On 25 February 2022, the Court of Appeal (Sir Julian Flaux, Chancellor of the High Court, Phillips and Stuart-Smith LJJ) handed down judgment in the case of SKAT v Solo Capital Partners [2022] EWCA Civ 234, a case raising important issues on jurisdiction.

The Claimant is the Danish tax and customs administration (SKAT). It alleges that it was the victim of a tax fraud by various businesses, investors and individuals in the  period between 2012 and 2015. It brings claims in London against these individuals totalling around £1.4 billion.

The preliminary issue before the Court of Appeal was whether SKAT’s claims were barred by application of the Common Law rule against the enforcement of acts of foreign public law. This is set out in Rule 3(1) of Dicey, Morris & Collins on the Conflict of Laws, 15^th ed “English courts have no jurisdiction to entertain an action … for the enforcement, either directly or indirectly, of a penal, revenue or other public law of a foreign State”. A closely analogous issue arose under Article 1(1) of Brussels I (recast) regulation on the jurisdiction and the recognition and enforcement of judgments. The question arose as to whether SKAT’s claim fell outside the scope of the regulation which does not extend to “revenue, customs or administrative matters or to the liability of the State for acts and omissions in the exercise of State authority (acta iure imperii)”.

The Court of Appeal found that SKAT’s claims (as alleged) were admissible before the English court, on the basis that the claims were not for unpaid tax but to recover monies which had been abstracted from SKAT’s general funds by fraud. The sovereign act principle was therefore inapplicable. On this basis, SKAT’s claims were found to fall outside the scope of the Common Law Revenue Rule as against all Defendants, and should proceed to trial.

However, SKAT had not challenged the trial judge’s finding that the case against one group of defendants (the “ED & F Man” defendants) fell within the scope of the Revenue Rule. The court therefore found that by parity of reasoning the claim against ED & F Man must also fall outside the scope of the Brussels Regulation, rejecting SKAT’s argument that the claim was a “civil or commercial” matter within the meaning of the Brussels Regulation, and that this precluded reliance on the Common Law Revenue Rule. The claim against ED & F Man was therefore barred from proceeding in the English courts.

The Court of Appeal’s judgment sheds further light on the scope of the prohibition at Common Law on the enforcement of foreign public law and will be of significance in any further cases raising such issues.

Robert Palmer QC, Christopher Vajda QC and Conor McCarthy, instructed by Simons Muirhead Burton, acted for one group of defendants in the proceedings. Their submissions on the effect of the Brussels Regulation were upheld by the Court of Appeal.

The judgment is here.

 

The High Court has ruled in favour of the NHS and against Servier, the French pharmaceutical giant, and its attempts to limit damages for serious infringements of competition law in the sale and supply of the widely prescribed blood pressure drug, perindopril (brand name Coversyl).

The 109-page judgment by Mr Justice Roth is a major victory for the NHS.

The case concerns actions between 2005 and 2007, in which Servier entered into “pay for delay” agreements with four generic drugmakers to stall competition for perindopril, and committed alleged abuses of a dominant position. These practices are estimated to have cost the NHS hundreds of millions of pounds.

Servier was found to have engaged in anticompetitive practices by the EU Commission, and the Commission’s decision was upheld in part by the General Court in 2018. The General Court found that the pharmaceutical company had committed a very serious breach of competition law, by agreeing with providers of generic alternatives to delay entering the market with less costly versions of the drug. The General Court did not find that there was a sufficient basis for a finding of dominance for the purposes of the abuse of dominance allegations, and this point is currently on appeal by the Commission to the European Court of Justice (just as the “pay for delay” issues are on appeal by Servier). In the NHS damages actions, the abuse of dominance claims are not pursued pending the outcome of the further appeal to the European Court of Justice.

The NHS claimants are seeking, as damages, the difference between the prices they paid and what the prices that they estimate they would have paid if the price had been determined under conditions of normal competition.

In the latest stage of this action Servier contended that damages to the NHS should be reduced because the NHS should have taken appropriate steps to avoid buying Servier’s product, by encouraging the use of cheaper alternatives, even though at the time Servier was actively promoting its drug to clinicians, including on the basis that it was different from those alternatives.

Mr Justice Roth in rejecting this argument, commented that “…a disinterested observer might find it surprising that such arguments would, or could, be advanced by a defendant found to have committed a very serious infringement of competition law”.

The final judgement in the European proceedings is anticipated later this year and a full trial to determine the level of damages due to the NHS will follow.

See full judgment here.

