In its judgment of 26 July 2023[1], the Competition Appeal Tribunal ("CAT") considered the applicability of the European Court of Justice's ("CJEU") decision on limitation in Volvo AB and DAF Trucks NV v RM[2] ("The Volvo Decision") to the claims brought in both the Umbrella Interchange Fee Litigation and the Merricks Collective Proceedings.
The Volvo Decision arose out of a request to the CJEU for a preliminary ruling by a Spanish regional court and was published on 22 June 2022, postdating Implementation Period Completion Day ("IP Completion Day"), the point at which the transitional (or implementation) period of Brexit ended.
Both sets of claimants alleged that no part of their claims was time-barred by limitation periods as a result of the Volvo Decision which, as they interpreted it, held that "limitation periods applicable to actions for damages for infringements of the competition law provisions of the Member States and of the European Union cannot begin to run before the infringement has ceased".[3]
Further, the claimants argued that to the extent that the English law of limitation gives an inconsistent result to the Volvo Decision, it must yield to the supremacy of EU law in this regard, notwithstanding that the Volvo Decision postdates IP Completion Day, as their claims concerned "accrued EU rights" which arose prior to IP Completion Day (even if they were asserted post-IP Completion Day).
What did the Volvo Decision hold?
Paragraph 61 of the Volvo Decision stated:
...it must be considered that the limitation periods applicable to actions for damages for infringements of the competition law provisions of the Member States and of the European Union cannot begin to run before the infringement has ceased and the injured party knows, or can reasonably be expected to know, (i) the fact that it had suffered harm as a result of that infringement and (ii) the identity of the perpetrator of the infringement.” [Emphases added]
The CAT referred to the two requirements of Paragraph 61 of the Volvo Decision as the "Cessation Requirement" (in bold above) and the "Knowledge Requirement" (underlined above) respectively. In the Volvo Decision the Cessation Requirement was not considered in any detail as the facts of that case were not relevant. The judgment of the Volvo Decision thereafter only considered the Knowledge Requirement. Paragraph 61 of the Volvo Decision was not part of the operative part of the decision, or "Dispositif". In CJEU judgments, the Dispositif is set in bold type to distinguish it from the supporting recitation of facts or reasoning. Only the Dispositif and the essential reasoning behind it is binding upon lower courts.
Since the UK left the EU, whilst the UK courts continue in some instances to be able to decide cases based on EU law they are unable to make a reference to the CJEU, and it therefore it now falls to UK courts, in this instance the CAT, to interpret CJEU decisions or other provisions of EU law where necessary. Reviewing the Volvo Decision in its entirety, the CAT found that the Cessation Requirement referred to did not form part of the Dispositif or the essential reasoning of the judgment and would therefore not be binding upon a UK court, even if the UK were still part of the EU. Further, the CAT noted that even if it were so bound, it disagreed with the CJEU’s reasoning that a Cessation Requirement is essential for a limitation period to start as being necessary to the EU law principle of effectiveness. Further, the CAT noted that it is bound by the Court of Appeal’s decision in Arcadia[4] which held that current English limitation rules complied with the principle of effectiveness. Any incorporation of a Cessation Requirement for cases which pre-date the Damages Directive[5] (Article 10(2) of the Damages Directive and the domestic implementing legislation[6] impose a Cessation Requirement by law) constitutes new law which is not effective in either the Merricks or Umbrella Interchange cases. The CAT also found that there is nothing in prior EU case law which indicates the necessity of a Cessation Requirement for a limitation period to start running.
We conclude that the Volvo Decision does not stand as authority for the proposition that, as a matter of EU law, time must run from the time when the infringement of competition law has ceased for the purposes of claims asserting an infringement of EU competition law. We have referred to this as the Cessation Requirement, and hold that national limitation law is not required by EU law to comply with any such principle whether before or after IP completion day, save as contained in the Damages Directive, whether as a result of the Volvo Decision or any other case-law of the EU, and whether preceding or succeeding the Volvo Decision.
Since the CAT's judgment, the EU's Advocate General Kokott has produced an opinion for the CJEU in a preliminary reference from a Czech court[7], which states that a Cessation Requirement is necessary for a limitation period to begin running in competition damages claim. If the CJEU adopts AG Kokott's opinion, then the CAT's decision in this case will represent a clear deviation between EU law and UK law on this issue.
Given that the CAT found that the Volvo Decision did not impose a Cessation Requirement upon limitation periods under EU law, it was somewhat academic to consider further whether the CAT was obliged to follow it. However, it did so on the basis that the point had wider significance.
The claimants argued that their claims were “accrued EU rights” which arose prior to IP Completion Day (even if they were asserted post IP Completion Day) and therefore that the Volvo Decision was binding on them. The judgment contains a detailed recitation of the various legislation which affected the transfer of EU law into domestic law but, in summary, the CAT found that the Volvo Decision was not binding on the UK courts in the way that it would have been prior to Brexit. The majority of the tribunal (Mr Justice Roth wrote a concurring minority judgment with alternative reasoning) held that the process of Brexit meant that a “paradigm shift” had occurred in the translation of EU law into domestic law, and that the “accrued rights” asserted by the claimants did not exist in law.
Instead, according to the majority of the Tribunal, enforceable EU rights which accrued before IP Completion Day were translated into UK law, as was the procedural manner in which such rights are enforced. The CAT felt there was no ambiguity in Parliament’s intention regarding this transfer and that Parliament had clearly envisaged that the development of these rights was no longer a matter for the CJEU, but subject to the jurisdiction of the UK courts alone. Whilst the CAT noted it could still “have regard” for the Volvo Decision, it did not consider it needed to, on the basis of its interpretation of the Volvo Decision.
The contention [of the claimants] is, at the most fundamental level, inconsistent with what Parliament intended by the United Kingdom's exit from the EU as set out in the relevant enactments.
This decision, alongside other recent decisions such as Gemalto v Infineon[8], forms a trend of judicial reluctance to extend limitation periods in competition damages litigation beyond the scope of the existing English law of limitation. It should be noted that both this decision and Gemalto are only of relevance to damages actions in relation to competition infringements that ceased prior to 9 March 2017. After this date, Schedule 8A of the Competition Act 1998 – which implements the Damages Directive – applies and limitation periods will be suspended during an investigation by a competition authority. These decisions, therefore, apply only to the "legacy" claims currently making their way through the courts. However, there is a substantial body of such claims, and these recent decisions indicate that the courts will not assist claimants who have delayed in bringing their claims by bridging the gap between the existing law of limitation and the new provisions of Schedule 8A. Should the CJEU follow the opinion of AG Kokott in Heureka v Google, this decision will also represent a clear fork in the road between the UK and EU's approach to limitation in these legacy claims.
This decision is also of wider significance in that it dismisses any notion of "accrued EU law rights" which would develop separately with EU law, creating a schism of applicable law where claims under EU law arose but were not asserted prior to IP Completion Day. The CAT held that the litigation of claims arising under provisions of EU law, including those claims accruing and asserted before IP Completion Day, must reflect the reality of the UK's transition from a member state to a third country.
Finally, the decision is a noteworthy early example of where the English courts may be prepared to diverge from EU case law developments post-Brexit. Based on this decision, it appears that such a divergence may be more likely where EU law decisions represent a marked change to an already well-established position taken by the English courts, as opposed to, for example, a gradual development of the existing position.
Footnotes
