Case C-302/13 flyLAL-Lithuanian Airlines: Damages for breach of competition law, civil and commercial matters

In its recent judgment of 23 October 2014 in flyLAL-Lithuanian Airlines AS in liquidation v Starptautiskā lidosta Rīga VAS, Air Baltic Corporation AS, C-302/13, EU:C:2014:2319, the Court of Justice confirmed that actions brought by undertakings seeking redress or compensation for damage resulting from alleged infringements of EU competition law, come within the definition of ‘civil and commercial matters’ within the meaning of Article 1(1) of Regulation No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (OJ 2001 L 12, p. 1).

Thus such actions, whether they are “follow on” or stand alone actions, are subject to the rules on jurisdiction, recognition and enforcement contained in Regulation No 44/2001.In this case, flyLAL-Lithuanian Airlines AS, in liquidation (‘flyLAL’), a Lithuanian company law, sued Starptautiskā lidosta Rīga VAS (‘Starptautiskā lidosta Rīga’), a Latvian company which manages the airport in Riga (Latvia), and Air Baltic Corporation AS (‘Air Baltic’), another Latvian company, in a Lithuanian court claiming compensation for damage resulting, first, from the abuse of a dominant position by Air Baltic on the market for flights from or to Vilnius Airport (Lithuania) and, second, from an anti-competitive agreement between the co-defendants. To that end, the plaintiff in the main proceedings applied for provisional and protective measures. The Lithuanian court granted an order for sequestration, on a provisional and protective basis, of the moveable and/or immoveable assets and property rights of Air Baltic and Starptautiskā Lidosta Rīga.

The plaintiff then sought recognition and enforcement in Latvia of a judgment of the Lithuanian court ordering provisional measures or protective measures. The defendants opposed recognition and enforcement claiming that the action brought by the plaintiff  did  not fall within the scope of Regulation No 44/2001. The dispute, they claimed, related to airport charges set by State rules and not a civil or commercial matter within the meaning of that regulation. FlyLAL on the contrary submitted that its action was a civil matter because it sought compensation for damage resulting from the infringement of Articles 81 EC (101 TFEU) and 82 EC (102 TFEU).

On account of the nature of the rules setting the levels of airport charges and reductions in those charges, the referring court doubted that the case before it is a civil or commercial matter within the meaning of Article 1 of Regulation No 44/2001. By reference to the answer given in the judgment in St. Paul Dairy (C‑104/03, EU:C:2005:255) it argued, in effect, that a judgment ordering provisional and protective measures may be recognised on the basis of that regulation only if the case in which those measures have been requested is a civil or commercial matter within the meaning of that regulation.

The Court held that flyLAL seeks legal redress for damage relating to an alleged infringement of competition law. Thus, it comes within the law relating to tort, delict or quasi-delict (see, by analogy, judgment in Sunico and Others, C‑49/12, EU:C:2013:545, paragraph 37).

To reach that conclusion,  the Court recalled that, according to settled case-law, in order to ensure, as far as possible, that the rights and obligations which derive from Regulation No 44/2001 for the Member States and the persons to whom it applies are equal and uniform, ‘civil and commercial matters’ should not be interpreted as a mere reference to the internal law of one or other of the States concerned. That concept must be regarded as an independent concept to be interpreted by referring, first, to the objectives and scheme of that regulation and, second, to the general principles which stem from the corpus of the national legal systems (see, to that effect, judgments in Apostolides, C‑420/07, EU:C:2009:271, paragraph 41; Cartier parfums-lunettes and Axa Corporate Solutions Assurance, C‑1/13, EU:C:2014:109, paragraph ; and Hi Hotel HCF, C‑387/12, EU:C:2014:215, paragraph 24 and the case-law cited).

Also, in so far as Regulation No 44/2001 now replaces the Brussels Convention in relations between Member States, the interpretation given by the Court concerning the provisions of that convention is also valid for those of that regulation in so far as the provisions of those instruments may be regarded as equivalent (judgments in Sunico and Others, C‑49/12, EU:C:2013:545, paragraph 32, and Brogsitter, C‑548/12, EU:C:2014:148, paragraph 19 and the case-law cited).

The scope of Regulation No 44/2001 is, like that of the Brussels Convention, limited to ‘civil and commercial matters’. In order to determine whether a matter falls within the scope of Regulation No 44/2001, the elements which characterise the nature of the legal relationships between the parties to the dispute or the subject-matter thereof must be examined (see, to that effect, judgments in Sapir and Others, C‑645/11, EU:C:2013:228, paragraphs 32 and 34 and the case-law cited, and in Sunico and Others, EU:C:2013:545, paragraphs 33 and 35 and the case-law cited).

It follows from Article 5(3) and (4) of Regulation No 44/2001 that, in principle, actions seeking legal redress for damage are civil and commercial matters and therefore come within the scope of that regulation. As stated in recital 7 in the preamble to that regulation, its scope must cover all the main civil and commercial matters apart from certain well-defined matters. Exclusions from the scope of Regulation No 44/2001 are exceptions which, like all exceptions, and in the light of the objective of that regulation, which is to maintain and develop an area of freedom, security and justice by facilitating the free movement of judgments, must be strictly interpreted.

The Court states that while it has held that, although certain actions between a public authority and a person governed by private law may come within the scope of civil and commercial matters, the position is otherwise where the public authority is acting in the exercise of its public powers (judgments in Sapir and Others, EU:C:2013:228, paragraph 33 and the case-law cited, and in Sunico and Others, EU:C:2013:545, paragraph 34 and the case-law cited).

The exercise of public powers by one of the parties to the case, because it exercises powers falling outside the scope of the ordinary legal rules applicable to relationships between private individuals, excludes such a case from civil and commercial matters within the meaning of Article 1(1) of Regulation No 44/2001 (judgment in Apostolides, EU:C:2009:271, paragraph 44 and the case-law cited).

Thus, so far as air navigation charges are concerned, the Court has held that the control and surveillance of air space are activities which in essence fall within the remit of the State and which, in order to be carried out, require the exercise of public powers (judgment in SAT Fluggesellschaft, C‑364/92, EU:C:1994:7, paragraph 28).

However, the Court has already held that the provision of airport facilities in return for payment of a fee constitutes an economic activity (judgments in Aéroports de Paris v Commission, C‑82/01 P, EU:C:2002:617, paragraph 78, and in Mitteldeutsche Flughafen and Flughafen Leipzig-Halle v Commission, C‑288/11 P, EU:C:2012:821, paragraph 40 and the case-law cited). Such legal relations therefore do indeed come within the scope of civil and commercial matters.

The Court also held that In circumstances such as those at issue in the main proceedings, such a conclusion is not contradicted by the fact that the alleged infringements of competition law resulted from provisions of Latvian law or by the fact that the State holds 100% and 52.6% of the shares in the defendants in the main proceedings. The Court emphasised in this case that the Latvian State is not a party to the main proceedings and the mere fact that it is a shareholder in those entities does not in itself constitute a situation equivalent to that in which that Member State exercises public powers. This is even more true where those entities, the majority or sole shareholder in which is, admittedly, that State, behave like any economic operator, whether a natural or legal person, operating on a given market. The action is brought, not against conduct or procedures which involve an exercise of public powers by one of the parties to the case, but against acts carried out by individuals (judgment in Apostolides, EU:C:2009:271, paragraph 45).

Another issue came up about the interpretation of Regulation No 44/2001 but that’s more for our friends at the excellent Conflict of Laws blog to look into.

 

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