Jon Turner QC and Josh Holmes QC for the Claimants collectively.
Philip Woolfe (instructed by Peters & Peters Solicitors LLP) for the English Claimants.
Julian Gregory and Alexandra Littlewood (instructed by RPC LLP) for the Scottish / NI Claimants.
Laura Elizabeth John and Ciar McAndrew (instructed by Geldards LLP) for the Welsh Claimants.

France – a culture that famously celebrates wit and repartee – has given us the phrase “esprit d’escalier” to describe that moment when it is only on the way down the stairs that you think of the brilliant retort that you should have made 10 minutes earlier.

In a judgment issued today, the High Court had to consider the lawyers’ equivalent to “esprit d’escalier”: the realisation after the hearing – or even after judgment – that there is a point that you should have taken but did not.

The case concerns an issue of EU law. An Irish national placed money in an Irish pension fund registered with the Irish tax authorities. Some years later he moved to London to pursue a consultancy business and then became bankrupt in England and Wales. Under the relevant UK statutes, money that he had placed in an UK. fund registered with HMRC would have been protected against his insolvency. But his Irish fund was not so registered and hence was, under the strict wording of the statute, in principle part of his bankruptcy estate and available to his creditors.

The Irish national took the point that that result infringed his rights of freedom of establishment under EU law (Article 49 TFEU), as it discriminated against those who had pension assets in another Member State. The trustees in bankruptcy denied that Article 49 was engaged. In 2020 (during the transition period) the High Court referred that question to the Court of Justice of the EU (“CJEU”), deciding in addition that if the Irish national was right, the UK statute could be “read down” so as to give equivalent protection to his Irish pension.

A point that the trustees did not take at that stage was whether – if Article 49 was engaged – the restriction or discrimination could be justified on public interest grounds. No issue on justification was discussed before the High Court or referred to the CJEU.

However, before the CJEU, both the trustees and the Commission raised the issue of possible justification. (The UK government did not exercise its right to take part and made no submissions.) In its judgment, in addition to answering the question of whether Article 49 was engaged in the Irish national’s favour – the CJEU gave guidance on how the national court should approach the question of justification.

At that point, the trustees asked the High Court to consider the question of justification.

In today’s judgment, the High Court refuses to allow them to raise that issue. It rejects the trustees’ claim that the CJEU was instructing the national court to consider that issue, observing that that claim was not consistent with the CJEU’s language or the relationship between the CJEU and national courts. It considers that in effect the trustees were trying to raise a further issue – on which the onus of proof lay on them – after having received a draft or final judgment: something that would be permitted only in exceptional circumstances.

The lesson from the case is that, in general, “esprit d’escalier” thoughts are just too late. That principle is further illustrated in a different context in this very case: the court notes that the trustees had, after the hearing of this matter, put in further written “post-hearing submissions”, and states that such submissions should be made only with the permission of the court.

George Peretz QC acted for the Irish national in the High Court and CJEU.

The Competition Appeal Tribunal (“CAT”) has delivered judgment on a claim for damages brought by Achilles Information Limited, a provider of supplier assurance services, against Network Rail.

Until May 2018, Achilles operated a supplier assurance scheme in the rail industry. In May 2018 Network Rail announced that businesses operating in the rail sector would only be allowed access to Network Rail infrastructure if they were assured by the RISQS scheme operated by the Rail Safety Standards Board.

In 2019, the CAT heard at trial on liability ruled that Network Rail’s imposition of the “RISQS-only Rule” was anti-competitive and in breach of the Chapter I prohibition, and ordered that Network Rail must accept supplier assurance provided by alternative providers, including Achilles ([2019] CAT 20). Network Rail appealed against that ruling but it was upheld by the Court of Appeal in 2020: [2020] EWCA Civ 323.

In October 2021, the CAT heard Achilles’ claim for damages arising out of Network Rail’s breach of the Chapter I prohibition. In its judgment of 11 February ([2022] CAT 9), the CAT has valued Achilles claim at approximately £3.8 million. The Tribunal rejected Network Rail’s arguments that Achilles would not have been in a position to continue operating in the market in May 2018, and that Achilles would not have been able to maintain a viable business.

Philip Woolfe acted for Achilles throughout the proceedings. Stefan Kuppen acted for Achilles at the 2019 liability trial.

In a significant new judgment on limitation in competition damages claims, Bacon J has held that a claimant can in principle plead a claim following the announcement of the Statement of Objections (SO), if the content of the announcement combined with the other material available to the claimant allows it to identify the essential elements of the cartel.

