Air cargo cartel damages litigation: determining jurisdiction for follow-on damages claim

October 21, 2015

Dispute Resolution analysis: in July 2015 the Amsterdam District Court concluded that there had been no abuse of procedural law by KLM in a case related to alleged freight cargo price fixing. Daan Beenders, partner, and Wouter Hofstee, associate, at De Brauw Blackstone Westbroek in Amsterdam, look at the issues raised in this dispute.

What is the background to this case?
In 2010 the European Commission levied fines of almost EUR 800m on 11 airlines, including Koninklijke Luchtvaartmaatschappij NV, Martinair Holland NV and Société Air France (altogether KLM) for agreeing to fix cargo pricing from 1999 until 2006. The airlines involved in the supposed ‘air freight cartel’ are confronted with follow-on damage claims in multiple jurisdictions by direct and indirect customers that allegedly incurred losses. In the proceedings before the Amsterdam District Court, KLM is seeking a declaration of non-liability vis-à-vis 16 entities forming part of the Deutsche Bahn (DB) concern, including DB subsidiaries that directly purchased air freight services from KLM between 1999 and 2006 (freight forwarders).


What were the key issues in this case?
The DB subsidiaries involved are domiciled in different Member States. Deutsche Bahn Finance BV is the only entity domiciled in Amsterdam and is thus used as ‘anchor’ to create jurisdiction for the Amsterdam District Court with regard to all other DB subsidiaries. Deutsche Bahn Finance BV allegedly did not purchase any air freight services, possibly making the claim against the ‘anchor’ inadmissible. The issue central to this interlocutory judgment is whether the Amsterdam District Court lacks jurisdiction with regard to the DB subsidiaries that are not domiciled in Amsterdam, on the grounds of abuse of law, given that KLM seeking a declaration of non-liability before the Amsterdam Court improperly withholds certain DB subsidiaries from their natural forum.


What did the court decide?
The court principally held that proceedings for a declaration of non-liability fulfil a legitimate function. The mere fact that KLM sought declaratory relief before a Dutch court does not establish abuse of law, all the more so since KLM has a valid interest in the proceedings. According to the court, the Brussels Regulation (EC) 44/2001, art 6 (Brussels I) allows for claims to be brought before a single court in case a claimant is pursuing connected claims against multiple defendants domiciled in different Member States, regardless of the admissibility of the initial claim against the ‘anchor’. The court held that the claims KLM brought against all DB subsidiaries arise from the same situation of fact and are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings. The Amsterdam District Court accepts jurisdiction as regards all claims lodged.


What are the practical implications of this decision?
This decision reiterates that a party facing an action that forestalls proceedings in the Netherlands by seeking declaratory relief does not easily constitute an abuse of law, notwithstanding special circumstances. Claimants may specifically be considered as having a valid interest in seeking declaratory relief before a court where other related proceedings are pending–for example, to avoid being held liable for the same damages twice. By extension, as long as the claims are sufficiently connected, the claimant seems to be free to use an anchor defendant (domiciled in the Netherlands) to create derived jurisdiction for defendants domiciled in other Member States. It is worth considering whether this has certain tactical advantages, also in relation to the (strictly applied) lis pendens rule under Brussels I (art 29).


Would the result have been different under Brussels I (recast)?
Brussels I (recast) (EU) 1215/2012 applies solely to legal proceedings instituted on or after 10 January 2015. KLM commenced these proceedings on 7 April 2011. The proceedings therefore do not fall within the temporal scope of Brussels I (recast). It is, however, likely that the issue would not have been determined differently under Brussel I (recast), given that art 8 (Brussels I, art 6) is not revised at this point, nor does Brussels I (recast) contain amended rules regarding negative declaratory relief that would have an impact on the outcome of this issue.


The analysis, based on an interview by Anne Bruce, was published on 8 October 2015 by LexisPSL, a LexisNexis title

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