On 6 July 2021, the Amsterdam Court of Appeal had to decide whether the pragmatic approach of the Amsterdam District Court, which had applied Dutch law to all air freight cartel damages claims, could be upheld. The Court of Appeal ruled that the claims relating to flights falling within the scope of the European Commission’s decision are governed by Dutch law.
As regards the claims relating to flights falling outside the scope of the decision, the Court of Appeal set aside the judgment of the District Court. The Court of Appeal found that at this stage of the proceedings, it is not possible to decide on the applicable law on those claims, because the claimant did not furnish enough facts in this regard.
Facts and judgment of the District Court
The judgment of the Court of Appeal is rendered in the ongoing air freight cartel litigation, in which indirect purchasers (known as ‘shippers’) of air freight services initiated civil proceedings against the airlines that are alleged to have participated in a price-fixing cartel between 1999 and 2006.
In 2019, the District Court had to decide which legal system(s) would govern the civil law damages claims of the indirect purchasers. On 1 May 2019, the District Court rendered two judgments (1 and 2) and took a pragmatic approach, applying Dutch law to all individual follow-on damages claims resulting from the international air freight cartel. It ruled that since the cartel had a worldwide impact, including in the Netherlands, Dutch law could be applied to all individual claims. The court justified this approach with reference to the principles of due process and the European law principle of effectiveness.
The airlines appealed this decision, arguing that the decision of the District Court was based on incorrect assumptions and did not take into account the private international law rules for determining the applicable law to international follow-on damages claims.
Judgment of the Court of Appeal
As the anticompetitive conduct occurred before the Rome II Regulation entered into force in January 2009, the Court of Appeal referred to the Dutch private international law rule which provides that claims arising out of an infringement of competition law are "governed by the law of the state where the competitive act affected the competitive relationships". According to the Court of Appeal, the ‘single and continuous infringement’ by the airlines results in a single damages claim per shipper. The court furthermore considers that the competitive relationships with regard to an individual flight were distorted both at the airport of departure and at the airport of arrival. Therefore, the damage suffered by a shipper as a result of the infringement was incurred in several states, because the market was disrupted in several states. This is even the case if a shipper bases his claim on one single flight. This follows, according to the Court of Appeal, from the specific, transnational character of air cargo services.
According to the Court of Appeal, there is a legislative gap in the applicable Dutch private international law rule. The legislator did not foresee the present situation in which the applicable Dutch rule designates multiple legal systems rather than just one when the competitive relationships relating to one individual flight are simultaneously affected in different places. This applies all the more when a shipper has purchased more than one flight on different flight routes.
In deciding how this legislative gap should be filled, the Court of Appeal considered that as far as possible it should be in line with widely shared views, should lead to as little legal uncertainty as possible, and should not be in conflict with the European law principle of effectiveness. With those principles in mind, the Court of Appeal refers to article 6(3)(b) of the Rome II Regulation, despite the fact that this regulation is not applicable in this case. Article 6(3)(b) of the Rome II Regulation allows claimants to apply the law of the country in which they bring their claims, provided that this country's market was "directly and substantially" affected by the relevant anticompetitive conduct. The (unilateral) choice of Dutch law by the claimants meets the requirements of article 6(3)(b) Rome II, according to the Court of Appeal.
In light of the above, the Court of Appeal ruled that the follow-on damages claims of the shippers are governed by Dutch law, insofar as these claims relate to flights falling within the scope of the Decision of the European Commission (flights within the cartel period with a departure and/or arrival located within the EEA, including Switzerland).
As regards claims relating to flights falling outside the scope of the Decision, termed ‘extra-European flights’, the Court of Appeal overturned the District Court judgment applying Dutch law to these claims. According to the Court of Appeal, claim vehicle Stichting Cartel Compensation (SCC) did not furnish enough facts in this regard. The Court of Appeal is therefore not able to decide on the applicable law on those claims at this stage of the proceedings.
This judgment shows that the Court of Appeal, just as the District Court, seems to struggle with determining the applicable law to international follow-on damages claims. Instead of applying the (applicable) Dutch private international law rule, it prefers to adopt a more pragmatic approach and apply the (non-applicable) Rome II Regulation.
This article was published in the Competition Newsletter of August 2021. Other articles in this newsletter:
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Horizontal cooperation: from the dark side to the light?
ACM issues first excessive pricing fine in pharma
Court rules ACM can use accidental evidence found in dawn raids
Netherlands FDI regime protecting national security is getting closer
CJEU clarifies jurisdiction for follow-on damage claims
Court assesses threshold for substantiating cartel damage plausibility