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District Court of Amsterdam rules on the validity of the assignments and prescription of CDC's claims for damage in sodium chlorate cartel

District Court of Amsterdam rules on the validity of the assignments

District Court of Amsterdam rules on the validity of the assignments and prescription of CDC's claims for damage in sodium chlorate cartel

01.06.2017 NL law

On 10 May 2017, the District Court of Amsterdam issued an interim judgment in a damages action filed by claim vehicle CDC against Kemira Chemicals Oy (Kemira), a producer of sodium chlorate. It follows from the judgment that the time-barring of claims is not absolute and that for each individual claimant - taking into account all circumstances of the case - it must be determined whether it would violate the effectiveness of EU law if the claims for damages are time-barred.

CDC based its EUR 61 million claim on a decision of the European Commission of 11 June 2008, in which the Commission fined several producers of sodium chlorate for allocating sales volumes and fixing prices. Twelve groups of purchasers of sodium chlorate that allegedly suffered damage as a result of the cartel subsequently transferred their claims to CDC.

The District Court considered whether the purchasers had validly assigned their claims to CDC under Dutch law. Kemira argued that the assignments were invalid on three different grounds, which were all rejected by the District Court. The Court first dismissed Kemira's argument that the claims could not be sufficiently determined. Secondly, the District Court rejected Kemira's argument that the Dutch prohibition on ownership of collateral ("fiduciaverbod") had been violated because the purchase price of the claims was partially dependent on the outcome of the proceedings. The District Court ruled that there had been a real transfer of the claims to CDC, confirmed by the assignors' right to repurchase their claims. Lastly, Kemira argued that the assignments were contrary to the public interest because CDC would transfer any compensation directly to the purchasers and investors, making it hard to recover any costs. However, CDC had reserved EUR 55,000 in its lawyer's third party account, which according to the District Court was enough to cover the costs.

After concluding that the assignments were valid, the District Court examined whether CDC's claims were time-barred. Under the Dutch Unlawful Act (Conflict of Laws) Act, the Court had to assess this under the laws of the countries of the purchasers' production locations. The District Court found that under Spanish, Czech and Slovakian law, CDC's claims were time-barred. As for Finnish and Swedish law, CDC argued that if the claims were time-barred, this would violate the effectiveness of EU law, including the right to effective compensation.

Under Finnish law, part of CDC's claims was time-barred about six months after the summary of the Commission's decision was published. CDC argued that the purchasers only became aware of the cartel and possible damages because of this summary. However, the District Court found that the purchasers had been made aware a year earlier when the Commission's press release was issued, and that CDC had not explained which essential information could be derived from the summary that was not included in the press release. The purchasers therefore had about eighteen months to initiate proceedings, which means that the effectiveness of EU law had not been violated. Under Swedish law, the claims were time-barred before the purchasers had any awareness of the cartel. Yet, CDC did not institute proceedings until three years after publication of the Commission's press release. CDC had therefore not made sufficient efforts to promptly initiate proceedings after it became aware of the cartel and therefore could not invoke the effectiveness of EU law.

This article was published in the Competition Law Newsletter of June 2017. Other articles in this newsletter:

  1. European Commission accepts Amazon's commitments in e-book probe
  2. Recent enforcement action emphasizes the importance of compliance with procedural EU merger rules
  3. European Commission publishes final report on e-commerce sector inquiry 
  4. European Commission issues new rules for State aid to ports, airports, culture and the outermost regions
  5. Belgian Competition Authority fines undertakings for bid-rigging in railway tender

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