Can claims in the Competition Appeal Tribunal avoid limitation periods imposed by foreign law?

Written on 9 Sep 2016

The Competition Appeal Tribunal (CAT) recently considered whether special limitation rules for follow-on cartel damages claims brought in the CAT displaced foreign limitation periods, even where foreign law applied. Although its decision – that claims under foreign law were governed by the limitation periods of that law – was not surprising from a private international law perspective, it provides helpful guidance for claimants considering where they should bring their claims.

The issue was being considered in two parallel cases, Deutsche Bahn AG v Mastercard Incorporated and ors (Mastercard), and Peugeot Citroën Automobiles UK Ltd and ors v Pilkington Group Limited and ors (Pilkington).

What were the issues?

Under English law, it is a complete defence for a defendant if it can be shown that a claim is brought “out of time”, that is, beyond the limitation period. However, it is not always straightforward to determine what the limitation period is, particularly in cases where a defendant’s conduct has been secret, such as in a cartel. The interplay of several English laws needs to be considered.
Until 1 October 2015, only follow-on claims arising from an official competition authority decision could be brought in the CAT and, according to rule 31 of the CAT Rules, this had to be done within 2 years of such a decision becoming final. Amendments to the Competition Act 2002 (CA 2002) introduced by the Consumer Rights Act 2015 (CRA) extended the CAT’s jurisdiction to cover all competition damages claims and brought the rules on limitation into line with those for claims in the High Court. However, for claims arising before 1 October 2015, the 2-year rule still applies, and the claims before the CAT in Mastercard and Pilkington fell into that category.

Although the claims were being brought in England, the defendants were arguing that they were governed by foreign law. This was crucial to their case because section 1 of the Foreign Limitation Periods Act 1984 (FLPA) (which applied at the time of the relevant events) states that, where foreign law is to be taken into account in determining any matter, the law of the relevant country relating to limitation shall also apply. This would mean that a claim which, on the face of it, fell within the special CAT limitation period, would be time-barred under the foreign law of limitation. The position is the same under the Rome II Regulation, which has since replaced this provision of the FLPA.

The competing arguments

The claimants contended that the 2-year rule superseded the FLPA because the CAT follow-on procedure was a comprehensive and self-contained regime, and that foreign limitation periods therefore did not apply. They also argued that the application of foreign limitation periods in such a case might mean that claims which were valid under English law might be excluded from the CAT, which should not be permitted.

The CAT did not agree. The Tribunal’s view, finding for the defendants, was that there was nothing in the CA 2002 which excluded “otherwise applicable enactments“, such as the FLPA. Therefore, the governing law of the claim would determine the limitation period, not the 2-year rule. The CAT held that the supposed “anomaly” raised by the claimants was no reason to ignore the FLPA and that outcomes at odds with the domestic position often arise when applying foreign law in the English courts. Furthermore, to apply an English law limitation period to a non-contractual claim governed by a foreign law would be inconsistent with the Rome II Regulation.

This ruling applied to the application in Pilkington, but can be expected to be followed in the parallel application in Mastercard.

The CAT did not go on to consider what the appropriate governing law was. For Mastercard this issue is due to be determined in parallel proceedings between the same parties in the High Court in May 2017. The CAT Mastercard claim has been stayed pending the outcome of that High Court hearing.

Sticking to the time limits

The laws on limitation under English law can be complex, particularly where claims are brought in the CAT. For causes of action arising after 1 October 2015, claimants will not have to contend with having to consider separate regimes depending on whether claims are brought in the CAT or the High Court. However, the transitional rules, as they are generally understood to apply, will continue to mean that claims relating to causes of action which pre-date October 2015 are treated differently in the CAT. In addition, as this case demonstrates, where foreign laws are involved, other limitation periods may apply and need to be complied with. With limitation providing a complete defence to a claim, the consequences of getting it wrong can be severe.