanair back in 1999, then in a slightly different form in 2000, and subsequently renewed annually until expiry on 31 April 2009.

3.       Article 12.1 provides as follows:

‘The Agreement contains the entire agreement of the parties with respect to the subject matter hereof and there are no other promises, representations or warranties affecting it. This Agreement cannot be modified in any way except in writing signed by the parties. No claims shall be made hereunder for prospective profits or for indirect or consequential damages except as otherwise provided in the footnotes attached to the schedule. This Agreement shall be governed by the laws of England excluding its conflict of laws rules and the United Nations Convention on the International Sale of Goods Act shall not apply. For the purposes of the resolution of disputes under this Agreement, each party expressly submits itself to the non-exclusive jurisdiction of the Court of England.

4.       Thus, the parties’ contract was made on the basis of English law and the non-exclusive jurisdiction of the English courts. Prospective profits and indirect or consequential damages were excluded. It is not clear what follows from the exclusion of English conflict of law rules, which might be said to be a large exclusion, but no point has been taken on that.”

 

51.              Rix L.J. noted that “[i]t is important to observe that Ryanair at no time asserted that its claim for breach of statutory duty fell within the jurisdiction clause in the absence of a concomitant contractual claim under article IV in respect of the lower quantity of fuel supplied by Esso Italiana itself, which was itself premised on Esso Italiana participating in infringing behaviour in breach of article 101”.[21] Indeed, the “whole edifice” of Ryanair’s jurisdictional argument “is built on the initial claim, the contract claim, that Ryanir had a remedy pursuant to article IV of the contract[22]…it seemed to be a necessary part of Ryanair’s argument based on the Fiona Trust presumption in favour of the rational and reasonable businessman’s preference for one-stop adjudication, that a contractual claim based on article IV for a breach of article 101 had some prospect of success. If, therefore, there was no contractual claim under article IV by reason of Esso Italiana’s supply of jet fuel at prices inflated by conduct in breach of article 101, then, at any rate arguably, it became harder to see why reasonable businessmen would interpret the jurisdiction clause as covering a separate claim for breach of statutory duty arising out of conduct in Italy in breach of article 101[23].”

52.              It was therefore necessary to consider the nature of the contractual claim being advanced. It is not necessary to set out the argument before the Court of Appeal on this point, nor even the detail of the Court of Appeal’s conclusions. For present purposes, what matters is that the Court of Appeal held that:

“40.   In my judgment there is no answer to Mr. Beard’s powerful submissions concerning the construction of article IV. The clause simply was never intended to apply to the use to which Ryanair’s contract claim seeks to put it.

41.     It follows that there is no prospect of Ryanair having a contractual claim under art IV or an implied term as would give a remedy, albeit to goods supplied under the contract itself, which reduplicated the effect of a statutory duty pursuant to article 101.”

 

53.              Standing by itself, without the buttress of a contractual claim, the Court of Appeal held that the tortious claims fell outside the scope of the non-exclusive jurisdiction clause. Rix L.J. considered The Angelic Grace to be of no assistance to Ryanair in this context.[24] He referred to Fiona Trust, in particular [13] cited at paragraph 44 above, and held:[25]

Such reasoning, however, does not carry over into a situation where there is no contractual dispute (by which I intend to include disputes about contracts), but all that has happened is that a buyer has bought goods from a seller who has participated in a cartel. I think that rational businessmen would be surprised to be told that a non-exclusive jurisdiction clause bound or entitled the parties to that sale to litigate in a contractually agreed forum an entirely non-contractual claim for breach of statutory duty pursuant to article 101, the essence of which depended on proof of unlawful arrangements between the seller and third parties with whom the buyer had no relationship whatsoever, and the gravamen of which was a matter which probably affected many other potential claimants, with whom such a buyer might very well wish to link itself.”

 

54.              The point is, in many respects, an obvious one. The starting assumption articulated in Fiona Trust is that the parties, as rational businessmen, are likely to have intended any dispute arising out of the relationship into which they have entered or purported to have entered to be decided by the same tribunal. But it is difficult to see how a tortious claim can arise out of a contractual relationship when the only claim in contract that can be said to be related is unarguable.

(5)        The relevant provisions of the PPA

55.              As stated in paragraph 34 above, the PPA had an effective date of 1 July 2001. I was told that there was no evidence of any prior business dealings between Nokia and Sony: the parties proceeded, and I proceed, on the basis that the first dealings for the sale and purchase of batteries between Nokia and Sony were under this PPA and would therefore have commenced on 1 July 2001.

56.              By Article 2.1 of the PPA, “[t]his Agreement contains the terms and conditions which apply globally to all sale and purchase of Product(s)”. Under Article 1, “Product(s)” means “certain lithium-ion batteries manufactured by or for SELLER subject to purchase and sale between the Parties as listed in Appendix 2.” Appendix 2 of the PPA lists only one product, the “BPS-2” battery, at a price of JPY770. Below that entry is the following note:

“Prices are agreed on separate negotiations.”

That meshes with the definition of “Price(s)” in Article 1 as meaning “the mutually agreed price(s) for each Product”.

57.              Article 26 provides:

“26.1 This Agreement supersedes all previous arrangements, communication and agreements between the Parties in relation to the subject matter of this Agreement. This Agreement supersedes any general conditions of purchase/sale and other standard conditions. The Appendices shall be an integral part of this Agreement.[26]

26.2  Appendices 1 and 2 may be amended by a mutual written agreement (in paper, electronic or other format), even if not physically incorporated into this Agreement document. Other amendments to this Agreement shall be valid only if in writing and signed by both Parties.”

 

58.              Although Appendix 2 refers to only a single product, I infer from the terms of Article 2.1 and the relatively informal way in which Appendix 2 could be amended or supplemented pursuant to Article 26.2, that Appendix 2 was, in fact, so amended or supplemented from time-to-time, to reflect the products (and the prices for those products) that Sony was supplying to Nokia.[27] I further infer that all Li-ion Batteries supplied by Sony to Nokia were supplied pursuant to the PPA.

59.              Article 10 provides:

“10.1 The Price(s) are stated in Appendix 2 and shall include all SELLER’s obligations in accordance with this Agreement. Changes in Prices(s) shall be mutually agreed in writing and negotiated in good faith. The Price(s) are set in JPY unless otherwise mutually agreed in Appendix 2 or otherwise.”

 

60.              Central to D1/Sony Europe’s submissions on the scope and effect of the arbitration clause was the “good faith” obligation contained in Article 10.1. One of the issues between D1/Sony Europe and Microsoft Mobile was the ambit of this good faith obligation. It was common ground that the obligation to negotiate a price in good faith applied when the price for a battery already listed in Appendix 2 was changed. That, however, was as far as Microsoft Mobile contended the obligation went. D1/Sony Europe, on the other hand, contended that the obligation to negotiate in good faith extended to all Prices agreed, even where a new Product was being added to Appendix 2 for the first time.

61.              On this point, I prefer the contentions of D1/Sony Europe:

i)                   To “change” something means to make it different: the addition of a new Product with, inevitably, a new Price, changes the state of affairs that pertained originally. Where there was once no Product of that description, and so no Price, there is now a Product and a Price.

ii)                 That fits with the wording of Article 10.1, when read as a whole:

a)                  The first sentence of Article 10.1 provides that Prices are stated in Appendix 2.

b)                 The second sentence then refers to “[c]hanges in Price(s)”, which can only be a reference to the Prices stated in Appendix 2. It follows that a “change” is a change to Prices stated in Appendix 2, and such a change can either be by the insertion of a wholly new Price (where there is a new Product introduced) or by the alteration of an existing Price (where a Product is already listed).

c)                  The second sentence requires that changes in Prices (i) be mutually agreed in writing and (ii) be negotiated in good faith. It is clear that the first requirement – mutual agreement in writing – extends to amendments to Appendix 2 whether by adding or changing prices, which is consistent with Article 26.2. It is natural to read the good faith obligation co-extensively.  

iii)               Furthermore, it is unlikely that the parties – having agreed to include a good faith obligation regarding prices – would have wanted to confine that obligation only to changes to prices already agreed. Although Microsoft Mobile suggested one possible reason for this – that the value of Li-ion Batteries would decline over-time, as those batteries became more and more obsolescent, and that the “negotiation in good faith” provision was required for this reason – this was speculation and there was nothing in the factual matrix to allow me to conclude that this was something that might have been in the contemplation of both parties. I prefer to rely on what I find to be the natural construction of the words of Article 10.1. 

62.              Article 19 of the PPA provides:

“19.1 EXCLUDING WARRANTY CLAIMS UNDER ARTICLE 16, INDEMNIFICATION CLAIMS UNDER ARTICLE 17, NEITHER PARTY SHALL UNDER ANY CIRCUMSTANCES BE LIABLE FOR ANY LOST PROFITS, LOST OPPORTUNITIES, LOST REVENUES OF THE OTHER PARTY OR OTHER SIMILAR INDIRECT DAMAGE INCURRED BY THE OTHER PARTY AND ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT, UNLESS SUCH DAMAGE IS CAUSED BY GROSS NEGLIGENCE OR WILFUL MISCONDUCT.”

 

63.              There are two points that need to be made in respect of this clause limiting liability:

i)                   First, consistent with the approach in Fiona Trust, I take no account of the difference between the words “arising under or in connection with this agreement” in Article 19.1 and the words “[a]ny disputes related to this Agreement” in Article 25.2.

ii)                 Secondly, Article 19.1 seems to have been carefully thought through: the carve-outs, in relation to the warranty that all Products will be free from defects, etc (Article 16.1) and in relation to indemnification by SELLER in case the BUYER is found liable for defects in Products (Article 17), relate to central aspects of the PPA, namely the provision of Products by SELLER to BUYER in return for a mutually agreed Price. 

64.              Article 21 of the PPA provides:

“21.1 SELLER agrees to promptly inform BUYER in writing of event(s) coming to SELLER’s attention that reasonably may affect SELLER’s ability to meet any of its obligations under the Agreement.

21.2   The affected Party is not liable for a failure to perform any of its obligations under this Agreement to the extent it proves that the failure was due to Force Majeure. The affected Party shall without delay take reasonable steps to limit or minimise the consequences of Force Majeure. If Force Majeure continues for more than seven (7) years, BUYER may cancel the relevant Purchase Orders.”

 

65.              The force majeure provision is of no interest for the purposes of this Judgment: but D1/Sony Europe did rely upon the provisions of Article 21.1, as a corollary to the good faith obligation in Article 10.1, in that if it came to the attention of SELLER that changes in Prices were not being negotiated in good faith, there was an obligation to inform BUYER under Article 21.1.

66.              Microsoft Mobile disputed this, and suggested that there was a relationship as between Article 21.1 and 21.2, which caused Article 21.1 to be confined, in some way, to cases of Force Majeure. I reject that submission:

i)                   What links Articles 21.1 and 21.2 is the fact that they relate to an inability to meet (in the case of Article 21.1) or failure to perform (in the case of Article 21.2) “any of its obligations” under the PPA. That is no doubt why they appear in a single Article.[28]

ii)                 Of course, it may be that a Force Majeure event will signal itself before actually occurring, thus triggering the duty to inform under Article 21.1: but that is not a reason to read Article 21.1 as confined to those cases where SELLER’s inability to meet any of its obligations is due to Force Majeure.

(6)        The scope of the arbitration clause

67.              D1/Sony Europe contended that the PPA was a “relational” contract, and that its terms should be read in this light. The reference to a “relational” contract was a reference to the analysis of Leggatt J. in Yam Seng Pte. Ltd v. International Trade Corporation Ltd [2013] EWHC 111 (QB). In Yam Seng, Leggatt J. stated at [142]:

“In some contractual contexts the relevant background expectations may extend further to an expectation that the parties will share information relevant to the performance of the contract such that a deliberate omission to disclose such information may amount to bad faith. English law has traditionally drawn a sharp distinction between certain relationships – such as partnership, trusteeship and other fiduciary relationships – on the one hand, in which the parties owe onerous obligations of disclosure to each other, and other contractual relationships in which no duty of disclosure is supposed to operate. Arguably, at least, that dichotomy is too simplistic. While it seems unlikely that any duty to disclose information in performance of the contract would be implied where the contract involves a simple exchange, many contracts do not fit this model and involve a longer term relationship between the parties [to] which they make a substantial commitment. Such “relational” contracts, as they are sometimes called, may require a high degree of communication, cooperation and predictable performance based on mutual trust and confidence and involve expectations of loyalty which are not legislated for in the express terms of the contract but are implicit in the parties’ understanding and necessary to give business efficacy to the arrangements. Examples of such relational contracts might include some joint venture agreements, franchise agreements and long term distributorship agreements.”

 

68.              I did not find D1/Sony Europe’s reference to Yam Seng of particular assistance:

i)                   In the first place, I do not consider that the PPA amounted to a “relational” contract of the sort described by Leggatt J. The PPA is much more a contract of “simple exchange”, albeit one intended to operate over a considerable period of time and embracing multiple Products and purchases. Those factors do not, however, turn a contract for the sale and purchase of Products into anything more than that.

ii)                 Secondly, Leggatt J.’s analysis in Yam Seng was directed to the question of whether a duty of good faith should be implied into the contract before him. In this case, D1/Sony Europe placed much emphasis on the express duty to negotiate in good faith contained in Article 10.1, and did not contend for any implied term over-and-above this. Indeed, it is difficult to see how – given the nature of the PPA, and the extent to which the parties expressly provided for “good faith” obligations – any further, implied, good faith obligations could be found to exist.

69.              I therefore proceed on the basis that the PPA is not a relational contract, and that no question of implication of terms arises. However, it is necessary to have regard to the express terms of the PPA, which I have considered and construed in paragraphs 59 to 61 above.

70.              It is very difficult to see how a party to the PPA, like D1/Sony Europe, could knowingly engage in cartelist behaviour of the sort alleged by Microsoft Mobile without at the same time breaching Article 10.1 and triggering the obligation to inform under Article 21.1. For present purposes, I regard the second of these provisions as less important than the first. Plainly, as Mr. de la Mare, Q.C. submitted, were D1/Sony Europe to comply with Article 21.1, and disclose in writing an intention to negotiate prices in bad faith because of an agreement with other cartelists, the cartel would end before it began.

71.              Assuming, for present purposes, the existence of the Cartel alleged by Microsoft Mobile, it is much more likely that D1/Sony Europe would (and did) breach Article 10.1 and so, incidentally, Article 21.1. But it is the provision in Article 10.1, containing the obligation to negotiate in good faith, that would be key.

72.              In this context, it is necessary to consider whether any contractual claims arising out of the PPA would be sufficiently closely related to the tortious claims actually advanced by the Claimant so as to render rational businessmen likely to have intended such a dispute to be decided (like a contractual dispute) by arbitration pursuant to Article 25.2 of the PPA. I conclude that they are for the following reasons:

i)                   It was common ground that this was a question that needed to be considered as at the time the PPA was concluded. This is a matter of interpretation of the PPA, not an exercise in hindsight.

ii)                 It is irrelevant that a contractual claim has not been pleaded by Microsoft Mobile. Microsoft Mobile stressed that its claims were pleaded entirely in tort, and of course that is right. However, the mere fact that a claim in contract has not been pleaded is, to my mind, irrelevant. Were the manner in which a case was actually pleaded to matter, instead of how a case could have been pleaded, it would be easy for a claimant to circumvent the scope of an arbitration or jurisdiction clause by selectively pleading or not pleading certain causes of action. It would be an extraordinary outcome were a claimant successfully to be able to contend that, because a contractual claim had not been pleaded, a “parallel” claim in tort arising out of exactly the same facts and with a scope defined by that contract fell outside the scope of such a provision. The proposition only has to be stated to be rejected.

iii)               That said, the extent to which a contractual claim is pleadable is obviously relevant to the thinking of rational businessmen at the time the arbitration clause is concluded. The more strained, recondite, convoluted or plain outlandish the contractual claim being postulated, the less likely it is that rational businessmen would expect “related” tortious claims to be subject to an arbitration clause. This is the approach in Ryanair, where the Court of Appeal was faced with an unarguable contractual claim, and concluded that it was unlikely that rational businessmen would choose to have determined together in a one-stop-shop a claim in tort “related” to an unarguable contractual claim.

iv)               When weighing the link between a tortious and contractual claim, it is not merely the unarguable contractual claim that is an indicator that the arbitration clause does not bite, but also the strained one.

v)                 But I do not consider that, in this case, a breach of contract claim based upon Articles 10.1 and 21.1 to be anything other than plausible, and certainly well-arguable. I have well in mind the points that Rix L.J. weighed in Ryanair:

“31.   Mr. Beard further submitted that Ryanair’s construction of the clause renders it otiose: because it is triggered by proof of a breach of statutory duty which provides its own remedy, and, on Ryanair’s case, provides the very remedy which the statutory tort provides.

32.     If therefore article IV does not cover or allow Ryanair’s contract claim or permit the use to which Ryanair seeks to put it, then it becomes all the more unlikely that article 12.1 should be interpreted to cover a claim in statutory tort whose ramifications are so far removed from the considerations of contractual remedies which the parties would otherwise be reasonably regarded as having in mind in a jurisdiction clause which is concerned with ‘the resolution of disputes under this agreement’, a fortiori where the same clause expressly excludes claims for ‘prospective profits or for indirect or consequential damages’.

33.     In this connection Mr Beard pointed out in his submissions some of the broad and idiosyncratic consequences of a claim for breach of statutory duty pursuant to article 101: such as that such a claim properly concerns tortious arrangements between rivals generally unrelated to a particular contract between a buyer and a seller; that such arrangements can come in all varieties; that it is possible to sue any member of a cartel for damages caused by each and any member of the cartel; that a customer of various members of a cartel may have different jurisdiction clauses in its contracts with such members; that losses caused by different cartel arrangements may be very various; that in any case such losses may also vary from those caused by being charged prices higher than a more competitive model would indicate to losses on business missed because of inflated prices, i.e. losses due to non-sales (an example of loss of profits excluded from article IV); that direct customers from a cartel may suffer no loss because they have passed on the higher price to their customers, in circumstances where it is their customers, so-called indirect purchasers, who have suffered the inflated prices and may correspondingly sue the cartel members. Mr. Beard submitted that it is unlikely that parties to a clause such as article 12.1 contemplated such claims for damages for breach of statutory duty, which are likely to arise between multiple claimants and multiple defendants, as falling naturally or presumptively within a contractual jurisdiction clause.”     

 

vi)               Rix L.J. found that there was “no answer to Mr. Beard Q.C.’s powerful submissions”[29] and – in the context of a case where no contractual claim analogous to the tortious one being advanced is possible – I respectfully agree. But that is not this case. There may be many reasons why a change in price might not be negotiated by SELLER in good faith, and so amount to a breach of Article 10.1 of the PPA. No doubt some of these might require consideration only of the conduct of SELLER, unrelated to SELLER’s interactions with third parties. But, equally, SELLER’s failure to act in good faith may (as would appear to be the case here, based upon Microsoft Mobile’s pleaded case) have been actuated by SELLER’s dealings with third parties, in the form of a cartel or other (illegal) combination. In such a case, the overlap between the contractual claim, the cartel claim and the combination claim will be considerable:

a)                  The contractual claim will not sound in debt (it will not be for the price), but for damages – just as the tortious claims.

b)                 The extent to which the negotiated price was above the “good faith” price will inevitably involve an examination of the dealings between SELLER and the various other cartelists. The arrangements and dealings between protagonists not party to the PPA will be relevant.

c)                  BUYER’s loss and damage will have to take account of any pass-on (if any) and (if higher prices were passed on) volume effects will come into play – as part of the ordinary process of assessing damages.

vii)             It is true that the claim that BUYER has against SELLER will be confined to SELLER. There can – because of the arbitration clause – be no bringing in of other parties to the cartel. For this reason, questions of contribution from other cartelists will not arise, in the arbitration at least. Neither will the question of competing jurisdiction/arbitration clauses.

viii)           Of course, it would remain open to the BUYER to select a claim against a different defendant, such that other parties involved in the cartel could be brought in to such proceedings. The feasibility of such a course would depend on all the circumstances.

ix)               I am also conscious that the parties to the PPA gave careful thought to the allocation of risk and liability as between themselves:

a)                  The provisions of Article 19 of the PPA are set out in paragraphs 62 and 63 above. It is clear that SELLER’s primary responsibilities and so liability lie in providing Products free of defects, and these aspects of performance are carved out of the Article 19 exclusion clause.

b)                 All other aspects of liability – apart from cases where damage is caused by gross negligence or wilful misconduct – fall within Article 19, including the negotiation of Prices.

c)                  If, at the time of the conclusion of the PPA, the prospect of liability in respect of an innocent participation or involvement in a cartel had been mooted, I consider that rational businessmen would have expected such a claim (even though sounding in tort) to fall within Article 19.