By a claim brought in July 2019, Gemalto sought damages from Infineon and Renesas based on their participation in an infringement of competition law in relation to smart card chips. The infringement was the subject of an infringement decision by the European Commission which was announced in September 2014. Prior to the Decision Gemalto had received two information requests from the Commission in 2012, which sought factual information in relation to their smart card chip supplies during the period 2003-2006. Gemalto did not however see any of the evidence under consideration by the Commission when it received the RFIs nor did it have sight of the SO itself which was announced in April 2013.

Gemalto’s position was that it could not plead a claim alleging a cartel until the Decision was announced and that the press release accompanying the SO made clear that the Commission did not at that stage prejudge whether any infringement had occurred.

Bacon J’s core reasoning is as follows.

“If the Commission decides that the evidence in its possession is sufficient to form a preliminary view that an infringement has occurred, it is very difficult to see why a claimant cannot rely upon that decision as giving rise to a prima facie case that can be pleaded in a claim in domestic proceedings – subject of course to the question of whether the Commission’s press release and any other available information contains enough material for the cartel to be pleaded with sufficient particularity….”

In the present case, the press release said that parties were under investigation in relation to coordination to keep prices up which Bacon J held was a sufficient description of the cartel behaviour. The identities of the undertakings which had received the SO became known through press articles.

As to the period of the infringement, Bacon J held that Gemalto could have inferred the cartel period from questions asked in the RFIs (albeit that the infringement ultimately found by the Commission related to the period 2003-2005 rather than 2003-2006).

Bacon J accordingly held that Gemalto could have pleaded a claim before July 2013 and hence the claim was time barred. She has granted Gemalto permission to appeal.

The Judgment can be found here.

Jon Turner QC and Rob Williams QC acted for Gemalto.

Today, 26 January 2022, the General Court has annulled the entirety of the article of the contested European Commission decision which imposed a €1.06 billion fine on Intel. The Court holds that the Commission’s analysis was incomplete and does not make it possible to establish to the requisite legal standard that the rebates at issue were capable of having, or likely to have, anticompetitive effects.

The case (T-286/09 RENV) was a remittal back to the General Court following Intel’s successful appeal to the Grand Chamber of the Court of Justice of the European Union (C-413/14 P), which set aside an earlier General Court judgment and clarified the legal framework to be applied in Article 102 TFEU cases.

The case is a highly important one with significant ramifications for the proper approach to the assessment of alleged abuses of dominance under both European and domestic competition law rules. In particular, it clarifies the role and application of the As-Efficient Competitor test (the AEC test); the conditions which the Commission must assess when considering the capability of rebates to restrict competition; the burden of proof and the standard of proof in abuse of dominance cases; and the impact of CJEU judgments which quash earlier General Court Judgments.

The Court’s press release can be found here, and the Court’s Judgment can be found here.

Daniel Beard QC and Jack Williams represented Intel.

The Lawyer has highlighted 10 disputes set to be heard in both the Court of Appeal and Supreme Court in 2022. Two members of Monckton Chambers are instructed in the following case:

SKAT (the Danish Customs and Tax Administration) v Solo Capital Partners (in Special Administration) and others

For the respondent, SMB Defendants:

Robert Palmer QC is leading Conor McCarthy, instructed by Simons Muirhead Burton.

Christopher Vajda QC, former UK judge at the Court of Justice of the EU, has been retained by SMB to act in an advisory capacity on the appeal.

Subscribers to The Lawyer can read the full article here.

R (Good Law Project) v Minister for the Cabinet Office [2022] EWCA Civ 21

Following swiftly on from the High Court’s decision in a number of PPE challenges brought by the Good Law Project (“GLP”) last week (see news article here), the Court of Appeal has now dismissed another high profile and politically sensitive procurement judicial review, allowing the Minister’s appeal.

The Good Law Project’s claim challenged the award of a contract to Public First, a political consultancy run by friends of the Prime Minister’s former special adviser Dominic Cummings. The contract was awarded without competition at the height of the pandemic in early 2020, with Public First to provide urgent focus group testing of essential health messages and other Covid-related issues.

At first instance, O’Farrell J had dismissed two of the Claimant’s grounds, that the conditions for an emergency direct award without competition under Regulation 32(2)(c) of the Public Contracts Regulations 2015 were not met and that the contract length was disproportionate; but she held that the decision to award the contract to Public First did give rise to apparent bias contrary to principles of public law.

On appeal, the Minister challenged the judge’s conclusion that while the relationship between Mr Cummings and Public First did not itself give rise to apparent bias, the failure to keep a clear record of the objective criteria used to select Public First over other research agencies and the failure to undertake some form of comparative procurement exercise was nonetheless unlawful. GLP’s cross-appeal challenged the decision on the applicability of Regulation 32(2)(c), on the grounds that the award of the contract without competition was not strictly necessary.

