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Arbitration Clauses and Follow-on Cartel Damages Claims

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Title: Arbitration Clauses and Follow-on Cartel Damages Claims
Author(s): Hindström, Henrietta
Contributor: University of Helsinki, Faculty of Law
Discipline: Procedural and insolvency law
Language: English
Acceptance year: 2016
This study deals with the question of whether follow-on cartel damages claims fall within the scope of a broadly phrased arbitration clause. Common rules and principles governing the assessment of arbitration clauses have been assumed and reflected against principles of EU law. The jurisdiction of an arbitral tribunal is often based on an arbitration clause. In order for an arbitration clause to be binding, it must be valid. The regime of international arbitration has developed common rules and principles for assessing the validity of an arbitration clause. The development is a result of international regulations and model laws promulgated by international bodies and institutions. As all EU Member States are also Contracting States of the New York Convention, the provisions of the convention are reflected in legislation throughout the EU. This study divides these rules into two categories, formal and material. The focus of the study is on the material requirements, which include (i) arbitrability and (ii) scope of reference of the arbitration clause. National courts and arbitral tribunals consider these requirements when deciding on the jurisdiction of the case. Follow-on cartel damages are civil liability claims. The legal basis for follow-on cartel damages claims are found in Article 101 TFEU. The right to claim damages based on a cartel infringement forms a part of the private enforcement of EU competition law, seen to complement the public enforcement conducted by public authorities. EU law principles require an effective implementation of the rights conferred under EU law. The ECJ has stated that the principle of effective implementation may impact both procedural and substantive law. When assessing whether the material requirements of a valid arbitration clause are fulfilled under common rules and principles and national procedural law, national courts may have thus have to consider EU law, and EU competition law in particular. Despite the fact that it has only been implicitly stated by the ECJ, the arbitrability of competition law is generally acknowledged in the EU. Further, the Damages Directive explicitly states that follow-on cartel damages claims are arbitrable. From this follows that the scope of reference is the question primarily under scrutiny. There are different views on how to interpret the scope of reference. This study has divided the prevailing views into two categories: (i) the Inclusive and (ii) the Exclusive view. The Inclusive view pushes for a strong party autonomy, whereas the Exclusive view puts its emphasis on the foreseeability of follow-on damages claims and a narrow interpretation of the arbitration clause. EU law has not interfered with the common rules and principles for the assessment of the scope of reference. In fact, EU regulations regarding rules of jurisdiction exempt arbitration. Although the EU legislator does not in principle have general competence to regulate the civil proceedings of the Member States, the ECJ was asked to address the issue of whether a broadly phrased arbitration clause cover follow-on cartel damages claims. In its ruling the ECJ referred to a "lack of information" and only considered the scope of reference with respect to jurisdiction clauses governed under the Brussels I Regulation. The ECJ stated that the follow-on damages claims arising from competition law infringements were not within the scope of the jurisdiction clause, as they were not foreseeable. The ruling thus implicitly raised several questions regarding arbitration clauses. This study argues that an interpretation by analogy of the foreseeability requirement cannot be excluded. Further, a by-analogy interpretation may have consequences related to how arbitration clauses are drafted in the future. Additionally, this study argues that the principle of effectiveness of EU law may have an impact on the assessment of arbitration clauses. Finally, this study consists of a de lege ferenda discussion regarding whether the EU should set standards for the assessment of broadly phrased arbitration clauses. The suggestion is based on a recent legislative proposal from the US.

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