73.              I therefore hold that Article 25.2 extends to all pleaded claims made by Microsoft Mobile against D1/Sony Europe, save for those (if any) pre-dating the commencement of the PPA. To the extent that such pre-PPA claims are or can be advanced against D1/Sony Europe, they would fall outside the scope of the arbitration clause. As a continuing tort – or single, continuous infringement – the right of action (under English law at least) accrues afresh every day, but damages can be recovered only for the period covered by the proceedings.

(7)        Is Article 25.2 to be applied, even if wide enough to embrace the claims against D1/Sony Europe?

74.              Microsoft Mobile contended that if, contrary to its submissions, Article 25.2 covered all or part of its claims, it should not be applied, either pursuant to section 9(4) of the Arbitration Act 1994 (which can be invoked to deal with an incompatibility between an arbitration clause and EU law[30]) or (by virtue of EU law) in order to give effect to the primacy of EU law.[31]

75.              D1/Sony Europe did not seek to deny that it was possible, as a matter of law, to disapply Article 25.2 in this way, provided that an incompatibility with EU law could be shown. What was disputed, however, was that application of the arbitration clause in this case was in any way incompatible with EU law.

76.              Microsoft Mobile’s contention was that the operation of the Brussels I Regulation (Recast) must permit the effective protection of rights derived from competition law, including private law rights of action for infringement, these being rights accorded by EU law, and that an arbitration clause which caused the fragmentation of such rights of action was, for that reason, in breach of EU law.

77.              It should be said at the outset that it was not disputed by D1/Sony Europe, and is accepted by me, that the application of the arbitration clause in this case is likely to cause fragmentation, in at least two respects:

i)                   First, because D1/Sony Europe is invoking the arbitration clause, the claims made against D1/Sony Europe will have to be determined in arbitration against D1/Sony Europe and the other parties to the PPA (like D2/Sony Corporation) only, without the joinder of other parties (absent the consent of all).

ii)                 Secondly, Microsoft Mobile has lost its anchor defendant. D1/Sony Europe was, as I have described in paragraph 25(ii)(a) above, the party by way of which it sought to establish jurisdiction against the other Defendants.

78.              The question is whether this fragmentation, caused by the arbitration clause, is an infringement of EU law such as to render the application of the clause ineffective or inoperable. In this regard, Microsoft Mobile placed considerable reliance upon the opinion of the Advocate General (AG Jääskinen) in Case C-352/13, Cartel Damage Claims (CDC) Hydrogen Peroxide SA v. Evonik Degussa [2015] QB 609, and rather less reliance on the subsequent decision of the Court of Justice. It is therefore appropriate to set out in a little more detail than would normally be appropriate the reasoning of the Advocate General (emphasis supplied in all quotations):

i)                   The Advocate General noted that the reference, by the Landgericht Dortmund, unusually involved the interplay between the Brussels Regulation and Article 101 TFEU.[32] The Advocate General also noted that:

“8.     …it appears to me that the Brussels I Regulation, the aim of which is to create a system of rules of jurisdiction for the Union in respect of cross-border disputes in civil and commercial matters, is not fully geared towards ensuring effective private implementation of the Union’s competition law (or ‘private enforcement’, as it is usually called in this field) in circumstances such as those in this case.

9.       The application of certain provisions of that regulation is likely to lead to a territorial division of jurisdiction between the courts of the Member States which might, on the one hand, be inadequate from the point of view of the geographical scope of EU competition law or, on the other hand, make it more difficult for persons adversely affected by unlawful restrictions of competition to seek and obtain full reparation for the damage that they have suffered. It seems to me, therefore, possible that the authors of such restrictions could use those provisions of international private law to bring about a situation in which the civil-law consequences of a single, serious infringement of Union competition rules are to be determined in the context of a series of actions scattered across the various Member States.

10.     The general conclusion that I shall draw from this request for interpretation is that, de lege ferenda, because of the particular repercussions which cross-border anti-competitive practices are likely to have in terms of judicial cooperation in civil matters, especially when they are complex, as they are in the main proceedings, it would be advisable for the EU legislature to envisage incorporating in the Brussels I Regulation a rule of jurisdiction apt to cover such practices, on the lines of the conflict-of-laws provision which usually applies specifically to obligations deriving from acts restrictive of competition under the regulation usually known as ‘Rome II’.”

 

ii)                 The Advocate General’s starting point was, therefore, his appreciation of what he regarded as certain inadequacies in the Brussels I Regulation when dealing with a single, continuous, infringement of competition law. He sought, through interpretation of the Brussels I Regulation, to resolve these perceived inadequacies by unifying causes of action in a single forum:

“27.   …I consider that the interpretation and application of the Brussels I Regulation must make it possible to preserve the full effectiveness of provisions of EU competition law, which are vitally important for the internal market and constitute a fundamental element of the EU economic constitution because, as the Court has already stressed, Article 85 of the EC Treaty, now Article 101 TFEU, is a ‘fundamental provision which is essential for the accomplishment of the tasks entrusted to the Community, and, in particular, for the functioning of the internal market’. Furthermore, the procedural rules of EU law must, to a certain extent, serve the substantive rules of EU law, in the sense that the former are an instrument which enables the rights and obligations of private and public persons to be made tangible, particularly in terms of the right to an effective remedy and to a fair trial, as affirmed in Article 47 of the Charter of Fundamental Rights of the European Union.

52.     In conclusion, by analogy with the Court’s ruling in Besix, I consider that the special jurisdiction rule in matters of tort, delict or quasi-delict, laid down in Article 5(3) of the Brussels I Regulation, is inoperative when, as in the case in the main proceedings, the place where the harmful event allegedly occurred cannot be determined, by virtue of the fact that the infringement of Article 101 TFEU on which the action is based consists of actions notable for the multiplicity of places where they were agreed and/or performed, with the result that it is not possible to determine clearly and usefully what court has a particularly close link with the dispute as a whole.

53.     In my opinion, in such a case jurisdiction must be determined either by applying the general rule in Article 2(1) of the Brussels I Regulation or by applying other special jurisdiction rules specified in that regulation, such as the rule in Article 6(1), which allows actions brought against several defendants to be combined before a single court, provided that the conditions for applying one or other of those rules are satisfied in the case in point. In that connection, it must be pointed out that it is possible for account to be taken of the connection between actions against several defendants, as a basis for establishing jurisdiction, only in the context of Article 6(1), which provides for that possibility solely where there is the strong connecting link of the domicile of one of the defendants, but not in the context of a provision such as Article 5(3) of the Brussels I Regulation whose application depends on the place where an event occurred.

56.     In accordance with Article 6(1) of the Brussels I Regulation, all the claims on the part of a single applicant against a number of defendants may be brought before a court of a Member State in whose jurisdiction at least one of those defendants, who will be referred to here as the ‘anchor defendant’, is domiciled, provided always that there is a connecting link between those heads of claim. In this regard, the relevant provision expressly states that the claims must be ‘so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings’.

57.     By allowing actions to be centralised before a single court and by extending the jurisdiction of the latter to cover defendants vis-à-vis whom the court would not have been able to give a ruling failing that extension, Article 6(1) reflects the objectives of sound administration of justice, by eliminating unnecessary proceedings and preventing the concomitant risk of concurrent proceedings and conflicting decisions, as referred to in the Brussels I Regulation.

71.     I would emphasise that, if it were to be held that Article 6(1) of the Brussels I Regulation was not applicable to proceedings such as the main proceedings in this case, that would mean that different courts would have to examine the alleged damage, without any consultation, in the light of the various domestic legal orders, with the attendant risk that each of the participants in the same unlawful cartel might be ordered to pay different amounts of damages, when it would be desirable, not to say necessary, to rule uniformly on the claims submitted by the same applicant.

72.     As the Commission points out, in my view rightly, ‘the effectiveness of this provision would be undermined if it were to be interpreted so strictly that it would render impossible, in such circumstances, the bringing of joint actions against all the participants in a cartel before a court which is situated in the domicile of one of the defendants belonging to the cartel, on the sole grounds that it lacked international jurisdiction.’

73.     In the light of these factors, I consider that a situation in which several companies established in different Member States are tried separately, before different courts, and not before a single court, for the purpose of obtaining damages in respect of the same infringement of EU competition law, resulting from acts committed at different times and in different places but constituting a single and continuous infringement, is liable to lead to irreconcilable judgments, within the meaning of Article 6(1) of the Brussels I Regulation, if the cases are judged separately.

74.     In accordance with the Court’s case law, it will be for the referring court to assess, in the light of all the elements in the case, whether there exists such a risk in the proceedings before it.

75.     Like the Commission, I note that such an interpretation has the not inconsiderable advantage of reflecting the intention expressed by the legislature in the Rome II Regulation, especially in Article 6 entitled ‘Unfair competition and acts restricting free competition’, paragraph 3 of which sets out the possibility, for a claimant suing several defendants in the context of a dispute in this field, of centralising his claims before a single court ‘in accordance with the applicable rules on jurisdiction’ and of basing his claims on the law of that court. To my mind, due account should be taken of this legal guideline, in the interests of coherence between the instruments of Union law applicable to cross-border disputes, despite the fact that, as the defendants in the main proceedings contend, the Rome II Regulation is not, ratione temporis, applicable in this case.”

 

iii)               Thus, through interpretation, the Advocate General effectively sought to bring the Brussels I Regulation into line with Rome II, in order to ensure a single forum. He then considered the effect of jurisdiction and arbitration clauses, as possible derogations from the regime he had thus constructed.

iv)               The claim in the Landgericht Dortmund was in fact an agglomeration of claims. A number of victims of the cartel had assigned their claims to a single claimant entity, which was bringing these proceedings. Of course, these victims had purchased the cartelised product (hydrogen peroxide) pursuant to a variety of contracts containing a variety of different arbitration and jurisdiction clauses, which (no doubt) pointed in various jurisdictional directions.[33] As to choice of jurisdiction and arbitration clauses, the Advocate General showed a high degree of hostility to these, particularly if they pointed to a jurisdiction outside the EU:

“97.   …In the first place, it must be recalled that choice of jurisdiction clauses, under which the parties, at least one of which had its domicile in the territory of a Member State, have designated a court of a Member State to hear and determine disputes arising or likely to arise out of a particular legal relationship, fall within the ambit of Article 23 of the Brussels I Regulation.

98.     On the other hand, arbitration clauses are, as a matter of principle, excluded from the scope of that regulation. It follows that questions relating to the validity of, and the possibility of relying on, those clauses ought to be governed by the national law of each of the Member States and by the international conventions binding the latter. Nevertheless, the Court has held that if, because of the main subject-matter of the dispute, that is to say, the nature of the rights to be protected in proceedings, such as a claim for damages, the proceedings brought before a national court fall within the scope of the Brussels I Regulation, then an incidental preliminary issue concerning the applicability of an arbitration agreement, including its validity, falls within the scope of that regulation too and it is, therefore, exclusively for that court to rule on the objection of lack of jurisdiction based on the existence of an arbitration agreement and on its own jurisdiction under the provisions of that regulation.

99.     Despite this difference in terms of the applicability of the Brussels I Regulation, it must be recalled that the two categories of clause at issue have the common effect of derogating from the rules on jurisdiction laid down in that regulation, by reason of respect for the autonomy of the parties concerning the determination of the court, whether national or arbitral as the case may be, to which they mean to entrust the task of settling their disputes.

100.   Nevertheless, a clause conferring jurisdiction in accordance with Article 23 of the Brussels I Regulation may confer jurisdiction only on the courts of Member States of the European Union and by extension, under the Lugano Convention, on the courts of the Parties to that Convention, whereas an arbitration clause may provide that arbitration is to take place in any third State whatsoever. The likelihood of provisions of EU competition law not being applied, even by way of public policy rules, is much greater when jurisdiction is conferred on arbitrators or courts of States not bound by the Lugano Convention.”

 

v)                 The Advocate General considered that a distinction needed to be drawn between (i) jurisdiction clauses falling within Article 23 of the Brussels I Regulation, on the one hand, and (ii) jurisdiction clauses outside Article 23 and arbitration clauses, on the other.

vi)               As regards clauses to which Article 23 applied:

“109. I would, in particular, recall that it follows from the Court’s case-law in relation to Article 23 of the Brussels I Regulation, on the one hand, that the validity of a jurisdiction clause inserted in a contract is dependent on the parties that concluded it having clearly indicated their agreement to that clause and, on the other hand, that the court seised is required to examine whether that clause was the subject of consensus between the parties.

111.   Like CDC, I very much doubt that a clause conferring jurisdiction, included in contracts such as those at issue, could satisfy the requirement of clear unvitiated consensus, because the point is the attribution of jurisdiction to the court designated to settle a case relating to the tortious liability of one of the contracting parties deriving from an unlawful cartel when, at the time it concluded the agreement, the person allegedly injured was unaware of the existence of the cartel.

112.   On the other hand, it could, to my mind, be accepted that the person injured should enter into an agreement conferring jurisdiction after it had learned of the existence of the unlawful cartel agreement prohibited by Article 101 TFEU, the former agreement being entered into after the dispute arose, and hence accepted in full knowledge of the facts.”

 

vii)             As regards jurisdiction clauses outwith Article 23 and arbitration clauses:

“118.   With regard to the clauses conferring jurisdiction to which Article 23 of the Brussels I Regulation proves not to be applicable and to arbitration clauses, the problem raised by the referring court is more complex, for it must be tackled by applying, not the provisions of that regulation, as interpreted by the Court, but rules of national law, whose implementation must be consistent with the binding provisions of EU primary law, and in particular with Article 101 TFEU.

119.     In this connection, I would recall that, according to its consistent case-law in the judgments in Courage and Crehan and Manfredi and Others, the Court has held that, failing EU legislation in that sphere, it is for the domestic legal system of each Member State to prescribe the detailed rules for exercising the right to compensation for damage resulting from an agreement, decision or concerted practice prohibited under Article 101 TFEU,  subject to observance of the principles of equivalence and effectiveness which require, in particular, that those national rules should not hinder the full effectiveness of Union competition law and should take account, more specifically, of the objective contained in that article. In my opinion, it therefore follows in this case that the application of national rules may not allow the jurisdiction and/or arbitration clauses at issue to prejudice that full effectiveness.

120.     Furthermore, the Court has held that the full effect of Article 101 TFEU and, in particular, the effectiveness of paragraph 1 thereof would be put at risk if it were not open to any individual to claim damages for loss caused to him by a contract or conduct liable to restrict or distort competition, such as the unlawful cartel agreement which, in this case, forms the basis for CDC’s claims. The guarantee that individuals may seek such compensation is likely to discourage agreements or practices of this nature, which are often concealed, and it therefore contributes significantly towards maintaining effective competition within the Union.

121.   As a general rule, when faced with an arbitration clause, a court of a Member State should decline jurisdiction and refer the parties to arbitration, at the request of one of the parties, unless that court finds that the arbitration agreement relied upon has lapsed, is inoperative or cannot be applied in the dispute before it, following scrutiny within the scope of its own jurisdiction, in the light of the requirements of domestic law, since the Brussels I Regulation does not regulate the conditions governing the validity of such a clause. The same would apply to clauses designating a national court which are not covered by Article 23 of the regulation.

122. However, the principle requiring effective implementation of the prohibition under EU law of agreements, decisions and concerted practices, to which the Landgericht refers, can, in my view, be invoked vis-à-vis the jurisdiction or arbitration clauses at issue for the purpose, in particular, of ensuring that all persons have the right to seek full compensation for losses resulting from a prohibited agreement, such as those alleged in the main proceedings.

123.   In this connection, it is to be observed that the Court held in the judgment in Eco Swiss, which concerns the relationship between arbitration and the competition rules under EU law, that Article 85 of the Treaty, now Article 101 TFEU, ‘may be regarded as a matter of public policy’. The Court held that ‘where its domestic rules of procedure require a national court to grant an application for annulment of an arbitration award where such an application is founded on failure to observe national rules of public policy, it must also grant such an application where it is founded on failure to comply with [that article]. Community law requires that questions concerning the interpretation of the prohibition laid down in [that article] should be open to examination by national courts when asked to determine the validity of an arbitration award and that it should be possible for those questions to be referred, if necessary, to the Court of Justice for a preliminary ruling’.

124.   By analogy, I consider that national courts are required by EU law not to apply an arbitration clause, or a jurisdiction clause not governed by Article 23 of the Brussels I Regulation, in cases where the implementation of such a clause would hamper the effectiveness of Article 101 TFEU. In this connection, it may with advantage be noted that the judgment in Eco Swiss predates those in Courage and Crehan and Manfredi and Others, which upheld the recognition in EU law of a right to compensation for all damage suffered by persons adversely affected by unlawful barriers to free competition, not only in the interests of those persons but above all in order to preserve the general interests bound up with that freedom. The case-law after those two judgments has further reinforced that approach, by encouraging the private implementation of those competition rules (commonly known as ‘private enforcement’), particularly following the removal of the potential obstacles deriving from national provisions.

125.   It is true that the application of jurisdiction or arbitration clauses is not in itself an obstacle to the effectiveness of Article 101 TFEU within the meaning of the case-law cited. In particular, the fact that clauses of this type may, if they are valid and applicable to the dispute concerned, entail the ousting of the special bases of jurisdiction provided for in Articles 5 and/or 6 of the Brussels I Regulation does not necessarily have the effect of depriving the persons allegedly adversely affected by damage caused by an unlawful cartel agreement of the possibility of obtaining full compensation on that basis, given that they are not prevented from bringing actions before each of the appointed national or arbitration courts, even though, given the wide variety of clauses relied upon in this case, their application would certainly be likely to render such a course of action more difficult.

126.   None the less, I consider that it is a matter of some delicacy to put that theoretical position into practice in the particular context of an unlawful cartel agreement, involving numerous participants and persons allegedly adversely affected, whose implementation has generated a multitude of individual supply contracts, possibly concluded between different companies in the group to which a vendor or purchaser belongs. In the case of a horizontal restriction of competition, such as that on which the main proceedings are based, I find it difficult to accept an exclusion of the normal forms of judicial protection, unless the parties allegedly adversely affected have expressly entered into an agreement to that effect and the national arbitration courts to which jurisdiction has been assigned in this way are required to apply the provisions of EU competition law as rules of public policy.

 

viii)           The Advocate General’s conclusion at [132] was as follows:

“In consequence, I consider that Article 101 TFEU must be interpreted as meaning that, in the context of an action for compensation for damage caused by an agreement declared to be contrary to that article, the implementation of jurisdiction and/or arbitration clauses does not in itself compromise the principle of the full effectiveness of the prohibition of agreements, decisions and concerted practices. In so far as a clause of one or other of those categories  could be declared applicable, pursuant to the law of a Member State, in a dispute concerning liability in matters of tort, delict or quasi-delict that might follow from such an agreement, that principle, in my view, precludes jurisdiction over that dispute being attributed under a clause of a contract whose content had been agreed when the party against whom that clause is relied on was unaware of the cartel agreement in question and of its unlawful nature, and could not, therefore, have foreseen that the clause could apply to the damages sought on that basis.

 

79.              I have quoted extensively from the opinion of AG Jääskinen because there was considerable resonance between the submissions of Microsoft Mobile and the opinion of AG Jääskinen. Basing itself on the Advocate General’s opinion, Microsoft Mobile contended for a single jurisdiction – England and Wales – to hear all claims, apart from those U.S. claims it had itself brought. Factors – like the arbitration clause – which stood in the way of this outcome were to be set aside pursuant to this higher object.

80.              Opinions of Advocates General are advisory only, and are neither binding on the Court of Justice, nor on me. In a case where the Court of Justice has followed the opinion of an Advocate General, in terms of outcome or (more importantly) reasoning, the opinion of the Advocate General can be of importance in elucidating the judgment of the Court. In this case, however, the Court of Justice took a different approach from that of AG Jääskinen, and placed little (if any) weight on the concerns regarding the fragmentation of actions in competition claims that so troubled AG Jääskinen, and which Microsoft Mobile associated itself with:

i)                   In the first place, the Court of Justice pointed out that consolidation by assignment of claims could not affect the essential jurisdictional rules that applied. At [35] it was noted (in the case of all quotations, emphasis added):

“Given that the circumstances of the present case are characterised by the consolidation of a number of potential claims for damages brought by the applicant in the main proceedings which had been assigned to the applicant by several undertakings allegedly victims of the Hydrogen Peroxide cartel, it should be pointed out from the outset that the transfer of claims by the initial creditor cannot, by itself, have an impact on the determination of the court having jurisdiction under Article 5(3) of Regulation No 44/2001…”

 

ii)                 With great respect, this is obviously right. The consequence – spelt out in [36] – was that “the location of the harmful event must be assessed for each claim for damages independently of any subsequent assignment or consolidation”. The Court then considered where – in particular in competition cases – the place of the causal event and the place where the damage occurred might be. The detail of the Court’s reasoning does not, for present purposes, matter. What does matter is that the Court did not share the Advocate General’s concerns about fragmentation of claims. At [55], it stated:

“However, given that the jurisdiction of the court seised of the matter by virtue of the place where the loss occurred is limited to the loss suffered by the undertaking whose registered office is located in its jurisdiction, an applicant such as CDC, who has consolidated several undertakings’ potential claims for damages, would therefore, in accordance with the case-law set out in paragraph 35 above, need to bring separate actions for the loss suffered by each of those undertakings before the courts with jurisdiction for their respective registered offices.”