Dismissing the cross-appeal, the Court of Appeal (Lord Burnett CJ, Coulson LJ and Carr LJ) agreed with the judge that the ‘strict necessity’ test was made out: neither the Government’s other arrangements with existing suppliers nor the duration and scope of contract indicated otherwise.

Upholding the Minister’s appeal, the Court agreed that there was a tension between the judge’s decision finding (a) that the emergency circumstances justified the award of a contract without competition and (b) holding that the Minister ought nevertheless to have produced evidence of objective criteria justifying the selection of Public First over other agencies and that the failure to consider any other agency for the contract would lead to the perception of bias. Where the circumstances justified an urgent direct award, the impartial and informed observer would not require the creation of a common law “procurement regime-light” in the absence of which he would think there was a real possibility of bias. Moreover, evidence from the Cabinet Office officials responsible for the contract as to the reasons why they had awarded it to Public First was relevant to the assessment of apparent bias, and the judge had also been wrong to reject the officials’ unchallenged evidence that no other firm was capable of delivering the contractual services.

This appellate decision is likely to be of considerable importance going forward, both to procurement specialists and public law practitioners more widely, and as much for the Court’s obiter comments as for its decisions on the issues subject to appeal.

1. First, though the Minister did not appeal the High Court’s finding that GLP had standing to challenge the contract (despite it having no interest in winning the contract itself), the Court of Appeal expressed significant concern about the trend towards allowing such ‘public interest’ challenges to public contracts, commenting that “The question of standing for complete strangers to the procurement process with no commercial interest both under the Regulations and on public law grounds is a question ripe for review when it next arises.” It went on to describe the first instance decision in this case as “an unprecedented outcome: a party with no potential interest in a contract has not hitherto obtained a declaration of unlawfulness on the basis of apparent bias in respect of a decision by a public body to grant a private law contract.”
2. Second, though the parties had proceeded on the premise that the common law principles of apparent bias were applicable to the award of the contract, the Court was “in some doubt that the common assumption was correct”. Previous cases involving apparent bias had all concerned some form of adjudicative process, whereas here the Minister was entering directly into a private law services contract with Public First. Hence it was “difficult to see how any analogy can be drawn between the award of such a contract and the adjudicative context in which the rules against bias have hitherto been engaged.”

Michael Bowsher QC, Ewan West, and Anneliese Blackwood (with Sir James Eadie QC) acted for the Minister for the Cabinet Office, instructed by the Treasury Solicitor. Alfred Artley was also instructed on the Minister’s behalf at an earlier stage in the proceedings.

The full judgment can be read here, a detailed case note by Harry Gillow is here. The case has already attracted significant media attention, including on the BBC, in The Guardian, Reuters, and elsewhere.

Ronit Kreisberger QC and Nikolaus Grubeck are instructed by Quinn Emanuel as lead counsel in a £2.3bn landmark class action claim being brought in the Competition Appeal Tribunal (CAT) against META (formerly Facebook Inc.) for alleged abuse of dominance and imposition of unfair terms and prices on users.

The claim will be pursued under the Consumer Rights Act 2015 on behalf of around 44m UK consumers. The Act enables an opt-out collective damages claim to be brought on behalf of a class of people who have suffered loss. Under the rules laid down in the Act, all UK users of Facebook between at least 2015 and 2019 now living in the UK will automatically become part of the group of claimants unless they explicitly opt-out. This means that, once the claim is filed, no action will be required by individuals as
they will automatically be eligible to receive compensation at the conclusion of the claim

For the Quinn Emanuel’s press release please click here.

Media coverage includes: CITY.A.M; Daily Express; Reuters; The Global Legal Post

The Secretary of State has been granted permission to appeal in R (VIP Communications Ltd) v Secretary of State for the Home Department.

This is a national-security-related judicial review in the telecommunications sphere. In 2020, the Court of Appeal agreed with the High Court that the Secretary of State lacked the power to give a direction to Ofcom not to exempt ‘GSM Gateways’ from individual licensing requirements on national security grounds. GSM Gateways, and specifically Commercial Multi-User Gateways (or ‘COMUGS’), pose national security risks because when a call is made from a landline or mobile phone and routed through a “GSM gateway” the information identifying the calling party is replaced, making it very difficult for communications data about the call or the caller to be ascertained.

The appeal raises the narrow but important question of the proper construction of s.5(3) of the Communications Act 2003, and what powers it confers on the Secretary of State to give directions to Ofcom.

Daniel Beard QC, Michael Armitage and Imogen Proud are acting for the Secretary of State.