On 4 February 2020 the Amsterdam Court of Appeal in a landmark sentencia ruled that the claims brought by CDC against Kemira Chemicals Oy (‘Kemira Chemicals’) under Finnish, Swedish and Spanish law are not time-barred. The Court of Appeal is the first national appeals court to apply the Cogeco principles on limitation periods as formulated in 2019 by the European Court of Justice (‘CJEU’) to applicable objective and subjective limitation periods. In addition, the judgment confirms the model of bundling damage claims on a Europe-wide level.
Facts and Background
By decision of 11 June 2008 the European Commission imposed fines totalling over EUR 79 million on four groups of companies (among Akzo Nobel/EKA Chemicals, Kemira Chemicals and Arkema France) for allocating sales volumes and fixing prices for sodium chlorate, a bleaching agent mainly used in the pulp and paper industry, between 1992 and 2000. Several addressees filed an appeal against the decision. Kemira Chemicals was not among them. On 17 May 2011 the EU General Court dismissed the first appeals. Its judgments made public details of the scope of the single and continuous infringement of all cartel members, including Kemira Chemicals.
On 31 May 2011, CDC filed an action for damages against four cartel members before the District Court of Amsterdam. Ten pulp and paper companies with a total of 27 production sites located in nine European countries had previously sold and assigned their claims for damages resulting from the European Sodium Chlorate cartel to CDC. After several settlements, CDC still pursues damage claims governed by different national regimes against the last remaining defendant Kemira Chemicals. By sentencia of 10 May 2017 the District Court of Amsterdam held that the assignment of the claims by the affected companies to CDC were valid, but that certain claims were time-barred under certain national laws. Both CDC and Kemira appealed the judgment.
Judgment of the Court of Appeal
Finnish, Swedish and Spanish claims not time-barred
The Amsterdam Court of Appeal overruled the first-instance judgment and considered the claims governed by Swedish and Spanish law as well as Finnish law (prior to 1 October 1998) not time-barred. According to the Court of Appeal, CDC filed its damage action within the limits of the applicable limitation periods. It stressed that national laws must be applied in line with EU law, notably the principles on the interpretation of limitation rules as formulated by the CJEU in Cogeco (C-637/17, 28 March 2019, ECLI:EU:C:2019:263).
The starting point of subjective limitation periods
Based on an assessment of the Spanish (subjective) limitation period of one year and the EU law principle of effectiveness, the Court of Appeal found that the ‘limitation period cannot start before the single and continuous infringement of competition law has been finally determined and the injured parties are aware of the facts relating to the way the cartel worked, and the damage that they suffered’. In the present case that moment was after the EU General Court had rejected the appeals, even if Kemira Chemicals had not appealed the decision.
The Court of Appeal stressed that to determine the damage caused by cartels ‘it is important to know which legal entities have infringed competition law during which period of time.’ It considered that in the present case the decision of the General Court on appeal by cartel members other than Kemira Chemicals was ‘relevant for determining the extent of the infringement and, as a consequence, the damage (…) and the parties which were liable’, on a joint and several liability basis for the total damage. Because the damage largely depends on the duration, nature and extent of the infringement, the Spanish subjective limitation period of one-year did not start to run before May 2011. Equally, the Court emphasised that also a (previous) interruption would ‘require specific economic analyses, as the cartel was a secret operation and it may have affected a vast amount of transactions over the many years before the Commission published the press release and the summary’. Hence, the Court found that the short Spanish limitation period in this case is insufficiently attuned to the secret nature and economic complexity of cartel infringements.
The starting point of objective limitation periods
Based on similar grounds the Amsterdam Court of Appeal found that the Finnish (objective) limitation period of ten years which starts to run when the event giving rise to the damage occurs, has to be interpreted in line with the Cogeco principles. Thus, a damaged party under Finnish law can in general wait until a final decision has been taken, including any appeal. Any reliance on the moment of the event giving rise to the damage would lead to the finding that claims would already have expired by the time of the non-confidential decision of the Commission published in October 2009 and even more so by the time of the decision of the General Court in May 2011. In any event, ‘given the specific characteristics of this type of damage claim, as mentioned in Cogeco’ a remaining limitation period must not be ‘so short that even the limited investigation needed for an interruption could not reasonably be carried out’.
The Court of Appeal followed the same line of argumentation with regard to the Swedish (objective) limitation periods of five and ten years applicable in time, which started on the day the damage occurred. The Court considered that under a literate interpretation the claims governed by Swedish law had long been expired at the time of the publication of the Commission decision in October 2009 and even the General Court judgment in May 2011. This was ‘in principle contrary to the principle of effectiveness and so must be disregarded.’ Neither the assignors nor CDC could be expected to take measures earlier, since they could wait for the final decision of the EU General Court on the appeals against the Commission fining decision. CDC’s filing of the action two weeks after the publication of the judgment was ‘sufficiently diligent’ given this kind of damage claim.
Validity of assignments
Further, the Court of Appeal confirmed the validity of the assignments of claims to CDC under Dutch law. It rejected the cross-appeal by Kemira and found that the wording of the assignment agreements is sufficiently clear, precise and substantiated to grant full title over the claims to CDC. CDC’s full ownership of the claims cannot be put into question. In addition, the Court of Appeal rejected Kemira’s allegation that the assignments to CDC would not entail an actual transfer of the rights. The assignments notably cannot be considered as constituting a breach of the prohibition on ownership of collateral.
The decision by the Amsterdam Court of Appeal is a landmark judgment, as it is first decision by an national appeals court to apply the Cogeco principles and to decide on concrete consequences of the EU effectiveness principle on limitation period of several national laws. It is in particular important because the Court of Appeal assessed both subjective and objective limitation periods in a cartel follow-on damage action which usually is significantly more complex (e.g. multitude of co-infringers, joint and several liability and scope of damage caused) than other competition cases.
It follows from the judgment that the principle of effectiveness entails that a ‘limitation period cannot start before the single and continuous infringement of competition law has been finally determined and the injured parties are aware of the facts relating to the way the cartel worked, and the damage that they suffered’. A damaged party must therefore be able to await the final decision of the competition authority (including appeal, if any) and have sufficient time thereafter to file its claim for damages, without a national limitation regime making such effective enforcement impossible or practically too difficult. The impact of the Amsterdam judgment clearly goes beyond the case in question.
By Martin Seegers