 

iii)               The Court then turned to jurisdiction and arbitration clauses, and noted that it did “not have sufficient information at its disposal in order to provide a useful answer to the referring court”.[34] The Court said nothing about jurisdiction clauses outside Article 23 nor arbitration clauses. As regards jurisdiction clauses within Article 23, the Court simply noted:

“59.   …it is to be observed that, in the context of the Convention on jurisdiction and the enforcement of judgments in civil and commercial matters, signed in Brussels on 27 September 1968…, the Court has stated that, by concluding an agreement on the choice of court under Article 17 of the Brussels Convention, the parties may derogate, not only from the general jurisdiction under Article 2 thereof, but also from the special jurisdiction laid down in Articles 5 and 6 of that convention…

60.     Since the interpretation given by the Court in respect of the provisions of that convention is also valid for those of Regulation No. 44/2001 whenever the provisions of those instruments may be regarded as equivalent, it must be found that such is the case as regards the first paragraph of Article 17 of the Brussels Convention and Article 23(1) of Regulation No. 44/2001, which are drafted in almost identical terms…

61.     It must therefore be concluded that the court seised of a matter can, in principle, be bound by a jurisdiction clause derogating from the rules of jurisdiction laid down in Articles 5 and 6 of Regulation No. 44/2001, which was concluded by the parties under Article 23(1) of that regulation.

62.     That conclusion cannot be called in question by the requirement of effective enforcement of the prohibition of cartel agreements. First, the Court has already held that the substantive rules applicable to the substance of a case must not affect the validity of a jurisdiction clause agreed in accordance with Article 17 of the Brussels Convention…In accordance with the case-law referred to in paragraph 60 above, that interpretation is also relevant to Article 23 of Regulation No. 44/2001.

63.     Second, it must be considered that the court seised of the matter cannot, without undermining the aim of Regulation No. 44/2001, refuse to take into account a jurisdiction clause which has satisfied the requirements of Article 23 of that regulation solely on the ground that it considers that the court with jurisdiction under that clause would not give full effect to the requirement of effective enforcement of the prohibition of cartel agreements by not allowing a victim of the cartel to obtain full compensation for the loss it suffered. On the contrary, it must be considered that the system of legal remedies in each Member State, together with the preliminary ruling procedure provided for in Article 267 TFEU, affords a sufficient guarantee to individuals in that respect…”.

 

81.              In conclusion, whilst I accept that it is possible for the provisions of EU law to permit a court to sideline or declare ineffective an arbitration clause, there is nothing in the decision of the Court in CDC to mandate such a course. Indeed, to the contrary, to do so, would be to disregard the entire trend and direction of the approach of the Court.  I appreciate that the Court did not consider arbitration clauses specifically. However, that fact cannot disguise the basic truth that the Court’s approach to the risk of “fragmentation of claims” was fundamentally different to that of the Advocate General, and involved a wholesale rejection of his approach. I can see nothing in the decision of the Court to require me to displace the effect of the arbitration clause as something inimical to EU law. Accordingly, I reject Microsoft Mobile’s contention that the arbitration clause should be set aside or disregarded on the grounds of EU law.

(8)        Can and should the court determine the scope of the arbitration clause?

82.              I have already held that the court should determine the scope of the arbitration clause in this case (see paragraph 41 above) and have done so. I set out here my reasons for deciding the issue myself, rather than referring the point to the arbitral tribunal.

83.              The approach to determining an application for a stay under section 9 of the Arbitration Act 1996 was set out by Aikens L.J. in Joint Stock Company “Aeroflot-Russian Airlines” v. Berezovsky [2013] EWCA Civ 784 at [72] to [74] and Popplewell J. in Golden Ocean Group Ltd v. Humpuss Intermoda Transportasi Tbk Ltd [2013] EWHC 1240 (Comm) at [59].

84.              Essentially:

i)                   It is for the party seeking a stay of proceedings on the basis of an arbitration clause to show that there is a concluded arbitration agreement within the meaning of the 1996 Act and that it covers the disputes that are the subject of the court proceedings.

ii)                 Where such a contention is advanced, the court may do one of three things. It may decide the issues for itself in a summary fashion; it may direct an issue to be tried pursuant to CPR Part 62.8(3); or it may stay the proceedings so that the (putative) arbitral panel can decide on its own jurisdiction pursuant to section 30 of the 1996 Act.

iii)               If the court decides that there is a concluded arbitration agreement covering the scope of the disputes the subject of the court proceedings, then the counterparty to the arbitration clause may – the burden being on it – seek to satisfy the court that the clause is “null and void” pursuant to section 9(4).

iv)               In terms of the choice between the various courses outlined in sub-paragraph (ii) above, Popplewell J. set out a series of factors “likely to be of significance” in Golden Ocean Group at [59](7). These are, of course, context sensitive. In the present case, the factors that suggest that it is most appropriate for the court to decide the issues for itself in a summary fashion are the following:

a)                  As a matter of case management, this is clearly the most efficient approach. The parties had, before this hearing, prepared detailed argument on the point, and court time had been set aside for a substantive hearing. None of the parties seriously contended that the section 9 point should be adjourned for an issue to be tried or for the matter to be determined by an arbitral tribunal yet to be constituted.

b)                 As will become apparent when considering the Gateways, the effect of the arbitration clause is significant for the purposes of determining whether Microsoft Mobile can bring itself within Gateway (3). It was important to decide the question of the scope of the arbitration clause in order to deal properly with the Applications, which of course could not be referred to arbitration.

c)                  Microsoft Mobile contended that the EU issues it raised – and which have been considered in paragraphs 74 to 81 above – are matters more appropriately dealt with by a court, and not an arbitral tribunal.[35] 

C.        STAY OF THE PROCEEDINGS AGAINST D2/SONY CORPORATION IN FAVOUR OF ARBITRATION

85.              The position of D2/Sony Corporation is materially the same as that of D1/Sony Europe so far as the arbitration clause in the PPA is concerned. The PPA is actually between D2/Sony Corporation and Nokia Mobile Phones Ltd as contracting parties, and Article 25.2 falls to be construed in exactly the same way. Equally, there is no reason for holding the arbitration clause effective in the case of D1/Sony Europe and ineffective in the case of D2/Sony Corporation (or vice versa).

D.        OBJECTIONS TO JURISDICTION: AN OVERVIEW OF THE RELEVANT PRINCIPLES

(1)        Three requirements

86.              This is a case where D1/Sony Europe was sued as of right pursuant to Article 4 of the Brussels I Regulation (Recast). All of the other Defendants – including D2/Sony Corporation – are foreign companies not domiciled in the EU. Jurisdiction over the claims against them is determined by English national law, pursuant to Article 6(1) of the Brussels I Regulation (Recast).

87.              The relevant provisions in the Civil Procedure Rules are CPR Parts 6.36 and 6.37. These provide, insofar as is material, that:

“6.36 In any proceedings to which rule 6.32 or 6.33 does not apply,[36] the claimant may serve a claim form out of the jurisdiction with the permission of the court if any of the grounds set out in paragraph 3.1 of Practice Direction 6B apply.

6.37  

(1)     An application for permission under rule 6.36 must set out –

(a)     which ground in paragraph 3.1 of Practice Direction 6B is relied on;

(b)     that the claimant believes that the claim has a reasonable prospect of success; and

(c)     the defendant’s address or, if not known, in what place the defendant is, or is likely, to be found.

 (2)    Where the application is made in respect of a claim referred to in paragraph 3.1(3) of Practice Direction 6B, the application must also state the grounds on which the claimant believes that there is between the claimant and the defendant a real issue which it is reasonable for the court to try.

(3)     The court will not give permission unless satisfied that England and Wales is the proper place in which to bring the claim.

…”

      

88.              Three requirements must be shown before the Court will permit service of claims out of the jurisdiction:[37]

i)                   The claimant must satisfy the court that in relation to the foreign defendant there is a serious issue to be tried on the merits, i.e. a substantial question of fact or law, or both.

ii)                 The claimant must satisfy the court that there is a good arguable case that the claim falls within one or more of the Gateways.

iii)               England and Wales must be clearly and distinctly the proper forum for the trial of the claims.

89.              There is naturally a close nexus between these three requirements and the procedural requirements of CPR Part 6.37. Thus:

i)                   The requirement under CPR Part 6.37(1)(a) that the ground relied upon be set out must be established to the standard of a “good arguable case” (as stated in paragraph 88(ii) above).[38]

ii)                 The requirement under CPR Part 6.37(1)(b) that the claimant believes the claim has a “reasonable prospect of success” equates to the “serious issue to be tried on the merits test” referenced in paragraph 88(i) above.[39]

iii)               The requirement in CPR Part 6.37(3) that England and Wales be the proper place in which to bring the claim equates to the test that England and Wales must be clearly and distinctly the proper forum for the trial of the claims (as stated in paragraph 88(iii) above).[40]

(2)        The duty to make full and frank disclosure

90.              Because the parties in question have ex hypothesi not been joined, applications to serve out of the jurisdiction are generally made ex parte. There is, on such applications, a duty on the applicant to make full and frank disclosure of the material facts, including adverse facts.[41] The question of whether Murray 1 was full and frank is considered in Section H below.

(3)     Challenging an order permitting service out of the jurisdiction

91.              If a party served pursuant to such an order is minded to challenge it, this will be done on the inter partes return date of the applicant’s original ex parte application for permission to serve out of the jurisdiction. At this point, the court will reconsider, and decide de novo, by way of rehearing, whether permission to serve out should be given. It is for the party seeking to serve out – Microsoft Mobile – to demonstrate that this is a proper case for service out. The position is clearly explained in Briggs, Civil Jurisdiction and Judgments, 6th ed. (2015) (hereafter “Briggs”) at p.460:[42]

“The application is made without the opponent’s being notified that it is being made; the court will almost always grant permission unless there is a very obvious flaw in the application. If permission is granted, as in practice it almost always is, and service is effected in accordance with it, the defendant may dispute the jurisdiction by challenging the order which granted permission, and the service which was made pursuant to it, by applying under CPR Part 11. The inter partes procedure which then follows marks the point in the process at which the court will investigate whether permission to serve should have been granted. The fact that permission was granted to the claimant in the first place is largely irrelevant at this point: it leaves no footprint; no onus is placed upon the defendant who applies to have the permission set aside; the application is in effect a rehearing of an application for permission, with the onus lying on the party who needed the permission in the first place. The court is not inhibited from discharging or varying the order, and for which the claimant now in substance (if not in form) reapplies, by reason of the fact that it has already been made.”

 

92.              However, the question on the re-hearing is whether it was proper to grant permission on the date upon which the order to serve out was granted, not (in the light of changed circumstances or fresh evidence) whether it would be right to grant it as at the time of the inter partes application. In ISC Technologies Ltd v. Guerin [1992] 2 Lloyd’s Rep. 430 at 434, Hoffmann J. stated:[43]

“Mr. Crystal said I should look at the position today. An application under R.S.C. O.12, r.8 is a rehearing of the application to the Master and the exercise of a fresh discretion. It should therefore take into account whatever has since happened. I do not agree. The application is under R.S.C. O.12, r.8(1)(c) to discharge the Master’s order giving leave to serve out. The question is therefore whether that order was rightly made at the time it was made. Of course, the court can receive evidence which was not before the Master and subsequent events may throw light upon what should have been relevant considerations at the time. But I do not think that leave which was rightly given should be discharged simply because circumstances have changed. That would mean that different answers could be given depending upon how long it took before the application came on to be heard. The position is quite different when the application is for a stay on grounds of forum non conveniens. In such a case, the appropriate time to consider the matter is the date of the hearing.”

 

93.              As Evans L.J. noted in Mohammed v. Bank of Kuwait and the Middle East KSC [1994] 1 W.L.R. 1483 at 1492, “[t]he question for the court is whether the evidence in support of the application justifies the order which is applied for being made. The evidence may be produced then or subsequently, but it must be directed at the situation at the date when the application is made.”[44]

94.              It is now necessary to consider the three requirements set out in paragraph 88 above in greater detail.

E.        THE FIRST REQUIREMENT: SERIOUS ISSUE TO BE TRIED

(1)        The law

95.              The requirement that there be a “serious issue to be tried” has been held to be the same as the “reasonable prospect of success” test contained in CPR Part 6.37. In Bas Capital Funding Corp v. Medfinco Ltd [2003] EWHC 1798, Lawrence Collins J. held at [153]:

“It was held by the House of Lords in Seaconsar (Far East) Ltd v. Bank Markazi [1994] 1 A.C. 438[45] that the standard of proof in respect of the cause of action relied on was whether, on the evidence, there was a serious question to be tried, i.e. a substantial question of fact or law, or both, which the claimant bona fide desired to have tried. There is no reason to believe that the standard introduced under CPR 6.21(b) of a “reasonable prospect of success” differs in any material way from the “serious issue to be tried” test.”

 

96.              In Carvill America Incorporated v. Camperdown UK Ltd [2005] EWCA Civ 645, Clarke L.J. stated at [24]:

“It is common ground between the parties that the merits test under CPR 6.20 is in substance no different from the test of a real prospect of success under CPR 3.4 or 24.2…the underlying rationale is that the court should not subject a foreign litigant to proceedings which the defendant would be entitled to have summarily dismissed. It is, however, important in my opinion to have in mind that the test is not a high one. A claimant has a real prospect of success if its chances of success are not fanciful.”

 

(2)        The parties’ agreement to “park” the issue

97.              Before me, the parties were agreed that I should proceed on the basis, for purposes of the Applications, that the “serious issue to be tried” requirement was met. However, the agreement that they made was incomplete, in that it left certain issues open. Essentially, the position was as follows:

i)                   In support of the application of D2/Sony Corporation on jurisdiction (as opposed to its application to stay the proceedings in favour of arbitration), evidence was adduced in support of the contention that this test was not met. However, the parties were agreed that there was insufficient time for this matter to be dealt with at the hearing before me.

ii)                 In these circumstances, the parties agreed that instead of adjourning the hearing:

a)                  For the purposes of the CPR Part 11 applications of D4/LG Chem and D6/Samsung, I should proceed on the basis that there was a serious issue to be tried, but without prejudice to any subsequent summary judgment application that the Defendants might bring.

b)                 Subject to one point on the question of burden of proof, the D2/ Sony Corporation application should effectively be confined to the same points as were being advanced by D4/LG Chem and D6/Samsung.

c)                  The evidence in support of the D2/Sony Corporation application would be deployed (in the event of the Applications being unsuccessful) in support of an application to strike out or for summary judgment in respect of the Amended Particulars of Claim. I anticipate that such an application would be brought by at least D1/Sony Europe and D2/Sony Corporation. Ordinarily, the burden of the application would rest on the applicants.

iii)               The issue that was unresolved by the parties was on whom the burden of proof on this point should rest: on Microsoft Mobile (as the party seeking to justify the order serving out of the jurisdiction) or on the Defendants (as the parties applying for summary judgment).

98.              The parties were agreed that this issue did not have to be determined by me now, and I do not do so. The upshot, however, was that the agreement between the parties was not complete: an important element was unresolved, and I am being asked to deal with an important element going to jurisdiction on the basis of this incomplete agreement. In the circumstances, whilst I proceed on the basis that there is a serious issue to be tried, and that the first requirement is satisfied, I should make absolutely clear – particularly given the terms of paragraph 100 of Microsoft Mobile’s written submissions, which seek to suggest that the issue was open-and-shut – that I am making no determination on this point. It is simply that, given the agreement of the parties, I am not going to consider the question and will not set aside the Master’s order on this ground.

F.         THE SECOND REQUIREMENT: A GOOD ARGUABLE CASE THAT THE CASE FALLS WITHIN ONE OR MORE OF THE GATEWAYS

(1)        Good arguable case regarding one or more of the Gateways

99.              At common law, the court had no power to permit claims to be served abroad. Power to do so was introduced by the Common Law Procedure Act 1852; was from 1883 in Order 11, rule 1 of the Rules of the Supreme Court; and since 2000 has been provided for by CPR 6.36 and paragraph 3.1 of Practice Direction 6B.

100.          All of the Gateways listed in the Practice Direction presuppose some connection – apart from mere presence in the jurisdiction when served – with England and Wales. It is fair to say that the connection is between the pleaded causes of action and this jurisdiction – not any wider jurisdiction, like the EU or the EEA.

101.          The burden of demonstrating that a claim falls within one of the Gateways lies on the party seeking to serve out of the jurisdiction:

i)                   Where the facts required for jurisdiction are disputed, the applicant must show a good arguable case that those facts are true. The court will not make any factual determination binding at trial. The test has two strands, a relative one and an absolute one.

a)                  The relative test is whether, on the evidence before the court, the applicant has much the better of the argument. In Canada Trust Co v. Stoltenberg (No. 2) [1998] 1 WLR 547 at 555, Waller L.J. articulated the test as follows:[46]

“It is, I believe, important to recognise, as the language of their Lordships in Korner’s case [1951] AC 869 demonstrated, that what the court is endeavouring to do is to find a concept not capable of very precise definition which reflects that the plaintiff must properly satisfy the court that it is right for the court to take jurisdiction. That may involve in some cases considering matters which go both to jurisdiction and to the very matter to be argued at the trial, e.g. the existence of a contract, but in other cases a matter which goes purely to jurisdiction, e.g. the domicile of a defendant. The concept also reflects that the question before the court is one which should be decided on affidavits from both sides and without full discovery and/or cross-examination, and in relation to which therefore to apply the language of the civil burden of proof applicable to issues after full trial is inapposite. Although there is power under Order 12, rule 8(5) to order a preliminary issue on jurisdiction, as Staughton L.J. pointed out in the Attock Cement Co. case [1989] 1 W.L.R. 114, 1156D, it is seldom that the power is used because trials on jurisdiction issues are to be strongly discouraged. It is also important to remember that the phrase which reflects the concept “good arguable case” as the other phrases in Korner’s case “a strong argument” and “a case for strong argument” were originally employed in relation to points which related to jurisdiction but which might also be argued about at the trial. The court in such cases must be concerned not even to appear to express some concluded view as to the merits, e.g. as to whether the contract existed or not. It is also right to remember that the “good arguable case” test, although obviously applicable to the ex parte stage, becomes of most significance at the inter partes stage where two arguments are being weighed in the interlocutory context which, as I have stressed, must not become a “trial”. “Good arguable case” reflects in that context that one side has a much better argument on the material available. It is the concept which the phrase reflects on which it is important to concentrate, i.e. of the court being satisfied or as satisfied as it can be having regard to the limitations which an interlocutory process imposes that factors exist which allow the court to take jurisdiction.

The civil standard of proof itself has a flexibility depending on the issue being considered and the concept “good arguable case” has a similar flexibility.”

 

b)                 The absolute standard was described by Arden LJ in Brownlie v. Four Seasons Holdings Inc [2015] EWCA Civ 665 at [23]:[47]

“As submitted on behalf of Lady Brownlie, when looking for “the much better argument” the court is concerned with the question of relative plausibility. But there is also an absolute standard to be met. The words used by Waller L.J., namely a “much better argument”, mean more than that, on the material available, the case is arguable. There must be some substance to it: since we are deciding a question of jurisdiction, the evidence must achieve an acceptable level of quality and adequacy. However, the standard to be attained is not that of succeeding on a balance of probabilities because there is no trial…”

 

ii)                 Where there is a pure point of law, not involving a factual dispute, on which jurisdiction depends, the court should normally decide it: Altimo Holdings and Investment Ltd v. Kyrgyz Mobil Tel Ltd [2011] UKPC 7 at [81] (per Lord Collins).

(2)        The Gateways relied upon by Microsoft Mobile

102.          In its application to serve the Defendants out of the jurisdiction, Microsoft Mobile relied upon Gateways (3) and (9)(a) of paragraph 3.1 of Practice Direction 6B.

103.          The relevant parts of Practice Direction 6B on service out of the jurisdiction provide:

“3.1   The claimant may serve a claim form out of the jurisdiction with the permission of the court under rule 6.36 where-

(3)     A claim is made against a person (“the defendant”) on whom the claim form has been or will be served (otherwise than in reliance on this paragraph) and -

(a)     there is between the claimant and the defendant a real issue which it is reasonable for the court to try; and

(b)     the claimant wishes to serve the claim form on another person who is a necessary or proper party to that claim.

(9)     A claim is made in tort where-

(a)     damage is sustained, or will be sustained, within the jurisdiction…”.

 

104.          It is, of course, trite that Microsoft Mobile must show that each claim pleaded in the Amended Particulars of Claim falls within one or other of these Gateways. To the extent that service out can be authorised for some, but not for other, claims, those claims must be removed so far as any defendants out of the jurisdiction are concerned.[48]

(3)        Gateway (3): whether D2/Sony Corporation,[49] D4/LG Chem and/or D6/ Samsung are necessary or proper parties to Microsoft Mobile’s claims against D1/Sony Europe

(i)         Requirements that have to be satisfied

105.          In Altimo Holdings and Investment Ltd v. Kyrgyz Mobil Tel Ltd [2011] UKPC 7, Lord Collins considered this Gateway in general terms:

“73.   The necessary or proper party head of jurisdiction is anomalous, in that by contrast with the other heads, it is not founded upon any territorial connection between the claim, the subject matter of the relevant action and the jurisdiction of the English courts: The Brabo [1949] A.C. 326, 338, per Lord Porter. Piggott, Foreign Judgments and Jurisdiction (3rd ed, 1910), pt III, p 238, said: “This is perhaps the most important of the sub-rules, for it throws the net of jurisdiction over a wider area; and the principle of considering the nature of the cause of action which pervades the whole subject, appears here to be ignored.” Consequently as Lloyd LJ said in The Golden Mariner [1990] 2 Lloyd’s Rep. 215 at 222:

“I agree…that caution must always be exercised in bringing foreign defendants within our jurisdiction under O.11 r.1(1)(c). It must never become the practice to bring foreign defendants here as a matter of course, on the ground that the only alternative requires more than one suit in more than one different jurisdiction.”

74.     Among the questions which arise on this appeal are these: When is an action “properly brought” against the defendant served within the jurisdiction (and outside the jurisdiction under the English rules), referred to here as D1, or “the anchor defendant”? When will the foreign additional defendant, or D2, be a “proper party”? In particular, what is the merits threshold for each of those claims? Is the claim not “properly brought” against D1 if the motive of the claimant in suing D1 is to add D2? Does it matter that in practice the claimant will not recover against D1?

75.     The leading decisions are the decisions of the House of Lords in Improvement Commissioners v. Armement Anversois SA (The Brabo) [1949] A.C. 32 and Derby & Co Ltd v. Larsson [1976] 1 W.L.R. 202, and of the Court of Appeal in Massey v Heynes & Co. (1888) 21 Q.B.D. 330 and Multinational Gas and Petrochemical Co v Multinational Gas and Petrochemical Services Ltd [1983] Ch. 258. The members of those tribunals do not all speak with one voice, but the following propositions may be derived from them.

The motive in suing the anchor defendant

76.     First, the mere fact that D1 is sued only for the purpose of bringing in D2 is not fatal to the application for permission to serve D2 out of the jurisdiction: The Brabo [1949] A.C. 326, 338-9, per Lord Porter; Derby & Co Ltd v. Larsson [1976] 1 W.L.R. 202, 203, per Viscount Dilhorne.

77.     The question was discussed extensively (and somewhat discursively) in Multinational Gas and Petrochemical Co. v Multinational Gas and Petrochemical Services Ltd [1983] Ch. 258, but without reference to the relevant passages in The Brabo and without any citation to the court of Derby & Co. Ltd v. Larsson.

78.     The point arose in Multinational Gas because D1 was in liquidation and therefore the plaintiff had no real prospect of recovery against D1. Lawton L.J. did not treat as fatal to the application the fact that the sole, or predominant, reason for beginning the action against a party duly served within the jurisdiction was to enable an application to be made to serve the parties outside the jurisdiction. It was instead a relevant factor in the exercise of the discretion: at 268. Dillon L.J. said (at 285) that an action was not to be regarded as properly brought against D1 if the true inference from all the facts was that the sole reason for suing D1 was to found an application to join foreign defendants in the action. But although he held that the predominant reason for the action against D1 was to enable foreign defendants to be joined, he regarded the action as bona fide and properly brought: at 286-287. May L.J. considered that if there was a good arguable case against D1 in an action in which any judgment obtained against that defendant might or would not be met owing to lack of funds, the fact that the main or predominant purpose of keeping D1 in the proceedings was to enable the plaintiff to bring in D2 was not a ground for saying that the proceedings were not properly brought against D1: see at 273-279. See also Goldenglow Nut Food Co Ltd v. Commodin (Produce) Ltd [1987] 2 Lloyd's Rep. 569, 578 (CA).

79.     The better view, therefore, is that the fact that D1 is sued only for the purpose of bringing in the foreign defendants is a factor in the exercise of the discretion and not an element in the question whether the action is “properly brought” against D1, provided that there is a viable claim against D1.

“Bound to fail”

80.     Second, the action is not properly brought against D1 if it is bound to fail: The Brabo [1949] A.C. 326, 338-9, per Lord Porter. He also put the point (echoing Witted v Galbraith [1893] 1 Q.B. 577) on the basis that leave will not be granted if the lack of a plausible cause of action against D1 shows that the presence of D1 in the jurisdiction is being used as a device to bring in D2. See also Multinational Gas and Petrochemical Co. v. Multinational Gas and Petrochemical Services Ltd [1983] Ch. 258, 268, 273-274.”

 

106.          As Lord Collins identified, there are two very distinct requirements to this Gateway:

i)                   First, the claim against the anchor defendant – against whom no jurisdictional issue arises – must give rise to “a real issue which it is reasonable for the court to try”. In Vitol Bahrain EC v. Nasdec General Trading LLC [2014] EWHC 984 (Comm), Popplewell J. considered Altimo and observed at [46]:[50]

“The starting point when considering the necessary or proper party head of jurisdiction is to examine the nature of the claim which arises against the anchor defendant(s). That is the claim to which it must be necessary or proper for the additional defendant(s) to be party. At this first stage, the approach requires consideration of such claim in isolation, that is to say assuming that there will be no joinder of the additional foreign defendant(s).”

 

ii)                 Secondly, and assuming the claim against the anchor defendant does give rise to “a real issue which it is reasonable for the court to try”, the defendants out of the jurisdiction must be “necessary or proper parties” to that claim.

(ii)        The first requirement: the claim against the anchor defendant

107.          I do not consider – in light of the agreement reached by the parties regarding the existence of a serious issue to be tried – that it is open to me to debate whether there is a “real issue” – in the sense of an arguable issue – between Microsoft Mobile and D1/Sony Europe.[51]

108.          However, the first requirement goes beyond a requirement of mere arguability. In Erste Group Bank AG, London Branch v. JSC “VMZ Red October” [2015] EWCA Civ 379, the Court of Appeal considered Lord Collin’s statement in [79] of Altimo Holdings. Gloster L.J. stated:[52]

41.     …We do not accept Mr. Salzedo’s submissions that Lord Collins’ statement in paragraph 79, together with his statement in paragraphs 65 and 66 that, in effect, the changes in the wording of English rules made no difference to the old law relating to what was meant by ‘properly brought’, lead to the conclusion that the only criterion which had to be satisfied at the first stage under paragraph 3.1(3)(a) of PD6B is whether there is an arguable claim against the anchor defendants. Such a construction would in our view unjustifiably restrict the wide ambit of the phrase ‘which it is reasonable for the court to try.’ Nor do we consider that Lord Collins was attempting any such exclusive or exhaustive definition of the phrase ‘which it is reasonable to try’ as used in paragraph 3.1(3)(a) of PD6B of the English CPR, when he addressed the meaning of ‘properly brought’ and ‘proper party’, or the issues of ‘the motive in suing the anchor defendants’ and ‘bound to fail’ in the context of the Isle of Man provisions. If the Board has been attempting to do so, it clearly would have been obiter since the only issues that the Board were addressing in the context of the relevant Isle of Man ‘properly brought’ provision were (a) whether the relevant claims were bound to fail and (b) whether the motive for the defendants in bringing their counterclaim (viz for the sole or predominant purpose of establishing jurisdiction against the other defendants to counterclaim, as opposed to suing the anchor defendants) was an issue that fell to be considered as part of the question whether the action had been ‘properly brought’: see paragraphs 127 and 128. There was no consideration of the separate question whether there were real issues which it was reasonable to try.

42.     Accordingly in our view AK Investment is not to be regarded as even persuasive authority for the proposition that the court is precluded from considering wider issues of reasonableness at stage one of the process under paragraph 3.1(3)(a) of PD6B.”

 

109.          It is, therefore, necessary to consider wider issues regarding the “reasonableness” of the claim brought by Microsoft Mobile against D1/Sony Europe. The Defendants contended that the claim brought by Microsoft Mobile against D1/Sony Europe was unreasonable on the following grounds:

i)                   The proceedings against D1/Sony Europe had been commenced by Microsoft Mobile for the sole purpose of founding jurisdiction against the other Defendants, using D1/Sony Europe as the anchor defendant.

ii)                 The arbitration clause caused the claims against D1/Sony Europe to be stayed.

iii)               Given the manner in which the various claims advanced by Microsoft Mobile had been aggregated, the claims against D1/Sony Europe were unreasonable or (if this makes a difference) not reasonable.

I consider each of these points in turn.

Sole reason for joining D1/Sony Europe was to found jurisdiction against the other Defendants

110.          I consider that the sole reason that Microsoft Mobile’s action is structured as it is, with D1/Sony Europe as the “lead defendant”, has been to found jurisdiction in England against the other Defendants. Apart from D1/Sony Europe, all of the other Defendants are the ultimate parent companies of their respective corporate groups, claimed against as a part of a “single economic unit” or “undertaking”.[53] D1/Sony Europe is the exception: it is a subsidiary of D2/Sony Corporation, which is the parent company of the entire Sony group.[54] I can discern no other, additional, reason or benefit accruing to Microsoft Mobile for pursuing this course of action, and it is significant that in Microsoft’s proceedings in the United States, which involved similar issues and similar parties, D1/Sony Europe was not joined.

111.          The Defendants pointed to some (old) authority which they contended suggested that the joinder of an anchor defendant in such circumstances was unreasonable.[55] I do not consider that it is open to me on the (later) authorities on this point to reach such a conclusion, and I do not, therefore, consider these authorities further. In Altimo Holdings, Lord Collins considered that the fact that a party had been joined solely for the reason of bringing in other parties as defendants was relevant only to discretion, and not to the question of whether the Gateway was satisfied. In Erste Group Bank AG, Gloster L.J. stated at [43]:[56]

“It was obvious from the evidence that the commercial (and indeed only) driver behind the Bank’s issue of proceedings in England against D1 and D2 was to enable a claim to be brought against D3 and D5 and to attempt to execute against their assets, whether in Russia or elsewhere. However, we do not consider that in the present case it is necessary or appropriate for this court to revisit the question whether the fact that a claimant’s motive in bringing proceedings against the anchor defendants was only for the purposes of enabling a claim to be brought against the foreign defendants is a factor which is relevant to the question whether the threshold criteria under paragraph 3.1(3) of PD6B have been satisfied. To do so would involve reconsideration of this court’s decision in Multinational Gas and Petrochemical Co. v. Multinational Gas and Petrochemical Services Ltd [1983] Ch. 258 and the various authorities there cited. That would be a task for the Supreme Court. Accordingly, even if we have reservations on this point, we must accept for the purposes of this case the Board’s conclusion, as expressed in paragraph 79 of AK Investment, that the fact that the anchor defendant is sued only for the purpose of bringing in the foreign defendants is not an element in deciding the question whether the gateway requirements of paragraph 3.1(3)(a) or (b) have been satisfied. That factor is only for consideration under the wider discretionary head of Issue 4.”

 

On the state of the law as it presently stands, therefore, my conclusion that D1/Sony Europe was joined for the sole purpose of bringing into the proceedings the other Defendants does not render the claim against D1/Sony Europe one that it is unreasonable for this court to try.

The arbitration clause and section 9 of the Arbitration Act 1996

112.          For the reasons given in Sections B and C above, I have concluded that the arbitration clause in the PPA is sufficiently wide to embrace the claims brought by Microsoft Mobile against D1/Sony Europe and D2/Sony Corporation. For the reasons I have given, I have stayed the proceedings against these Defendants.

113.          The question is whether this determination – made after Microsoft Mobile’s application to serve out of the jurisdiction, and after that application was determined in Microsoft Mobile’s favour by the Master – is relevant to the question of reasonableness.

114.          Microsoft Mobile contended that such a determination was not relevant, because it post-dates the order for service out, and matters need to be assessed as at that date. I do not accept this contention, for two, related, reasons.

115.          First, it is clear from the terms of Murray 1 that the arbitration clause was a matter that was before the Master on the application for service out of the jurisdiction:

i)                   Paragraph 52(a) of Murray 1 identifies the arbitration provisions in the PPA between Nokia and D1/Sony Europe and D2/Sony Corporation.

ii)                 Paragraph 53 notes that the Third and Fifth Defendants – no longer party to the proceedings – had raised the question of arbitration in their PPAs with Nokia, but that Mr. Murray’s view was that “properly interpreted the present dispute does not fall within the ambit of the arbitration agreements”.

iii)               Plainly, this is a matter which was squarely and properly raised by Microsoft Mobile for the Master’s attention, and in relation to which it is appropriate to take into account further developments. Specifically:

a)                  At the time of the hearing before the Master, the position of D1/Sony Europe and D2/Sony Corporation in regard to the arbitration clause was unknown. That position is now clear.

b)                 The Master was not, it would appear, specifically invited to determine the question of the scope of the arbitration clauses identified by Mr. Murray in Murray 1. In my judgment, he should have been. This is a question of law, going directly to the position of the anchor defendant, which should have been resolved one way or the other.

116.          Secondly, and relatedly, it matters not that the position of D1/Sony Europe quoad the arbitration clause was unknown at the time of the hearing, because it should have been assumed that any point on jurisdiction properly available to D1/Sony Europe would be taken by it. In Tyne Improvement Commissioners v. Armement Anversois S/A, “The Brabo” [1949] A.C. 32, Lord Simonds stated at 347:

“…I do not think that the court ought to assume that the defendants within the jurisdiction would not avail themselves of any defence open to them. In this case it was suggested that the second and third defendants might not assert the immunity of the Crown. But if one valid line of defence is assumed to be abandoned, so might another, until at last any action may be deemed to be properly brought because the defendants might throw down their arms and run away.”

 

117.          Accordingly, I find that the effect of the arbitration clause on the lis between Nokia and D1/Sony Europe is a factor to be considered on the present Applications. The question whether, in these circumstances, the claim against D1/Sony Europe gives rise to “a real issue which it is reasonable for the court to try”, is straightforward to answer. Given the scope of the arbitration clause, and the fact that D1/Sony Europe is asserting it and seeking arbitration of the claims against it, there is simply no real issue between Microsoft Mobile and D1/Sony Europe for this court to try. The point is so fundamental, it goes beyond any question of reasonableness.

118.          This finding is sufficient to determine the argument in relation to Gateway (3) against Microsoft Mobile.  However, in case I am wrong on the question of a stay in favour of arbitration, I consider the alternative scenario where the proceedings against D1/Sony Europe continue. That brings me to the third point: whether – given the manner in which the various claims advanced by Microsoft Mobile have been aggregated – it can be said that the claims against D1/Sony Europe are unreasonable or (if this makes a difference) not reasonable.

Aggregation of claims

119.          As I have already noted, I do not consider that it is open to me to set aside the Master’s order on the basis that the claims advanced by Microsoft Mobile against D1/Sony Europe are unarguable. That is a matter – if at all – for a later and different hearing on summary judgment.[57]

120.          However, there is a secondary issue, on the question of reasonableness. I have described above the aggregated nature of the claims being made by Microsoft Mobile, in that claims are made by Nokia and Microsoft Mobile generally, against the various Defendants generally, such that it is not possible to define or identify specific aspects of a claim against (for example) D1/Sony Europe by a specific entity within Nokia.

121.          Although it is true to say that the claims being advanced by Microsoft Mobile are in this sense vague, I do not consider that it can be said that this renders the claims unreasonable. It is perfectly proper to advance claims in the alternative – alternative claimants and alternative defendants – and in this case, of course, any Defendant participating in the Cartel will be jointly and severally liable for the acts of the other participants of the Cartel – whether joined as defendants or not.

122.          Microsoft Mobile has alleged, in terms, that D1/Sony Europe participated in the Cartel, although it has done so by advancing that allegation generally against all of the Defendants. See, for example, the following paragraphs in the Amended Particulars of Claim:

“37.   …the Defendants and/or the undertakings of which they were a part, together with other undertakings (collectively the ‘Cartelists’) in the period from at least August 1999 to May 2011 entered into agreements and/or arrangements and/or concerted practices by which they or two or more of them…[58]

63.     In summary, beginning no later than 1999, the Cartelists began communicating with each other bilaterally and/or multilaterally with a common goal of cooperating to prevent, restrict or distort competition on the relevant market for Li-ion Batteries.

174.   By reason of the Defendants’ participation in and/or implementation of the Cartel as described hereinabove…

181.   As an intended and/or foreseeable consequence of the conduct set out above, the Defendants and the undertakings of which they formed part caused the Claimant loss and damage…”

 

123.          In short, there is a clearly pleaded case against D1/Sony Europe, by way of which all of the claims pleaded in the Amended Particulars of Claim are advanced. I reject the contention – set out most clearly in paragraph 64 of D6/Samsung’s written submissions – that “Sony Europe was not alleged to have directly participated in the cartel or even to have known of the cartel. Instead Sony Europe was sued simply on the basis that it was part of the same economic unit as Sony…and was said to be jointly and severally liable with Sony and the rest of the Japanese and Korean Defendants for the damages caused by the cartel”.

124.          Although, of course, I accept that D1/Sony Europe might be found to be liable in damages to Microsoft Mobile on the basis of what can be termed “group liability” – i.e. because D1/Sony Europe, although not involved in the Cartel, was liable because it was part of the same undertaking, entities within which did participate in the Cartel – that is not the case that is pleaded by Microsoft Mobile. The case that is pleaded, which is verified by a statement of truth and by the witness statements of Mr. Murray, is that D1/Sony Europe itself participated in the Cartel. I conclude that, but for the arbitration clause, the claim against D1/Sony Europe gives rise to real issues which it is reasonable for the court to try.

125.          It is, for this reason, unnecessary for me to determine what the parties called the “Provimi” point. The Provimi point only arises if D1/Sony Europe’s liability is based solely on its being a part of the same undertaking as its parent D2/Sony Corporation – in short, if the claim against D1/Sony Europe is predicated solely on a theory of group liability, without any allegation that it knew or directly participated in the Cartel. Were the case against D1/Sony Europe to be solely a group liability case, very difficult questions of whether D1/Sony Europe was, or was not, a part of the same undertaking as D2/Sony Corporation might arise, in addition to difficult questions of attribution of conduct within an undertaking.[59] As it is, my conclusion regarding the nature of the allegations made by Microsoft Mobile against D1/Sony Europe means that I do not have to venture into these difficult waters, and I do not consider the Provimi question further in this Judgment.

(iii)       The second requirement: necessary or proper party

Introduction

126.          The next question which arises is whether the Defendants, apart from D1/Sony Europe, are persons who are “necessary or proper” parties to the claim against D1/Sony Europe. It is important to note that “necessary” and “proper” are disjunctive.

127.          Microsoft Mobile did not contend that the Defendants were necessary parties to the action – the Defendants quite rightly pointed out that there is no need to sue every member of a cartel: joint and several liability means that only one cartelist needs to be joined in an action such as this.

128.          Microsoft Mobile did, however, contend that the Defendants were proper parties. Microsoft Mobile contended that the test for being a “proper” party was simply whether – on the assumption that the foreign defendant was within the jurisdiction – that defendant could be joined pursuant to CPR Part 19. This was disputed by the Defendants, who submitted that:

i)                   The test imported more than this; and

ii)                 They were not proper parties because D1/Sony Europe had been sued as anchor defendant in order to bring the claim against the other Defendants.

129.          Two questions therefore arise:

i)                   What is the nature of the requirement that a party be a “proper” party to the proceedings?

ii)                 According to that test, are the Defendants “proper” parties?

What does “proper” mean?

130.          The Defendants relied upon a test propounded by Lindley L.J. in Witted v. Galbraith [1893] 1 Q.B. 577 at 579:[60]

“The rule that now applies is Order XI, r.1(g), and it is said that the present case comes within that rule. There is a very easy method of testing whether this is true. Supposing that both the defendant firms were resident within the jurisdiction, would they both have been joined in the action? I cannot think so; there is no plausible cause of action against the brokers. I come to the conclusion that the brokers have been brought into the action simply to enable the plaintiff to bring the other defendants within the jurisdiction. It is not a bona fide case of an action properly brought against a person who has been served within the jurisdiction. Consequently there is no right to proceed under the order, and the appeal must be allowed.”

 

131.          The Defendants submitted that there was significance in the use of the word “would” in Lindley L.J.’s test. The question was not whether the claim could have been brought, but whether it would have been on the assumption that all parties were resident within the jurisdiction. This, of course, is a much narrower and more stringent test than simply whether a defendant could be joined pursuant to CPR Part 19.

132.          The Defendants’ contention places a great deal of weight on a single word. Other cases take a different approach. In Massey v. Heynes (1888) 21 Q.B.D. 330 – another decision of the Court of Appeal, pre-dating Witted v. Galbraith, and where Lindley L.J. was a member of the court – Lord Esher M.R. said at 338:[61]

“The question, whether the person out of the jurisdiction is a “proper party” to an action against a person who has been served within the jurisdiction, must depend on this, - supposing both parties had been within the jurisdiction would they have been proper parties to the action? If they would, and only one of them is in this country, then the rule says that the other may be served, just as if he had been within the jurisdiction.”

 

Lindley L.J. did not dissent from this test.

133.          Lord Esher M.R.’s test in Massey v. Heynes is altogether wider than Lindley L.J.’s “counter-factual” “would” test in Witted v. Galbraith. The touchstone of Lord Esher M.R.’s test is whether a defendant would be a “proper” party assuming that party to be within the jurisdiction. That comes very close to the test propounded by Microsoft Mobile: could the defendant be joined pursuant to CPR Part 19?

134.          This wide approach is confirmed by a number of cases relied upon by the Defendants, where service out of the jurisdiction was set aside on the ground that the claim against the anchor defendant had not bona fide been brought. In these cases, the claim against the anchor defendant was no more than a device or sham to enable claims to be brought against other defendants who were out of the jurisdiction.[62] Given these findings, it is easy to see that (in these cases) the joinder of the foreign defendant would be “improper” according to the test propounded by Lord Esher M.R.

135.          I conclude that the circumstances in which a party is a “proper” party to proceedings already commenced or to be commenced against an anchor defendant are significantly wider than those contended for by the Defendants. I consider the test simply to be whether the foreign defendant could, if within the jurisdiction, properly have been joined pursuant to CPR Part 19.

136.          There is a further reason why I reject the approach contended for by the Defendants. Ex hypothesi, if the sole reason for bringing D1/Sony Europe into the proceedings was to found jurisdiction against the other Defendants, then (assuming the other Defendants were already amenable to the court’s jurisdiction) D1/Sony Europe would never have been joined. Such a test is not only inconsistent with the law as I have described it, but also it is not open to me, given Lord Collins’ statement in Altimo Holdings at [79] and the Court of Appeal’s view of that statement in Erste Group Bank AG at [43] (see paragraph 111 above). This approach to what is a “proper” party brings into play precisely the same “reasonableness” arguments in relation to forum-shopping as Lord Collins rejected in Altimo. This is very clear from paragraph 120 of D6/Samsung’s written submissions:

“In this case, it is submitted that the answer to Lindley L.J.’s counterfactual question is plainly “No”…it is obvious (and certainly, Samsung has the better of the argument on the material before the Court, it being more plausible) that Sony Europe would not have been sued were the Japanese and Korean Defendants resident in England, and has been sued solely or predominantly in order to found jurisdiction over the Japanese and Korean Defendants. As a result, those foreign defendants are not “proper parties” to the claims against Sony Europe, and it is not “reasonable” for the English Court to try those claims with the claims against the foreign defendants, within the letter, spirit or substance of sub-paragraph 3…”.

 

137.          It seems to me that questions as to the propriety of the claim against the anchor defendant are more properly considered at the stage of the first requirement (a reasonable issue for the court to try) and not at the stage of the second requirement (necessary or proper party).

138.          In conclusion, the law is well-described in Dicey, Morris & Collins, The Conflict of Laws, 15th ed. (2012) at paragraph 11-165:

“Y, who is out of England, must be either a necessary or proper party to the proceedings. If Y is a proper party it is not also a requirement that he be a necessary party; but if adding Y is likely in practice to achieve no potential advantage for the claimant, it would not ordinarily be a proper case for service out of the jurisdiction. The question whether Y is a proper party to proceedings against X depends on this: supposing both X and Y had been in England, would they both have been proper parties to the proceedings? If they would, and only one of them, X, is in this country, then Y is a proper party and permission may be given to serve him out of the jurisdiction. Y will be a proper party if the claims against X and Y involve one investigation. It is not necessary that the alleged liability of Y be joint and several with that of X.”

 

Are the Defendants “proper parties”?

139.          I have no doubt that the Defendants are, according to the test that I have described, “proper” parties to the proceedings against D1/Sony Europe:

i)                   Although I have concluded that the proceedings against D1/Sony Europe were brought for the sole purpose of founding jurisdiction against the other Defendants, that does not render the action against D1/Sony Europe unreasonable, nor the joinder of the Defendants improper.

ii)                 Matters might be different if the claim against D1/Sony Europe were brought without a bona fide intention to prosecute the action against D1/Sony Europe. However, the evidence before me is clear that even if the proceedings against the other Defendants do not proceed in this jurisdiction, the claim against D1/Sony Europe, will. Paragraph 136 of Murray 2 states:

“…the Claimant sued the First Defendant as a Cartel participant and in good faith. The Defendants have not asserted that the Claimant’s claim against the First Defendant was motivated by bad faith. I can also confirm…that…the Claimant would proceed against the First Defendant in these proceedings irrespective of whether the other Defendants remained parties or not. As participants in cartels are jointly and severally liable for all the losses that result from their breach of competition law, the Claimant could proceed against the First Defendant for the full value of its losses…”

 

iii)               In these circumstances, there are strong reasons for concluding that there would be real advantage in joining the Defendants. They are jointly and severally liable with D1/Sony Europe; investigating the Cartel is, effectively, a single investigation; and it makes no sense to duplicate this investigation and run the risk of inconsistent findings. It is clear from the case law that this is a particularly powerful factor – indeed, it may be said to be one of the essential functions of this particular Gateway.[63]

(4)        Gateway (9)(a): damage within the jurisdiction

(i)         The wording of the Gateway

140.          The wording of this Gateway has changed over time. Prior to 1987, the predecessor to paragraph 3.1(9) was RSC O.11 r.1(h), which applied where the claim was “founded on a tort committed within the jurisdiction”. The focus was thus on the place where the wrongful act was done.

141.          In 1987, rule 1(h) became rule 1(f) and was changed substantially to its present form, referring separately to:

i)                   Damage sustained in the jurisdiction; and

ii)                 Damage resulting from acts committed in the jurisdiction.

142.          This change was made from a desire to incorporate into the common law rules of jurisdiction the effect of what is now Article 7(3) of the Brussels I Regulation (Recast) as interpreted by the Court of Justice in Bier [1978] QB 708. As a result, it may be appropriate (as Ms. Demetriou, Q.C., leading counsel for D4/LG Chem, contended) to take into account, when construing this Gateway, other case-law emanating from the Court of Justice, even though the Gateway is an English and not an EU jurisdictional rule.[64] Whilst it might be appropriate to keep an eye on non-English case law as being of potentially persuasive force, in my judgment it would be inappropriate to go further than this: the Gateway is an English and not an EU jurisdictional rule, and must be construed on that basis.

143.          In this case, Microsoft Mobile based its contentions as regards this Gateway entirely on the basis that damage had been sustained within the jurisdiction i.e. paragraph 3.1(9)(a) of Practice Direction 6B. It is not necessary, for present purposes, to consider further the alternative ground of acts committed within the jurisdiction.

(ii)        Basis upon which Microsoft Mobile contended that there had been damage within the jurisdiction

144.          The factual basis on which Microsoft Mobile sought to demonstrate jurisdiction turned on the following aspects, which were set out in paragraph 33 of Murray 1:

“Based on an initial review of the Claimant’s and Nokia’s sales and purchase data, I understand from the Claimant’s economic experts that the Claimant and/or Nokia suffered damage within the jurisdiction as a result of the Defendants’ unlawful participation in the Cartel.

(a)     In the Cartel Period and the Run-Off Period, Nokia and/or the Claimant purchased 12.1 million units from the First Defendant, which, as set out above, is a company located in the UK and incorporated under English law.

(b)     Nokia entered into a series of Product Purchase Agreements (“PPAs”) with the Second Defendant (which agreement includes the First Defendant as an affiliated company), Third, Fourth, Fifth and Sixth Defendants. Of these PPAs, the agreements with the Second and First Defendants, and with the Fifth Defendant, are governed by “United Kingdom law”. In the absence of any connection between the Claimant and these Defendants to Scotland or Northern Ireland, the reference to “United Kingdom law” can only reasonably be construed as a reference to the law of England and Wales. Pursuant to Article 4(3) of Regulation 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obligations (“Rome II”), this is recognised to establish a close connection between England and Wales and the tortious conduct which the Claimant has identified in its claim.

(c)     In addition, the Claimant and Nokia sold substantial quantities of Handsets in England and Wales over the Cartel Period and Run-Off Period. While the Claimant does not consider that there has been any “pass on” of the cartelised prices to its own customers, if the Defendants were, on the contrary, to show that its higher prices had been passed on to the Claimant or Nokia’s own customers, then any higher sales prices that resulted from an increase in the costs of its component products would have caused the Claimant and/or Nokia to suffer lower volume of sales…That would in turn have caused loss to be sustained by them within England and Wales. Moreover, in that event, it would also be the case that UK consumers and/or businesses also suffered significant damage as a result of the Defendants’ unlawful conduct.”

 

145.          In its written and oral submissions, Microsoft Mobile appeared to supplement or extend these three bases. Thus, paragraph 116.2 of Microsoft Mobile’s written submissions states that “[t]he entities within Nokia that made purchases of Li-ion Batteries, in respect of whose purchases the claim is brought, include Nokia UK Ltd which is established in the UK”. The significance of Nokia UK Ltd is that it would have its registered office within the jurisdiction which (assuming the approach in CDC is applicable, which I do) could be the place where damage was sustained.

146.          It will be necessary to consider all of these bases, together with the additional evidence relied upon by Microsoft Mobile (Murray 1 being the evidence deployed before the Master: it was supplemented by Murray 2 before me). Before doing so, however, something needs to be said about the nature of the Gateway itself.

(iii)       Legal aspects regarding the Gateway

147.          There are a number of points that fall to be considered:

i)                   The law by which it is to be ascertained whether there has, in fact, been damage within the jurisdiction.

ii)                 Whether and, if so, to what extent, the causes of action relied upon by Microsoft Mobile must be viewed in what I shall term a “disaggregated” way, that is to say by focussing on the original claims and disregarding the assignment of claims from Nokia to Microsoft Mobile.

iii)               The need for the damage sustained to be “substantial”.

iv)               The need for the damage sustained to be “direct”.

148.          These various aspects are considered in turn below. Thereafter, I turn to the specific contentions of Microsoft Mobile.

The relevant law to determine whether the requirements of the Gateway are satisfied

149.          Clearly, a good arguable case needs to be shown regarding the applicability of the Gateway: see paragraph 101 above. The question is, what law should apply when seeking to determine whether the criteria demanded by a Gateway are met. Briggs at pp.466 to 467 says this:

“The heads set out in Paragraph 3.1 contain various definitional elements. A question which appears important, but which is oddly free of convincing authority, is whether these are to be interpreted by reference to English domestic law, or English rules of private international law, or something else. Suppose the claimant wishes to serve out on the basis ‘the claim is in respect of a contract where the contract was made within the jurisdiction’. Is the question whether there actually was a contract for the claim to be made in respect of answered by reference to English domestic law, or by reference to the rules of English private international law? And is the place where it was made answered by applying the offer and acceptance rules of English domestic law, or the corresponding rules of whichever law is picked out by the rules of private international law, or some other way altogether?”

 

150.          I was referred to no authority on this question. In a straightforward case, where the facts are clear, it might be possible to determine the applicable law as a matter of law; in other cases, the facts may be capable of determination on the “good arguable case” test, and the applicable law then determined on the basis of those facts.

151.          The present case is, however, altogether more complex. Unsurprisingly, very little has been said before me about the operation of the Cartel, and it is clear from the exchanges with Mr. Beal, Q.C. recorded in paragraph 20 above, that the facts relating to the sale and purchase of the Li-ion Batteries will be difficult to establish, as regards place of purchase; the identity of the vendor; the identity of the buyer; whether there was a “chain” of purchases within Nokia; and how the Li-ion Battery was, in the end, on-sold by Nokia.

152.          The difficulty of the point is stated very clearly in Murray 2:

“139. As a preliminary comment, I note that this is not a case where it is straightforward to identify the location of damage. There are numerous candidates:

(a)     Where each contract of sale for a Relevant Product (as defined in Section D of the Particulars of Claim) was concluded;

(b)     Where each Relevant Product was delivered;

(c)     Where each entity within Nokia which purchased a particular Relevant Product was located;

(d)     Where each payment for a Relevant Product was made; and/or

(e)     Where each product incorporating a Relevant Product was ultimately sold.

141.   Which of these particular locations should be considered appropriate will be a matter for legal submission. How the many millions of Relevant Products that were purchased during the Cartel Period should be divided up on these different bases will be a complex matter requiring expert evidence in due course. In short, the detailed analysis will be a matter for trial…”

 

153.          In these circumstances, it is simply not possible to make any determination as to what might be the applicable law in the present case; still less have I received factual evidence in relation to all of the potentially applicable laws. None of the Defendants sought to contend that the inability of Microsoft Mobile to identify the applicable law, and so identify more specifically the places where damage had been sustained by Nokia, was fatal to Microsoft Mobile’s contention that its claims fell within Gateway (9)(a). In my judgment, they were right not to do so. In a case such as this, the question of where damage has been sustained must be informed by the jurisdictional rules of the lex fori – by which I mean, the manner in which the Gateway has been formulated and construed, plus (when dealing with questions such as “what is damage?” and “where did that damage occur?”), the sort of “broad internationalist spirit” described by Lord Mance in Raiffeisen Zentralbank Österreich AG v. Five Star General Trading LLC [2001] QB 825 at [27].

154.          Adopting this broad internationalist spirit, I take the approach that if Microsoft Mobile can show damage sustained within the jurisdiction on the basis of any of the candidates described in paragraph 139 of Murray 2, the requirements of Gateway (9)(a) will be satisfied.

Assignment and disaggregation

155.          The White Book 2016 says this at paragraph 6.37.15.1:

“The applicant must show that each claim made by them [sic] has the attributes set out in at least one of the sub-paragraphs listed under para. 3.1 of 6PDB…The burden is upon the applicant to show in respect of each claim that it comes within one or other of the “jurisdictional gateways” in para 3.1 of 6BPD…”.

 

156.          In Saipem S.p.A. v. Dredging VO2 B.V., the “Volvox Hollandia” [1988] 2 Lloyd’s Rep. 361 at 371-372, Kerr L.J. stated:

“Given the settled principles governing the jurisdiction under O.11, there can in my view be no doubt that the plaintiffs’ claims for the negative declarations in question were improperly included in their writs for service on the shipowners in Holland, even though their claims for damages could properly be pursued by means of these writs. It requires no authority that a writ for which leave is sought under O.11 may, like the curate’s egg, be good in part and bad in part, in which case the plaintiffs may not proceed with those claims which are bad…”

 

157.          Each claim that is advanced by a claimant and which that claimant seeks to pursue against a defendant outside the jurisdiction must fall within one or more of the Gateways. The question which arises is how this applies where – as here – there has been an assignment of claims. In such a case, it may – and in this case will – be necessary to consider “who is the claimant?”. Where there has been an assignment, there are two candidates – the person who originally had the claim, the assignor, and the person who now has the claim, the assignee.

158.          In my judgment, where the identity of the person whose “claim” is being considered for the purposes of a Gateway matters, that person is the original holder of the claim, and not the last person to whom that claim was transferred. The jurisdictional rules must be applied not in relation to the claim as assigned (where the ultimate assignee would be regarded as the claimant) but to the claim as it originally subsisted (so that the original assignor would be regarded as the claimant).

159.          This is clearly the approach of English national law. The assignee cannot, by virtue of the assignment, be in a better position than the assignor would have been in. This is reflected in the damages that the assignee can recover if a cause of action is assigned to him (where the rule is that the assignee cannot recover more than the assignor could have done[65]) and in the fact that an assignee is bound by choice of jurisdiction and arbitration clauses.[66]

160.          Such an approach is, I have no doubt, entirely consistent with Lord Mance’s “broad internationalist spirit”. In the CDC case considered in paragraphs 78ff above, the Court of Justice considered that, for jurisdictional questions, it was necessary to have regard to the status of the original claimant and that jurisdiction clauses binding on an original claimant were also binding on that claimant’s successor in title:

“35.   Given that the circumstances of the present case are characterised by the consolidation of a number of potential claims for damages brought by the applicant in the main proceedings which had been assigned to the applicant by several undertakings allegedly victims of the Hydrogen Peroxide cartel, it should be pointed out from the outset that the transfer of claims by the initial creditor cannot, by itself, have an impact on the determination of the court having jurisdiction under Article 5(3)…

65.     Only where a party not privy to the original contracting party’s rights and obligations in accordance with national substantive law as established by the application of the rules of private international law of the court seised of the matter could that third party nevertheless be bound by a jurisdiction clause to which it had not agreed…”

 

Substantial damage

161.          In Berezovsky v. Forbes [2000] 1 WLR 1004 at 1012, Lord Steyn – considering the old formulation of the Gateway – held that “a tort committed within the jurisdiction must be a real and substantial one”.

162.          Unlike the equivalent jurisdictional base under the Brussels I Regulation (Recast), where jurisdiction only exists in respect of such damage as was sustained within the jurisdiction, this Gateway gives jurisdiction in respect of damages sustained both within and without the jurisdiction. In Metall und Rohstoff A.G. v. Donaldson Lufkin & Jenrette Inc. [1990] 1 Q.B. 391 at 437, the Court of Appeal noted:[67]

“As the rule now stands it is plain that jurisdiction may be assumed only where (a) the claim is founded on a tort and either (b) the damage was sustained within the jurisdiction or (c) the damage resulted from an act committed within the jurisdiction…Condition (b) raises the question: what damage is referred to? It was argued for A.C.L.I. that since the draftsman had used the definite article and not simply referred to “damage”, it is necessary that all the damage should have been sustained within the jurisdiction. No authority was cited to support the suggestion that this is the correct construction of the Convention to which the rule gives effect and it could lead to an absurd result if there were no one place in which all the plaintiff’s damage has been suffered. The judge rejected this argument and so do we. It is enough if some significant damage has been sustained in England.

 

163.          In this case, when approaching the question of whether Microsoft Mobile can show substantial damage sustained within the jurisdiction, two points must be borne in mind:

i)                   Consistent with what I have found in relation to disaggregation of claims and assignments, what damage has been sustained must be assessed by reference to that particular claim. It is altogether irrelevant – when a number of claims had been assigned so as to be held by a single assignee – to consider whether the damages sustained in respect of one particular claim are substantial when compared to the damages sustained in respect of other claims.

ii)                 The “substantial” damage test is not an absolute test – the amount of damage sustained does not have to be above a certain threshold. The test instead relates to a case where damage is sustained both within and without the jurisdiction. In such a case, the damage sustained within the jurisdiction must be significant relative to the damage sustained outside the jurisdiction.

Direct and indirect damage

164.          It is clear that the damage that needs to be established under this Gateway is direct, and not indirect or consequential, damage. In Erste Group AG, London Branch v. JSC “VMZ Red October” [2015] EWCA Civ 379, Gloster L.J. stated:[68]

“106. …it seems to us that the tort gateway is not satisfied in any event on the claim pleaded because, largely for reasons already given in relation to applicable law, we have reached the clear view that the relevant damage for this purpose was sustained in New York rather than London. None of the first instance cases had treated as relevant damage a non-payment of money in England which is simply and precisely dependent upon an earlier non-payment outside England, in circumstances where there were prior arrangements, for example with an agent, that the offshore payment would be followed by an onward payment to an account within the jurisdiction. On the contrary, the damage successfully relied upon was, in each of those cases, ‘direct’ damage, whether it consisted of payment of funeral expenses or a continuing loss of earnings, arising afresh month by month when salary would otherwise have been paid to the victim, but for his injury.

107.   In the present case, the relevant loss was the destruction of the value of the Bank’s receivables under the Loan Agreement and Guarantee which, for reasons already given, is properly to be regarded as having occurred in New York, that being the place of payment. The knock-on consequence, namely non-payment by the Facility Agent to the Bank’s facility office in London was merely reflective of that earlier loss. In relation to the Bank’s share of repayments it was, dollar for dollar, the same. It was not in any rational sense a fresh, different or separate loss. Nor was it a continuing loss, like loss of earnings.”

 

165.          In Brownlie v. Four Seasons Holdings Inc [2015] EWCA Civ 665, the Court of Appeal also drew a distinction between direct losses and indirect/consequential losses. A claim for damages brought by the claimant on her own behalf and on behalf of her husband’s estate for injuries suffered as a result of an accident in Egypt was consequential loss; on the other hand, the claimant’s claim under the Fatal Accidents Act 1976 had been sustained within the jurisdiction, as it was a separate statutory cause of action brought to recover compensation for the claimant’s loss of dependency, and was not consequential loss. At [91], Arden L.J. stated:

“To sum matters up on this issue, concerning Lady Brownlie’s tort claims, therefore, I would agree with the doubts expressed by this court in Erste Group Bank AG London Branch v. JSC “VMZ Red October” [2015] EWCA Civ 379 about claims for consequential loss for foreign accidents being within the tort gateway. I would allow the appeal in respect of Lady Brownlie’s personal claim and in respect of the LRMPA34 claim…However, for the reasons given above, I would dismiss the appeal in so far as it relates to Lady Brownlie’s own tort claim under the FAA76.”

 

(iv)       Application in the present case

166.          I turn to consider whether Microsoft Mobile has demonstrated a good arguable case that, as a result of the tortious claims alleged by it, damage has been sustained within the jurisdiction.

Microsoft Mobile’s first contention: damage because Nokia and/or the Claimant purchased 12.1 million units from D1/Sony Europe

167.          The relevant part of Murray 1 – paragraph 33(a) – was set out in paragraph 144 above. Essentially, it is said that 12.1 million units of Li-ion Batteries were purchased from D1/Sony Europe by one or more companies within the Nokia group and/or Microsoft Mobile, without differentiating between these entities. No further information is provided.

168.          This point is very clearly highlighted in Wheeler 2:

“The only potentially relevant factor identified by Mr. Murray is the statement at paragraph 33(a) that “in the Cartel Period and/or the Run-Off Period, Nokia and/or the Claimant purchased 12.1 million units from the First Defendant, which, as set out above, is a company located in the UK and incorporated under English law”. As to this:

13.1   Purchases from an English company do not equate to damage suffered in England and Wales. In order to establish that any of this damage was suffered in England and Wales, the Claimant must address the following:

a)       which Nokia entity bought the products;

b)      where payment for the products was made from; it appears from the Amended Claim Form (para 4) that the relevant bank accounts are likely to have been in Switzerland;

c)       where payment for the products was made to; just because the products were purchased from an English incorporated company, it does not follow that payment was made to an English bank account; and

d)      where the products were delivered to and what they were used for following delivery; just because batteries were bought from an English company, it does not follow that they were delivered to England and Wales or that they were used in England and Wales.

13.2   The alleged number of purchases is in any event not sufficient to demonstrate that significant direct damage was suffered in this jurisdiction. As LG Chem has pointed out (Botteman 1/para 24), even if all of the 12.1 million units of sales relied upon reflect direct damage suffered in this jurisdiction, these are less than half of one percent of the sales in issue.”

 

169.          Taking a point against himself, Mr. Wheeler identified (in paragraph 15 of Wheeler 2) “at most €592,659 worth of the relevant products (i.e. approximately 200,000 units) to Nokia companies in the UK in the relevant period (all between 2002 and 2009)”, which Mr. Murray seized upon in paragraph 142 of Murray 2 to bolster Microsoft Mobile’s arguments. Before me, it was common ground that some €250,000 of these sales – being sales to a former Nokia subsidiary, Vertu Ltd – could not count, but apart from these sales to Vertu Ltd, I take these additional sales in the UK into account.

170.          In paragraph 24 of Botteman 1, an attempt is made to put the volume of UK sales into perspective:

“…the figure of 12.1 million sales is vanishingly small in the context of this claim. The Claimant’s case is that during the alleged infringement period it purchased over three billion units. Even if 12 million units were sold to Nokia in England and Wales during the infringement period…those sales would be less than half of one percent of the sales which are in issue in the case.”

 

171.          Apart from referencing the Sanyo sales mentioned in Wheeler 2 (see paragraph 142 of Murray 2), paragraphs 138 to 141 of Murray 2 really only repeat the facts stated in Murray 1, and no further substantive factual point is made.

172.          In these circumstances, I hold that Microsoft Mobile has not made out a good arguable case that the requirements of Gateway (9)(a) have been met:

i)                   Had Microsoft Mobile been able to show that – on one of the bases listed in paragraph 139 of Murray 2, and set out at paragraph 152 above – a single entity within Nokia had sustained losses as a result of the UK sales by D1/Sony Europe then its position would be difficult enough. It is hard to see how the damage sustained as a result of the sales of 12.1 million units within the jurisdiction can be significant or substantial when (relative to the overall sales of Li-ion Batteries) this is but a tiny proportion of those overall sales.

ii)                 But Microsoft Mobile cannot even show which entity within Nokia purchased these 12.1 million units. As was pointed out in paragraph 20 above, Microsoft Mobile is entirely unable to state or identify any specific link between Li-ion Batteries sold by D1/Sony Europe in the UK and Li-ion Batteries purchased by any specific Nokia entity. In other words, the damage – such as it is – may have been suffered by multiple Nokia entities, because there may have been multiple purchasers within Nokia of these 12.1 million units.

iii)               What is more, as Mr. Beal Q.C. frankly acknowledged (see paragraph 20), it was not even possible to say whether these Li-ion Batteries were purchased directly by an entity within Nokia, using a common purchasing agent, so that there was a direct purchase and “direct” damage, or whether there was a chain of sales and purchases within Nokia, whereby one subsidiary purchased and on-sold to another – which would or would very likely be “indirect” damage.

Microsoft Mobile’s second contention: damage because the PPAs are governed by English law and Article 4(3) of Rome II applies

173.          It is common ground that the PPA between D2/Sony Corporation is governed by English law: see paragraph 35 above. Other PPAs are also governed by English law, albeit not all.

174.          Article 4 of Rome II provides:

“1.     Unless otherwise provided for in this Regulation, the law applicable to a non-contractual obligation arising out of a tort/delict shall be the law of the country in which the damage occurs irrespective of the country in which the event giving rise to the damage occurred and irrespective of the country or countries in which the indirect consequences of that event occur.

2.       However, where the person claimed to be liable and the person sustaining damage both have their habitual residence in the same country at the same time when the damage occurs, the law of that country shall apply.

3.       Where it is clear from all the circumstances of the case that the tort/delict is manifestly more closely connected with a country other than that indicated in paragraphs 1 and 2, the law of that other country shall apply. A manifestly closer connection with another country might be based in particular on a pre-existing relationship between the parties, such as a contract, that is closely connected with the tort/delict in question.”

 

175.          Microsoft Mobile is thus relying on the second alternative choice of applicable law – what Recital (18) of Rome II refers to as an “escape clause” – as indicating that English law is the applicable law. The reason it is said the escape clause is triggered is because there is a manifestly close connection between the torts pleaded in the Amended Particulars of Claim and the English choice of law provisions in (some of) the PPAs.

176.          I find this argument entirely unpersuasive, and I reject it for the following reasons:

i)                   Article 4 of Rome II is concerned with identifying the applicable law in the case of non-contractual obligations arising out of a tort/delict. It is quite clear that Article 4(3) is a provision that will only rarely be triggered and then only when there is a “manifestly closer connection”. I would take some persuading that Article 4(3) pertained in the present case.

ii)                 However, I do not see how or why it is necessary to descend into the finer questions of what law is applicable. I have already accepted Mr. Murray’s point that identifying the applicable law is something that is not possible at this stage of the proceedings. As I have made clear, in my view the appropriate course, when considering whether there is or is not damage within the jurisdiction of England and Wales, is to apply a test that is based upon the “broad internationalist spirit” described by Lord Mance. I am – for the purposes of these applications – quite prepared to apply any one or all of the candidates listed in paragraph 139 of Murray 2 (as set out in paragraph 152 above).

iii)               The problem that Microsoft Mobile faces is thus not the difficulty of identifying the applicable law and persuading me that it is the law of England and Wales. That is a difficulty that does not, in my judgment, arise. The problem that Microsoft Mobile does have is that the factual material it has adduced is too insubstantial to indicate that damage was sustained in the jurisdiction, whatever the applicable law.

iv)               In short, this contention, based as it is on no additional factual evidence, takes matters no further. All it does, unhelpfully from the perspective of Microsoft Mobile, is to suggest a close connection between the pleaded tortious claims and the PPA which, of course, contains the arbitration clause on which D1/Sony Europe and D2/Sony Corporation rely. To that extent, this is a point against Microsoft Mobile as regards the section 9 applications of these Defendants.

Microsoft Mobile’s third contention: damage through the sale of handsets in England and Wales and “volume effects”

177.          The third contention advanced in paragraph 33(c) of Murray 1 is that Nokia and/or Microsoft Mobile sold substantial quantities of handsets in England and Wales over the Cartel Period and Run-Off Period, and that there is the potential that Nokia and/or Microsoft Mobile suffered loss through “volume effects”.

178.          By volume effects, I mean that Nokia and/or Microsoft Mobile may have passed on to their customers (the ultimate purchasers of the handsets containing the Li-ion Batteries) any overcharge paid by them to the Cartelists. To this extent, therefore, neither Nokia nor Microsoft Mobile would have sustained any loss through the overcharge, but they might have sustained a loss by selling fewer handsets because of the higher price that was passed on to consumers.

179.          Damages arguments of this type are fairly common in competition cases. But in my judgment, in order to found a good arguable case that the claims fall within the Gateway, something more than a theoretically possible contention must be advanced. Whilst, for the sake of argument, I am prepared to accept that Nokia and/or Microsoft Mobile sold considerable volumes of handsets in the UK market, there is no evidence before me of:

i)                   Any pass-on to consumers.

ii)                 Any loss arising by reason of fewer handsets being sold.

180.          Indeed, it is important to note that both in the Amended Particulars of Claim and in Murray 1, damage of this sort is expressly disavowed. All Microsoft Mobile does is keep open the option of taking the point (for whatever it may be worth) later on. Paragraph 33(c) of Murray 1 states:[69]

While the Claimant does not consider that there has been any “pass on” of the cartelised prices to its own customers, if the Defendants were, on the contrary, to show that its higher prices had been passed on to the Claimant or Nokia’s own customers, then any higher sales prices that resulted from an increase in the costs of its component products would have caused the Claimant and/or Nokia to suffer lower volume of sales…That would in turn have caused loss to be sustained by them within England and Wales. Moreover, in that event, it would also be the case that UK consumers and/or businesses also suffered significant damage as a result of the Defendants’ unlawful conduct.”

 

181.          I reject the suggestion that a contention that a claimant is in terms not advancing can amount to a good arguable claim. Furthermore, were Microsoft Mobile to make such a positive case, then it would once again be important to understand at least something of the factual basis for the assertion that damage has been sustained within the jurisdiction. For instance, I have been told nothing about how Nokia sold its handsets to the ultimate consumer; nor has there been any kind of explanation as to how such volume effects might manifest themselves.

Microsoft Mobile’s fourth contention: purchases by Nokia UK Ltd

182.          Paragraph 116.2 of Microsoft Mobile’s written submissions states that “[t]he entities within Nokia that made purchases of Li-ion Batteries, in respect of whose purchases the claim is brought, include Nokia UK Ltd which is established in the UK”, and has its registered office in the UK.

183.          Microsoft Mobile has pleaded that Nokia UK Ltd was a part of the Nokia group: see Appendix 1 to the Amended Particulars of Claim. It may be that (as pleaded) Nokia UK Ltd purchased Li-ion Batteries – but beyond that it is impossible to go. It is not said how many units were purchased; it is not said from whom these units were purchased or where; it is not said whether these purchases were direct purchases or indirect purchases, or at what prices. The only point that is of any evidential substance is the fact that Appendix 1 of the PPA lists various Nokia “manufacturing centres”. None are UK based; all save one (which is based in Germany) are outside the EU. One “distribution centre” is identified: it is based in Hong Kong. Nokia UK Ltd is not listed, and the inference must be that Nokia UK Ltd did not purchase Li-ion Batteries directly from D1/Sony Europe or D2/Sony Corporation.

184.          I do not consider the bare assertion that Nokia UK Ltd purchased some Li-ion Batteries somewhere from someone to be sufficient to bring the claims in the Amended Particulars of Claim within Gateway (9)(a).

 (5)       Conclusion on Gateways

185.          For the reasons I have given, Microsoft Mobile cannot demonstrate that the claims pleaded in the Amended Particulars of Claim, or any of them, fall within either Gateway (3) or Gateway (9).

G.        CLEARLY AND DISTINCTLY THE PROPER FORUM FOR THE TRIAL

186.          The claimant must show that England and Wales is clearly and distinctly the proper forum for the trial of the claims. The test derives from the well-known decision of the House of Lords in Spiliada Maritime Corporation v. Cansulex Ltd, [1987] 1 A.C. 460 at 481:

“The effect is, not merely that the burden of proof rests on the plaintiff to persuade the court that England is the appropriate forum for the trial of the action, but that he has to show that this is clearly so. In other words, the burden is, quite simply, the obverse of that applicable where a stay is sought of proceedings started in this country as of right.”

 

187.          The factors that need to be taken into account are easily stated in general terms. They comprise:[70]

i)                   The personal connection which the parties have to England;

ii)                 The factual connections which the events have with England;

iii)               The question which law should apply. The possibility of there being a lis pendens in another court; and

iv)               The possibility that other persons may become party to, and affect the overall shape of, the litigation.

188.          In the present case, the status of the proceedings against D1/Sony Europe polarised the submissions of Microsoft Mobile on the one hand and the Defendants on the other. Microsoft Mobile stressed that with a claim commenced as of right against D1/Sony Europe in this jurisdiction, the natural jurisdiction for the rest of the claims against the other Defendants was this jurisdiction too. In paragraph 125 of its written submissions, Microsoft Mobile stated:

“England and Wales is the proper forum for these proceedings. Where, as in this case, there is a multi-jurisdictional cartel operating globally, there is in principle no unique natural home for any particular litigation. However, as set out above, C has a viable, and substantial, claim against D1 for the entirety of its losses on a joint and several basis which will proceed in this jurisdiction. In the light of that, the Master correctly concluded that the clearly and distinctly more appropriate forum for the rest of the claims against D1’s joint tortfeasors was also England and Wales. That represents the most economic and timely use of resources; it will minimise the risk of conflicting decisions; and it will prevent the unnecessary duplication of costs for the parties. Indeed, if the Ds were acting rationally, rather than strategically, they would agree.”

 

189.          The Defendants, by contrast, stressed the following points:

i)                   That proceedings had been brought against D1/Sony Europe for the sole reason of establishing jurisdiction against the other Defendants. The Defendants sought to contend that this was a relevant factor at the stage of Gateway (3), and I have rejected that contention. However, it is relevant here.

ii)                 That the place of the tort was not England and Wales. As to this:

a)                  Whilst accepting that “the variety of circumstances is infinite” and that the over-arching principle is as stated in Spiliada,[71] the Defendants stressed the importance of the place of the commission of the tort. The relevant authorities are set out by Lord Mance in VTB Capital plc v. Nutritek International Corp, [2013] UKSC 5:

“14.   In the present case, VTB relies upon the words of Robert Goff L.J. in an earlier Court of Appeal case: Cordoba Shipping Co. Ltd v. National State Bank, Elizabeth, New Jersey (The Albaforth) [1984] 2 Lloyd’s Rep. 91, and the acceptance of that case as consistent with The Spiliada by the House of Lords in the later case of Berezovsky v. Michaels [2000] 1 WLR 1004. In The Albaforth [1984] 2 Lloyd’s Rep. 91, 96 Robert Goff LJ deduced from earlier case law that:

“where it is held that a court has jurisdiction on the basis that an alleged tort has been committed within the jurisdiction of the court, the test which has been satisfied in order to reach that conclusion is one founded on the basis that the court, so having jurisdiction, is the most appropriate court to try the claim, where it is manifestly just and reasonable that the defendant should answer for his wrongdoing. This being so, it must usually be difficult in any particular case to resist the conclusion that a court which has jurisdiction on that basis must also be the natural forum for the trial of the action. If the substance of an alleged tort is committed within a certain jurisdiction, it is not easy to imagine what other facts could displace the conclusion that the courts of that jurisdiction are the natural forum. Certainly, in the present case, I can see no factors which could displace that conclusion.”

15.     In Berezovsky v. Michaels [2000] 1 WLR 1004 a challenge to the consistency of this approach with The Spiliada was rejected by Lord Steyn in a speech with which the other two members of the majority agreed: speaking of a line of authority in which the approach taken in The Albaforth had been followed, he said, at p.1014:

“The express or implied supposition in all these decided cases is that the substance of the tort arose within the jurisdiction. In other words the test of substantiality as required by Kroch v. Rossell [1937] 1 All E.R. 725 was in each case satisfied. Counsel for Forbes argued that a prima facie rule that the appropriate jurisdiction is where the tort was committed is inconsistent with The Spiliada [1987] AC 460. He said that The Spiliada admits of no presumptions. The context of the two lines of authority must be borne in mind. In The Spiliada the House examined the relevant questions at a high level of generality. The leading judgment of Lord Goff of Chieveley is an essay in synthesis: he explored and explained the coherence of legal principles and provided guidance. Lord Goff of Chieveley did not attempt to examine exhaustively the classes of cases which may arise in practice, notably he did not consider the practical problems associated with libels which cross national borders. On the other hand, the line of authority of which The Albaforth is an example was concerned with practical problems at a much lower level of generality. Those decisions were concerned with the bread and butter issue of the weight of evidence. There is therefore no conflict. Counsel accepted that he could not object to a proposition that the place where in substance the tort arises is a weighty factor pointing to that jurisdiction being the appropriate one. This illustrates the weakness of the argument. The distinction between a prima facie position and treating the same factor as a weighty circumstance pointing in the same direction is rather a fine one. For my part the Albaforth line of authority is well established, tried and tested, and unobjectionable in principle.””

 

b)                 In his oral submissions, Mr. Beard Q.C. emphasised that the centre of gravity of the torts pleaded by Microsoft Mobile pointed away from England and Wales:[72]

“Without wishing to sound trite, it is important to remember that the mischief of a conspiracy tort, an unlawful means tort, or indeed a breach of Article 101 TFEU, is the coming together of people. If you think about a 101 case where an overcharge is alleged, the allegation is not that the actual price of the goods is inherently unlawful. It is not inherently unlawful to price at 110p rather than a pound. What is unlawful is where people agree who are competitors that the pricing should be at 110p. It is where that agreement is going on, it is where that concerted practice or agreement occurs that is the essence of the tortious behaviour for the purposes of breach of statutory duty that is found at least in English law on the basis of Article 101.

We say the same applies in relation to issues of conspiracy, or unlawful means, in the context of these allegations, where the claims are being brought that people got together in these company groups and coordinated their behaviour. Those people were at least primarily, probably almost completely, in Japan and Korea, and possibly China. When we look at the dramatis personae, we see 60 people who are Japanese and Korean.

Where the meetings took place, where the communications were: those were in Japan and Korea…

We say the answer here, actually the only answer we need to give is not England and Wales. That is the only answer, not England and Wales. We can go further, and say it is Japan and Korea. We do not need to. We just have to say it is not England and Wales…”

 

c)                  Against this, Microsoft Mobile could say relatively little: plainly, the centre of gravity of the Cartel is not England and Wales. The best that Microsoft Mobile could say (in paragraph 131.1 of its written submissions) was that “[i]t is not correct that all the cartel conduct complained of took place in Asia”, pointing to events allegedly occurring in Finland, occasionally in Europe and to an extent in Weybridge, Surrey. Of course, I take these facts fully into account – particularly those connecting with England – but Microsoft Mobile’s submissions make the Defendants’ point for them: the torts have a rather nebulous connection with England and Wales.

d)                 Perhaps Microsoft Mobile’s best point was that this was a multi-jurisdictional cartel operating perhaps globally, with “no unique natural home for any particular litigation”. I recognise that there is some force in this, perhaps diluting the weight of this factor in this particular case. But even so, the jurisdictions centrally engaged were not England and Wales, which was peripherally involved.

iii)               That the language and location of the parties’ witnesses and documents pointed away from England and Wales. As to this:

a)                  The vast majority of the companies and natural persons (from whom the factual witnesses are drawn) involved in the Cartel are not present in England and Wales. Their documents will not be in English (they will likely be in Japanese or Korean) and – although these documents can be translated – the fact is that nuance and some meaning is always lost in translation, however good the translator.

b)                 Microsoft Mobile did not contest this, but emphasised that Nokia’s and Microsoft Mobile’s documents would be in English, “which is the language in which Nokia and Microsoft conduct their business. The witnesses in question will speak English (but not Korean or Japanese)”.[73]

c)                  The point, therefore, goes both ways. Microsoft Mobile submitted that “it is the interests of C’s witnesses which should take priority. The D’s witnesses have – by admission, D4 to the DoJ and D6 to the Commission – participated directly in serious infringements of competition law and their interests should not outweigh those of the witnesses representing the victims of those infringements”.

d)                 I am disinclined to treat this as a question for a “court of morals”. The issue is not who is the wrongdoer, but where best these claims may be tried. Like it or not, an understanding of how the Cartel operated – in which, ex hypothesi, Nokia and Microsoft Mobile did not participate and of which they say they knew nothing – will be critical to the claims pleaded, and it will be a disadvantage for a court to deal with these complex factual issues through the medium of translation. By contrast, the factual questions in which Nokia and Microsoft were involved are likely to be highly technical (what was purchased; where; and for how much), but more susceptible of translation.

e)                  In short, this is a factor that goes both ways, and I attach relatively less weight to it for that reason. On balance, however, I consider that it points away from England and Wales as the proper forum. 

iv)               That the applicable law pointed away from England and Wales. None of the parties encouraged me to make any findings in respect of the applicable law – that being a matter for another time and one which (as I have noted) it is actually not possible to resolve at this stage. Although I accept that this is a factor that can be relevant,[74] I consider the point to be a neutral one in this case:

a)                  As can be seen from the table at paragraph 16(iv) above, Microsoft Mobile contends for a whole variety of applicable laws, of which English law is but one.

b)                 It is clear from Microsoft Mobile’s case that multiple other laws – apart from English law – will have to be considered by this court. But that would equally be true of a court of another jurisdiction hearing these claims.

v)                 That no point had been taken about the non-availability of a foreign forum. On this, Mr. Beard, Q.C. stated:[75]

“There is one other factor that I highlighted at the outset: alternative fora. As this is a service out case, the burden, as I have emphasised, is on Microsoft to show that England is clearly the proper forum. It is not on Samsung to show that there is an available alternative forum where the case can more appropriately be tried.

Just to be clear, Microsoft has not suggested that it cannot obtain fair justice in Japan, which we say is the natural forum, or indeed Korea, which is a far more natural forum than here…”

 

It was D6/Samsung’s case that Japan was the natural forum, closely followed by Korea;[76] D4/LG Chem regarded Japan and Korea as equally good.[77] Clearly, a potent indicator in favour of England and Wales would be an absence of other fora in which the dispute could be tried. Microsoft Mobile made no such contention.

190.          As Microsoft Mobile has stressed, and as cannot be gainsaid, proceedings have been commenced against D1/Sony Europe as of right. However:

i)                   I have determined that the proceedings against D1/Sony Europe (and, which is less to the point for present purposes, D2/Sony Corporation) should be stayed pursuant to section 9 of the Arbitration Act 1996.

ii)                 I have also determined that, essentially by reason of this stay, Microsoft Mobile cannot bring the claims it has pleaded within Gateway (3).

iii)               For reasons unrelated to the stay against D1/Sony Europe, I have concluded that Microsoft Mobile cannot bring the claims it has pleaded within Gateway (9)(a).

191.          It follows that, on the basis of these findings, we do not actually get to the third requirement: Microsoft Mobile’s claim to serve out of the jurisdiction fails at the second hurdle, and the order of the Master permitting service out of the jurisdiction will have to be set aside. However, it follows from what I have said so far, that were I to decide the third requirement, I would conclude that Microsoft Mobile had failed to show – let alone show clearly – that England and Wales is clearly and distinctly the proper forum.

192.          If, however, I am wrong on the application of the arbitration clause or on its relevance to the application of Gateway (3), then matters take on a different complexion. There are two possibilities:

i)                   If I am right that the arbitration clause is sufficiently wide to embrace the claims pleaded by Microsoft Mobile, but wrong in concluding that this fact is a relevant consideration when determining whether the claims are outside Gateway (3), then – whilst the stay pursuant to section 9 of the Arbitration Act 1996 is effective against D1/Sony Europe (and D2/Sony Corporation) – the Master’s decision to permit service out stands. It would be for the other Defendants to seek a stay of the proceedings against them, on the basis that there is a more appropriate forum elsewhere. Microsoft Mobile put the point in this way in paragraph 147 of its written submissions;

“D4 and D6 appear to apply for a stay on forum non conveniens grounds. The draft Orders filed in support of their applications include provision to this effect. Much of the supporting evidence, however, goes to the separate question of whether C satisfied CPR 6.37(3) at the time it applied for permission to serve out…This confusion underpins an apparent contention that the burden of proof lies with C. To be clear, while C accepts that it bears the burden of showing that CPR Rule 6.37(3) was satisfied at the time of the order for service out, the burden in respect of any separate forum non conveniens application which D4 and/or D6 wish to pursue lies squarely with them.”

 

This analysis is clearly correct: on this basis, given the factors set out in paragraph 189 above, and the fact of the stay against the anchor defendant, I would have acceded to such applications had it been necessary that they be moved.

ii)                 If I am wrong on the more fundamental question of the stay itself, then D1/Sony Europe will have been joined as of right in circumstances where it cannot deploy the arbitration clause. In this case:

a)                  The requirements of Gateway (3) will have been met; and

b)                 There is no power to stay the proceedings against D1/Sony Europe, because of the decision of the Court of Justice in Owusu v. Jackson [2005] QB 801.

The question that arises on this basis is whether – at the third stage of the inquiry, and given that the proceedings against D1/Sony Europe will inevitably continue – England and Wales is clearly and distinctly the proper forum for the trial of the claims against the other Defendants. It is to this question that I now turn.

193.          The problem is that, whereas under the English rules, a claim commenced as of right against a defendant could, in appropriate circumstances, be stayed, under the Brussels I Regulation (Recast) there is no such power. The proceedings against D1/Sony Europe will continue and there is at least the prospect:

i)                   That further parties will be dragged into these proceedings, by D1/Sony Europe seeking to advance Part 20 claims against other parties.

ii)                 Of inconsistent outcomes because of duplicative proceedings taking place in other jurisdictions.

194.          Both of these are powerful points indicating in favour of this jurisdiction, and they clearly would need to be taken into account when deciding the proper forum for trial as against the Defendants apart from D1/Sony Europe.

195.          Two questions arise:

i)                   What is the proper test to apply in these circumstances?

ii)                 Applying that test, how is the third requirement to be determined?

196.          Briggs suggests (at p.473) that the “correct analysis may be that if the court would have set aside service if it had not been for the decision in Owusu, it should still generally set it aside notwithstanding the effect of Owusu”. In effect, the approach suggested by Briggs is – as regards defendants not subject to the Brussels I Regime (Recast) – to pretend that the anchor defendant who is subject to that regime is not so subject. That, as it seems to me, is a denial of reality which has the consequence of causing the court simply to disregard the very real adverse consequences of proceedings continuing against the anchor defendant but not against the other defendant(s). This is an approach that I accordingly reject.

197.           On the other hand, it would be wrong to allow the fact that proceedings will inevitably continue against the anchor defendant automatically and without more to determine what should happen in relation to the other defendants.

198.          The proper course, as it seems to me, is to apply the forum conveniens test as I have described it, but taking these factors into account. Obviously, this has the effect of skewing the scales in favour of proceedings continuing in this jurisdiction (since the proceedings against the anchor defendant cannot be stayed), but it is not the case that these weighty factors cannot be outweighed by factors going the other way. There have been a number of cases where – notwithstanding the continuation or threatened continuation of proceedings against the anchor defendant – a court has been prepared to decide that the proceedings against the other defendants should not so continue:

i)                   In OJSC Oil Company Yugraneft v. Abramovich [2008] EWHC 2613 (Comm) at [490], Christopher Clarke J. noted:

Owusu mandates that any claim, if valid, against Millhouse must be determined here. But that is not a ground for bringing in a defendant if England is an inappropriate forum. It is obvious to me that the primary reason for suing Millhouse, with minimal net assets, is to provide the anchor on which to tether a claim against Mr. Abramovich. Had it been relevant, I would have loosed the chain.”

 

ii)                 In Pacific International Sports Clubs Ltd v. Soccer Marketing International Ltd [2009] EWHC 1839 (Ch), Blackburne J. stated:

111.   …It follows, therefore, that neither the doctrine of forum non conveniens nor the application “reflexively” of articles of the Judgments Regulation provides grounds for staying the pursuit by Pacific in this jurisdiction of its claims against SMI. Does this mean that, given Pacific’s wish to pursue its claims against SMI in this jurisdiction, this court should allow Pacific to continue to pursue its claims against the other defendants in this jurisdiction notwithstanding that, as against those other defendants, application of the doctrine of forum non conveniens, unaffected in the case of those other defendants by the impact of the Judgments Regulation, indicates that Pacific’s claims against those others should be pursued in Ukraine?

112.   I am not persuaded that it does. According to the particulars of claim in this action, SMI is, like the BVI defendants, a relatively minor player in the dispute: it was no more than the means whereby Mr. Surkis held and was able to take control of Dynamo. The principal dispute is undoubtedly between Pacific on the one hand and Mr. Surkis and Mr. Zgursky on the other. To allow the fact that the doctrine of forum non conveniens cannot be applied to SMI to dictate where the dispute as a whole must be tried would be, in my view, to allow the tail to wag the dog. In particular, I see no reason why, given my conclusions in relation to the application of the doctrine of forum non conveniens to the other defendants, I should not stay the action against Mr.Surkis and set aside the permission order, and with it service of the claim form on the BVI defendants, leaving it to Pacific to pursue its dispute with those persons (and SMI if it wishes) in the courts of Ukraine…”

 

iii)               In OJSC TNK-BP Holding v. Beppler & Jacobson Ltd [2012] EWHC 3286 (Ch) at [313], Mr. Andrew Sutcliffe, Q.C. sitting as a Deputy High Court Judge stated:

“It is necessary to consider the possibility of parallel proceedings in England and Russia. Mr. Kitchener accepts that Owusu v. Jackson [2005] QB 801 prevents this court from declining jurisdiction over the claim against BJUK on forum conveniens grounds. Accordingly, if the claim against this anchor defendant is viable it may continue even if permission to sue the Applicants is refused. The result might be the existence of parallel proceedings in Russia and England. However, as Mr. Kitchener points out, if this is of concern to Holding, the solution is in its own hands. It can join BJUK as a defendant to any Russian proceedings…This is a case where it is important to have regard to Lloyd L.J.’s observation in The Golden Mariner [1990] 2 Lloyd’s Rep. 215 at 222…The fact that Russia is the natural forum means that the claim against BJUK should not dictate the location of trial against the Applicants.”

 

199.          Considering, therefore, whether England and Wales is clearly and distinctly the proper forum for the hearing of the claims against D2/Sony Corporation, D4/LG Chem and D6/Samsung on the assumption that the proceedings against D1/Sony Europe continue in this jurisdiction, it would have been my conclusion that this third requirement was satisfied and that the Master’s order should stand. My reasons are as follow:

i)                   As I have already stated, absent the continuation of proceedings against D1/Sony Europe, the case against England and Wales being a proper forum as regards the other Defendants is compelling and one-sided: see paragraph 189 above.

ii)                 On the other hand, the potential for duplicative proceedings in multiple jurisdictions is an evil that ought to be avoided, albeit not at any price. I also have well in mind that – given my conclusion regarding the reason for the proceedings against D1/Sony Europe (see paragraph 189(i) above) – D1/Sony Europe has been used to bring in the other Defendants. It must also be acknowledged that Microsoft Mobile could easily decide that the proceedings it has begun against D1/Sony Europe could be stopped in light of proceedings in respect of the Cartel elsewhere.

iii)               I find these considerations finely balanced. The factor that in my mind determines matters in favour of allowing the claims against the other Defendants to proceed is that (unlike in OJSC Oil Company Yugraneft v. Abramovich and Pacific International Sports Clubs Ltd v. Soccer Marketing International Ltd), D1/Sony Europe is a substantial entity in its own right. It is well-able to pay significant damages and well-worth suing in its own right. Moreover, if it so chooses, it may well seek to bring in other parties by way of Part 20.

200.          Accordingly, had my decision regarding the section 9 stay been otherwise, my decision on this part of the Applications would have been different also. As it is, I set aside the order of Master Clark and with it the service of these proceedings on D2/Sony Corporation, D4/LG Chem and D6/Samsung.

H.        NOT FULL AND FRANK

201.          It follows that I do not need to determine whether the order of the Master should be set aside on the ground of material non-disclosure by Microsoft Mobile. However, because I was addressed on the point, and in case the matter goes further, I deal with it.

202.          The relevant principles that I must apply were set out by Warby J. in Sloutsker v. Romanova [2015] EWHC 545 (QB) at [51]:

“The relevant general principles are these:

i)       An applicant for permission to serve proceedings outside the jurisdiction is under a duty of full and frank disclosure which applies on all applications without notice.

ii)      The duty requires the applicant to make full and fair disclosure of those facts which it is material for the court to know: Brinks Mat v. Elcombe [1988] 1 W.L.R. 1350, 1356 (1) and (2) (Ralph Gibson L.J.). Put another way, disclosure should be made of “any matter, which, if the other party were represented, that party would wish the court to be aware of”: ABCI v. Banque Franco-Tunisienne [1996] 1 Lloyd’s Rep. 485, 489 (Waller J.).

iii)     Non-disclosure of material facts on an application made without notice may lead to the setting aside of the order obtained, without examination of the merits. It is important to uphold the requirement of full and frank disclosure.

iv)     But the court has a discretion to set aside or to continue the order. Whether the fact not disclosed is of sufficient materiality to justify or require immediate discharge of the order without examination of the merits depends on the importance of the fact to the issues that were to be decided. The answer to the question whether the non-disclosure was innocent is an important, though not decisive, consideration. See Brinks Mat at pp1357 (6) and (7) and 1358 (Balcombe L.J.).

v)      In the context of permission for service outside the jurisdiction the court has a discretion to set aside the order for service and require a fresh application, or to treat the claim form as validly served and deal with the non-disclosure by a costs order: NML Capital Ltd v. Republic of Argentina [2011] UKSC 31, [2011] 2 AC 495, [136] (Lord Collins).”

 

203.          A helpful distillation of the correct approach was given by Kerr J. in B.P. Exploration v. Hunt [1976] 3 All E.R. 879 at 894:[78]

“…the court should not consider the supporting affidavit as though it were marking an examination paper, deciding one way or the other merely on the basis of the extent to which the affidavit could have been improved. The primary question should be whether in all the circumstances the effect of the affidavit is such as to mislead the court in any material respect concerning its jurisdiction and the discretion under the rule.”

 

204.          In DSG Retail Ltd v. Mastercard Inc. [2015] CAT 7 at [44], Roth J. noted:

“44.   This application was heard without notice, as is usually the case for an application for permission to serve out. As on any application without notice, the applicant is under a duty to make full and frank disclosure of matters material to the application. That means not only that care needs to be taken in setting out the factual basis for the application, but also that the Tribunal's attention should be drawn to any significant objections to the application that the defendants could reasonably be expected to raise if they were before the Tribunal. The duty does not require disclosure to the same degree as on an application for a without notice injunction, such as a freezing order, where granting the application has immediate and potentially serious consequences for the defendant. The factors relevant to an application to serve out are only those which relate to the limited inquiry the Tribunal carries out in determining whether to grant such permission. Nonetheless, within the limited scope of that inquiry, if the claimant is aware of such factors as might cause the Tribunal to doubt whether permission should be granted, they should be clearly disclosed...

45.     In applications before the Tribunal, it will often be more appropriate for such disclosure to be made in a statement accompanying the claim form and similarly attested by a declaration of truth, rather than in the claim form itself. The Tribunal cannot be expected to go through a long claim form or Particulars of Claim teasing out material objections to service out of the jurisdiction. Moreover, since the Tribunal will generally seek to deal with such applications on the papers, compliance with the duty of full and frank disclosure cannot be left to counsel's skeleton argument for a hearing since in most cases there will not be a hearing.”

 

205.          Four points were taken by the Defendants in relation to what were said to be material deficiencies in the evidence before Master Clark:

i)                   First, it was said that Microsoft Mobile failed to draw to the Master’s attention the full position regarding damage sustained in the jurisdiction. D4/LG Chem’s written submissions stated:

“76.   First, whilst relying on [Gateway (9)(a)], the Claimant failed to point out that it was unable to establish that any significant damage (or indeed any damage at all) had been incurred in England and Wales. Instead, Murray 1 sought to rely on sales of the relevant products made by the First Defendant, without going on to elucidate the critical fact whether those sales were made in England or whether they were made to Nokia entities located elsewhere...

77.     Further, the Claimant failed to point out to the Court that, given the inadequacy of its evidence in relation to the place in which damage occurred, the Defendants would have a good argument that [Gateway (9)(a)] was not satisfied.

78.     Second, the Claimant failed in its application and evidence to present the position in relation to each individual assignee, and wrongly proceeded on the fundamentally flawed basis that all of the assignees’ claims are to be treated not as separate claims but as if all of the sales had been made to a single entity. The Claimant failed to explain to the Court that the Defendants would have an argument that evidence of loss having been caused to one Nokia entity in England would be insufficient to fulfil [Gateway (9)(a)] in respect of the whole claim.”

 

ii)                 Secondly, it was contended that Microsoft Mobile had failed to draw to the Master’s attention the range of factors pointing to Japan or Korea as being more appropriate fora. These factors have already been described in paragraphs 189 above. Paragraph 79 of D4/LG Chem’s written submissions stated:

Third, the Claimant failed to draw to the Court’s attention the wealth of factors indicating that Japan and South Korea are much more closely connected to the claim than England. The only discussion of Japan and South Korea as alternative fora was in Murray 1, §50. This (i) made the point that neither of these jurisdictions “is the home jurisdiction of all of the Defendants”, and (ii) sought to minimise the linguistic difficulties in bringing a claim in England. Nowhere has the Claimant drawn to the Court’s attention the factors set out…above and notably that:

(a)     the pleaded conduct giving rise to the alleged infringement took place entirely (alternatively, almost entirely) in Japan and Korea;

(b)     the persons alleged by the Claimant to have been involved all appear to be in Japan or Korea;

(c)     most of the documents are likely to be held in Japan and South Korea; and

(d)     most of the damage that is alleged to have been caused to the Claimant was not even sustained in the EEA, let alone in England and Wales. Given that this claim does not extend to damage suffered in the United States, most of the loss is likely to have been suffered in Asia.”

 

iii)               Thirdly, it was contended that Microsoft Mobile had failed to draw to the Master’s attention that there was a good argument that D1/Sony Europe had only been sued in order to found jurisdiction against the other Defendants.

iv)               Fourthly, and finally, it was contended that Microsoft Mobile had failed to draw to the Master’s attention the fact that the Defendants were likely to raise as a defence that the claim fell outside the scope of Article 101 TFEU. Paragraph 74 of D4/LG Chem’s written submissions states:

“In iiyama v. Schott AG [2016] EWHC 1207 (Ch), Mann J. recently set aside an order permitting service out of the jurisdiction on the ground inter alia that the claimants had not complied with their duty of full and frank disclosure. That claim was also a cartel damages claim brought mainly against defendants domiciled in Asia in respect of cartel conduct in Asia. Mann J. held that the claimants had failed properly to set out for the court the factual position in relation to purchases of the cartelised product in the EEA and had also failed to draw the court’s attention to the fact that the defendants were likely to raise as a defence that the claim fell outside the territorial scope of Article 101 TFEU…Mann J. held that these omissions were “serious” and went “to the heart of the case”.”

 

206.          In response, Microsoft Mobile could do little more than refer me to Murray 1 and suggest that these matters – to the extent they needed to be drawn to the attention of the court – had been properly adverted to in Murray 1. I have, therefore, reviewed this statement with particular care bearing in mind the points raised by the Defendants. I have also borne in mind that the mere fact that the statement might be improved upon is not the point. The question is whether the court has been misled.

207.          The points raised by the Defendants are all connected to the fact that – in reality – the centre of gravity of the Cartel was actually Asian, whether one has regard to the participants (both corporate and individual); the sales of the cartelised products (the Li-ion Batteries); and many of the purchasers. Microsoft Mobile, in my judgment, wrongly downplayed these important matters by:

i)                   Aggregating the claims of Nokia (as a group of companies) and not differentiating between them. As a result, it was possible to present purchases from D1/Sony Europe as by a single (legal) entity, and to avoid all mention of the potential that there were chains of purchasers within the Nokia group. This was a matter which only emerged during Mr. Beal Q.C.’s oral submissions (see paragraph 20 above); which is significant; and which was certainly not disclosed in Murray 1. Indeed, when seeking to distinguish Emerald Supplies v. British Airways [2015] EWCA Civ 1024 in paragraph 41 of Murray 1, Mr. Murray says at paragraph 41(a):[79]

Nokia was a direct purchaser of Li-ion Batteries, whereas in Emerald the purchasers were indirect (that is, the defendants sold the relevant product to third parties, who then re-sold it to the claimants.”

 

This statement is incomplete at best, and positively misleading at worst. Nokia can only be described as a “direct” purchaser when viewing matters at the level of the Nokia group. Viewed at the more granular level of the individual companies within the Nokia group, matters might well be different. The fact is that Microsoft Mobile simply does not know, and this undermines the boldness of the plea (at paragraph 150.1 of the Amended Particulars of Claim, paragraph 19(i) above) that Nokia was a direct purchaser of Li-ion Batteries. As far as it goes, this is right: but the certainty of the averment is only achieved through the broad definition of “Nokia”. This should have been drawn to the Master’s attention.

ii)                 A consequence of this would have been that the Master would have been able to probe a little more deeply into who was purchasing Li-ion Batteries from D1/Sony Europe. As it was, all that Murray 1 says (at paragraph 33(a)) is:

“In the Cartel Period and the Run-Off Period, Nokia and/or the Claimant purchased 12.1 million units from the First Defendant, which, as set out above, is a company located in the UK and incorporated under English law.”

 

iii)               No mention is made of the fact that Microsoft Mobile was unable to say who had purchased these 12.1 million units – save that it was some company in the Nokia group. It is worth noting – although it is a minor point[80] – that this paragraph (and also paragraph 5(e)) makes no mention of the fact that 12.1 million units is a drop in the ocean when considered in relation to the overall sales of Li-ion Batteries.

iv)               It is entirely right to say that Murray 1 is silent on factors pointing in favour of a non-English jurisdiction. Murray 1 makes the point that D1/Sony Europe is, inevitably, going to be sued in England and that it would be hugely disadvantageous to have parallel relating proceedings going on elsewhere. That, as I have already noted is an entirely fair point of great force. But – even disregarding the effect of the arbitration clause – the point is not a conclusive one, as the authorities described in paragraph 198 above demonstrate. Murray 1 should have set out the factors pointing in the other direction. Paragraphs 45 to 50 of Murray 1 do not come close to a fair statement of the points that the Defendants could deploy, and before me did deploy, in favour of a jurisdiction other than England and Wales.

208.          These are major criticisms, going to the heart of the issue that the Master had to decide. I consider that Murray 1 fell far short of what should have been said to the Master on the application to serve out.

209.          In The Arena Corporation Ltd v. Schroeder [2003] EWHC 1089 (Ch) at [213], the principles according to which the court should exercise its discretion in this case are helpfully set out:

“On the basis of the foregoing review of the authorities, I would summarise the main principles which should guide the court in the exercise of its discretion as follows:

(1)     If the court finds that there have been breaches of the duty of full and fair disclosure on the ex parte application, the general rule is that it should discharge the order obtained in breach and refuse to renew the order until trial.

(2)     Notwithstanding that general rule, the court has jurisdiction to continue or re-grant the order.

(3)     That jurisdiction should be exercised sparingly, and should take account of the need to protect the administration of justice and uphold the public interest in requiring full and fair disclosure.

(4)     The court should assess the degree and extent of the culpability with regard to non-disclosure. It is relevant that the breach was innocent, but there is no general rule that an innocent breach will not attract the sanction of discharge of the order. Equally, there is no general rule that a deliberate breach will attract that sanction.

(5)     The court should assess the importance and significance to the outcome of the application for an injunction of the matters which were not disclosed to the court. In making this assessment, the fact that the judge might have made the order anyway is of little if any importance.

(6)     The court can weigh the merits of the plaintiff’s claim, but should not conduct a simple balancing exercise in which the strength of the plaintiff’s case is allowed to undermine the policy objective of the principle.

(7)     The application of the principle should not be carried to extreme lengths or be allowed to become the instrument of injustice.

(8)     The jurisdiction is penal in nature and the court should therefore have regard to the proportionality between the punishment and the offence.

(9)     There are no hard and fast rules as to whether the discretion to continue or re-grant the order should be exercised, and the court should take into account all relevant circumstances.”

 

210.          In all the circumstances, given the seriousness of the non-disclosure and importance of the issues it went to, I would have discharged the order of the Master and set aside the service out on the grounds of non-disclosure.

I.       DISPOSITION

211.          For the reasons given in this Judgment:

i)                   The proceedings against D1/Sony Europe are stayed pursuant to section 9 of the Arbitration Act 1996.

ii)                 The order for service out of the jurisdiction against the other Defendants – including D2/Sony Corporation – is set aside and the service of those proceedings out of the jurisdiction is also set aside.


ANNEX 1

(footnote 1 of the Judgment)

TERMS AND ABBREVIATIONS USED

Term/Abbreviation

Meaning

First reference in Judgment

Applications

The Defendants’ applications.

Para. 28

Briggs

Briggs, “Civil Jurisdiction and Judgments”, 6th ed. (2015).

Para. 91

Brussels I Regulation (Recast)

Regulation (EU) No. 1251/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition of judgments in civil and commercial matters (recast).

Para. 22

Cartel

An alleged cartel selling Li-ion Batteries.

Para. 5

Cartelists

The undertakings allegedly participating in the Cartel.

Para. 10

Claimant

Microsoft Mobile.

Para. 1

D1/Sony Europe

The First Defendant.

Para. 8(i)

D2/Sony Corporation

The Second Defendant.

Para. 8(ii)

D4/LG Chem

The Fourth Defendant.

Para. 8(iii)

D6/Samsung

The Sixth Defendant.

Para. 8(iv)

Defendants

The First, Second, Fourth and Sixth Defendants.

Para. 9

Downstream Products

Products into which Li-ion Batteries are incorporated.

Para. 6(i)(a)

Gateways

The cases where permission to serve out of the jurisdiction may be given listed in paragraph 3.1 of Practice Direction 6B of the Civil Procedure Rules.

Para. 25(ii)

Gateway (3)

Paragraph 3.1(3) of Practice Direction 6B.

Para. 25(ii)(a)

Gateway (9)(a)

Paragraph 3.1(9)(a) of Practice Direction 6B.

Para. 25(ii)(b)

Gateway (9)(b)

Paragraph 3.1(9)(b) of Practice Direction 6B.

Para. 25(ii)(b)

Li-ion Batteries

Batteries for telephone handsets.

Para. 1

Li-ion Cells

Lithium ion battery cells, which are contained in Li-ion Batteries.

Para. 2

Microsoft Mobile

The Claimant in these proceedings.

Para. 1

Murray 1

The first statement of Mr. Robert Murray on behalf of the Claimant.

Para. 24

Murray 2

The second statement of Mr. Robert Murray on behalf of the Claimant.

Para. 29

Nokia

Nokia Corporation and its relevant subsidiaries.

Para. 3

PPA

Product Purchase Agreement No. 000247.

Para. 34

Rome II

Regulation (EC) No. 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obligations.

Para. 16(iii)(b)

Run-Off Period

The period of the Cartel’s operation after May 2011.

Para. 6(iii)

SAPA

The Stock and Asset Purchase Agreement dated 2 September 2013.

Para. 3

TFEU

Treaty on the Functioning of the European Union.

Para. 48

Upstream Products

Li-ion Batteries purchased either for incorporation into Downstream Products or for sale on the after-market.

Para. 6(i)(b)

1995 Act

Private International Law (Miscellaneous Provisions) Act 1995.

Para. 16(iii)(a)

 

 


 

ANNEX 2

(paragraph 29 of the Judgment)

EVIDENCE RELIED UPON BY THE DEFENDANTS

Gadhia 1

First statement of Sunil Gadhia filed on behalf of D1/Sony Europe and D2/Sony Corporation.

Gadhia 2

Second statement of Sunil Gadhia filed on behalf of D1/Sony Europe and D2/Sony Corporation.

Gadhia 3

Third statement of Sunil Gadhia filed on behalf of D1/Sony Europe and D2/Sony Corporation.

Botteman 1

First statement of Yves Botteman filed on behalf of D4/LG Chem.

Botteman 2

Second statement of Yves Botteman filed on behalf of D4/LG Chem.

Botteman 3

Third statement of Yves Botteman filed on behalf of D4/LG Chem.

Wheeler 1

First statement of Jonathan Wheeler filed on behalf of the Third and Fifth Defendants.

Wheeler 2

Second statement of Jonathan Wheeler filed on behalf of the Third and Fifth Defendants.

Cordell 1

First statement of Neville Cordell filed on behalf of D6/Samsung.

Cordell 2

Second statement of Neville Cordell filed on behalf of D6/Samsung.

Cordell 5

Fifth statement of Neville Cordell filed on behalf of D6/Samsung.

 



[1] Annex 1 lists the terms and abbreviations used in this Judgment, together with the paragraph in which that term or abbreviation was first used.

[2] It is important to bear in mind this compendious definition of Nokia, including not merely Nokia Corporation, but also its relevant subsidiaries. This is the definition used in paragraph 1 of the Amended Particulars of Claim.

[3] Paragraph 2 of the Amended Particulars of Claim.

[4] There is also a plea of vicarious liability for the conduct of servants, agents, subsidiaries, associated companies and/or corporate predecessors elsewhere identified in the Amended Particulars of Claim: paragraph 198.

[5] Transcript Day 4 at page 607.

[6] Transcript Day 4 at pages 609 to 610.

[7] Transcript Day 4 at pages 615ff.

[8] Transcript Day 4 at pages 627 to 629.

[9] The order of 19 January 2016 was amended (following an application made by Microsoft Mobile on 5 February 2016) on 9 February 2016.

[10] There was a question as to whether the Defendants were applying for a stay of proceedings against them if – contrary to their primary position – Microsoft Mobile succeeded in demonstrating that the three requirements set out at paragraph 25 were met. I consider that the Applications were wide enough to cover this, fall-back, position, which, however, is only engaged if Microsoft Mobile does succeed in demonstrating that the order of the Master permitting service out was justified.

[11] D2/Sony Corporation and D4/LG Chem both needed to make applications for extensions of time to (in the words of Microsoft Mobile) “piggy-back on applications that others have previously brought”. The reasons for the need to make these applications appeared in the written submissions, and I did not invite oral argument on the point. The applications were not opposed by Microsoft Mobile. I am satisfied that it is appropriate to grant these applications, and do so.

[12] Defined in Article 1 of the PPA as “either BUYER or SELLER”.

[13] A defined term under Article 1 of the PPA, but nothing turns on this.

[14] Also a defined term under Article 1 of the PPA, but again nothing turns on this.

[15] Microsoft commenced proceedings against some of the same defendants – including D2/Sony Corporation – in the US in respect of the same conduct. A US court has granted D2/Sony Corporation’s motion to compel arbitration pursuant to the same arbitration clause in respect of the same products, Li-ion Batteries. In these circumstances, therefore, it can be said that there will, in due course, be an arbitral tribunal established.

[16] The old law in this respect – involving distinctions between disputes “arising under” or disputes “arising out of” or disputes “in relation to” or disputes “in connection with” or “under” the agreement or contract – was adverted to by Lord Hoffmann at [11]. At [12], he noted that “the distinctions which they make reflect no credit upon English commercial law. It may be a great disappointment to the judges who explained so carefully the effects of the various linguistic nuances if they could learn that the draftsman of so widely used a standard form as Shelltime 4 obviously regarded the expressions “arising under this charter” in clause 41(b) and “arisen out of this charter” in clause 41(c)(1)(a)(i) as mutually interchangeable…”. 

[17] Emphasis supplied.

[18] See, also, Lord Hope at [26] and [28].

[19] At 89, emphasis supplied.

[20] Emphasis supplied.

[21] At [12].

[22] At [15].

[23] At [19].

[24] At [44].

[25] At [46]. Emphasis supplied.

[26] I should say that I attach no weight to the reference to “previous arrangements, communication and agreements”: this has all the hallmarks of a standard-form provision, and says nothing about whether such previous arrangements in fact existed.

[27] I was shown some documents amending or supplementing the PPA, but it is clear that these were not comprehensive – nor did any party suggest them to be.

[28] The heading to Article 21, it should be noted, adds nothing: it simply refers to “DUTY TO INFORM AND FORCE MAJEURE”.

[29] At [40].

[30] See Accentuate Ltd v. Asigra Inc [2009] EWHC 2655 (QB) at [88] and [89] (per Tugendhat J).

[31] See Case 106/77, Amministrazione delle finanze dello Stato v. Simmenthal [1978] ECR 629 at [21]; HMRC v IDT Card Ltd [2006] EWCA Civ 29 at [92] (per Arden LJ); Google Inc v. Judith Vidal-Hall [2015] EWCA 311 at [86] and [87] (per Lord Dyson MR).

[32] At [1], [7].

[33] The Advocate General (and the Court) had limited information: see [94].

[34] At [58].

[35] See paragraphs 81 and 82 of Microsoft Mobile’s written submissions.

[36] These rules deal respectively with “Service of the claim form where the permission of the court is not required-Scotland and Northern Ireland” and “Service of the claim form where permission of the court is not required-out of the United Kingdom”.

[37] See Altimo Holdings and Investment Ltd v. Kyrgyz Mobil Tel Ltd [2011] UKPC 7 at [71] (per Lord Collins).

[38] As to which, see further Section F below.

[39] As to which, see further Section E below.

[40] As to which, see further Section G below.

[41] Konameni v. Rolls Royce (India) Ltd [2002] 1 W.L.R. 1269 at [179] to [182] (per Lawrence Collins J.); Sloutsker v. Romanova [2015] EWHC 545 (QB) at [51] (per Warby J.); Heraeus Medical GmbH v. Biomet UK Healthcare Ltd [2016] EWHC 1369 (Ch) at [63] (per Mann J.).

[42] Emphasis supplied. See also: ISC Technologies Ltd v. Guerin [1992] 2 Lloyd’s Rep 430 at 434;  Artlev AG v. Joint Stock Company Almazy Rossii-Sakha, unreported 8 March 1995 (per Saville L.J.)

[43] Emphasis supplied. See also: Mohammed v. Bank of Kuwait and the Middle East KSC [1994] 1 W.L.R. 1483 at 1492 to 1493 (per Evans L.J.); Credit Agricole Indosuez v. Unicof Ltd [2003] EWHC 2676 (Comm) at [22] (per Cooke J.); Vitol Bahrain EC v. Nasdec General Trading LLC [2014] EWHC 984 (Comm) at [42](1) (per Popplewell J.).

[44] Instances where significant amounts of later evidence have been admitted to elucidate the situation which existed when the application was made are: Société Générale de Paris v. Dreyfus Brothers (1887) 37 Ch.D. 215; Tyne Improvement Commissioners v. Armement Anversois S/A [1949] 1 A.C. 326.

[45] At 456.

[46] Emphasis supplied. See also: Antonio Gramsci Shipping Corp v. Recoletos Ltd [2012] 2 Lloyd’s Rep. 365 at [39] (per Teare J.); and Brownlie v. Four Seasons Holdings Inc. [2015] EWCA Civ 665 at [17] to [22] (per Arden L.J.).

[47] See also Edenet Mining Corporation v. Kazakhstan [2016] EWHC 299 at [13] (per Cooke J.).

[48] Briggs at p.461

[49] I appreciate that I have decided that D2/Sony Corporation has the benefit of a stay pursuant to section 9 of the Arbitration Act 1996. Nevertheless, it is appropriate to consider what the position would be if there were no stay.

[50] Emphasis supplied.

[51] To the extent that the Defendants sought to contend otherwise – and paragraph 127 of Samsung’s written submissions at least appears to do so – I decline to embark upon the debate. By reason of the parties’ agreement on the question of whether there was a serious issue to be tried, I did not hear argument on this point.

[52] Emphasis supplied.

[53] See Amended Particulars of Claim, paragraph 15 (relating to the Defendants generally), paragraph 28 (relating to D4/LG Chem) and paragraph 36 (relating to D6/Samsung). The same is true of the Third and Fifth Defendants (see paragraphs 24 and 31 of the Particulars of Claim).

[54] See paragraphs 18 to 20 of the Amended Particulars of Claim.

[55] See, for instance: Witted v Galbraith [1893] 1 Q.B. 577 at 579 (per Lindley L.J.) and 579 to 580 (per Kay L.J.); Multinational Gas and Petrochemical Co. v. Multinational Gas and Petrochemical Services Ltd. [1983] 1 Ch. 258 at 268 (per Lawton L.J.).

[56] Emphasis supplied.

[57] To the extent that D6/Samsung was seeking to maintain such a point in paragraph 127 of its written submissions, I consider that that point was closed off by the agreement between the parties described in Section E above.

[58] Strictly speaking, because of the “and/or”, Microsoft Mobile’s claim could succeed on the pleading without establishing D1/Sony Europe’s involvement. In argument, however, I was assured by Mr. Beal Q.C. that an averment of participation was being made against D1/Sony Europe specifically. This is borne out by later paragraphs of the pleading.

[59] See, for instance, the analysis of the law set out in Sainsbury’s Supermarkets Ltd v. Mastercard Incorporated [2016] CAT 11 at [362]ff.

[60] Emphasis supplied.

[61] Emphasis supplied.

[62] Thus, in Ross v. Eason & Son [1911] 2 I.R. 459 at 463, it was concluded that the action against the anchor defendant had not been commenced bona fide; that was also the conclusion in Sharples v. Eason [1911] 2 I.R. 436 at 447 and 448-449.

[63] See, for instance, Massey v. Heynes (1888) 21 Q.B.D. 330 at 338: “I have no doubt that the rule applies to such a case as this. When the liability of several persons depends upon one investigation, I think they are all “proper parties” to the same action, and, if one of them is a foreigner residing out of the jurisdiction, rule 1(g) of Order XI applies” (per Lindley L.J.); Vitol Bahrain LLC v. Nasdec General Trading LLC [2014] EWHC 984 at [55]: “What ordinarily makes the entry through the necessary or proper party gateway a weighty factor in favour of exercising the discretion to grant permission is the risk of duplication of time and cost, and the risk of inconsistent judgments” (per  Popplewell J.).

 

[64] This may have occurred in Brownlie v. Four Seasons Holdings Inc. [2016] 1 WLR 1814 at [83] to [85], where the Gateway was read in the light of Rome II, which was construed in accordance with the Brussels Convention.

[65] Dawson v. Great Northern and City Railway Company, [1905] 1 K.B. 260 at 272-3 (per Stirling L.J.).

[66] See, e.g., Glencore International AG v. Metro Trading International Inc., [1999] 2 All E.R. (Comm) 899 (jurisdiction clause); The “Jordan Nicolov” [1990] 2 Lloyd’s Rep. 11 (arbitration clauses).

[67] Emphasis added.

[68] Emphasis supplied.

[69] Emphasis added.

[70] See Briggs, paragraphs 4.23 to 4.28.

[71] See VTB Capital plc v. Nutritek International Corp, [2013] UKSC 5 at [18] (per Lord Mance).

[72] Transcript Day 3, pages 423ff.

[73] Microsoft Mobile’s written submissions at paragraph 131.1.6.

[74] See VTB Capital plc v. Nutritek International Corp, [2013] UKSC 5 at [45] to [49] (per Lord Mance).

[75] Transcript Day 3 at pages 45ff.

[76] See the written submissions of D6/Samsung at paragraph 153.

[77] See the written submissions of D4/LG Chem at paragraph 70.

[78] Cited with approval in Konamaneni v. Rolls Royce (India) Ltd [2002] 1 WLR 1269 at [182] (per Lord Collins), itself cited with approval in Heraeus Medical GmbH v. Biomet UK Healthcare Ltd [2016] EWHC 1369 (Ch) at [63] (per Mann J.).

[79] Emphasis supplied.

[80] It is a minor point because the volume of sales is apparent from the Amended Particulars of Claim.


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