Bim Kemi AB v Blackburn Chemicals Ltd (No. 4)
| Jurisdiction | England & Wales |
| Judge | The Honourable Mr Justice Cooke,Mr Justice Cooke |
| Judgment Date | 06 February 2004 |
| Neutral Citation | [2004] EWHC 166 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 06 February 2004 |
| Docket Number | Case No: 1999/578 |
[2004] EWHC 166 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEENS BENCH DIVISION COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
The Honourable Mr Justice Cooke
Case No: 1999/578
Andrew Onslow, Q.C. and Mark Hoskins (instructed by Jeffrey Green Russell, Solicitors, London) for the Claimant
Alastair Wilson Q.C. and Jonathan D C Turner (instructed by Taylors, Solicitors, Blackburn) for the Defendant
Hearing dates: 2 nd and 3 rd February 2004
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Mr Justice Cooke
Introduction
This action has a substantial history to which it is necessary to refer in the context of the application which I have to determine. The application is made by the original counterclaiming defendant (Blackburn) seeking to strike out various parts of the defence to Blackburn's Statement of Case on assessment of damages on that Counterclaim. The original claimant and defendant to Counterclaim (Bim) seeks to rely upon a defence under Article 81 (previously Article 85) of the Treaty of Rome (the EC Treaty), in circumstances where the substance of that defence had been previously put forward by Blackburn, as a defence to Bim's original claim, but where that issue was stayed pending the resolution of other issues by the Courts.
As a result of a Judgment by Langley J handed down on 30 th January 2002 and that of the Court of Appeal on 13 th February 2003, the following issues have been determined:
i) A contract was made between Blackburn and Bim in October 1994 in the terms of a fax dated 20 th December 1993 (the 1994 Agreement).
ii) By its actions, Bim repudiated the 1994 Agreement and that repudiation was accepted by Blackburn on 22 nd December 1998 as bringing the 1994 Agreement to an end.
iii) Bim was in breach of the 1994 Agreement by reason of its sales of various products after binding itself to Blackburn to accept only Blackburn's products for sale on an exclusive basis. In consequence, Blackburn was entitled to damages in respect of those breaches and Bim's repudiation of the 1994 Agreement, subject to proof of loss.
iv) Bim had not by the end of 1996 obtained 20% of the available market referred to in the fax under the heading "Territories" (on the proper construction of that fax) and was therefore not entitled to continuing exclusive sales rights in Denmark, Norway or Finland. (The consequence of this was that Blackburn was free to make its own sales directly in those countries).
The 1994 Agreement which was the subject of this dispute, as encapsulated in the fax, contained the following paragraphs:-
" Territories
(1) Blackburn Chemicals Ltd will have exclusive sales rights in Great Britain and Eire.
(2) Bim Kemi AB will have exclusive sales right in Sweden. Bim Kemi will also have exclusive sales rights in Denmark, Norway and Finland for a 3 year period, this may then be continued subject to their attaining 20% of the available market, in any agreed product range.
(3) With regard to markets outside the exclusive regions, each partner can sell the partners product(s) only on account by account basis with the specific accord of the technology owner after furnishing information on each account, including name of company, product, potential volume, targeted volume, product price and competition. Such information must be updated by customer and by product on a regular six monthly basis.
Information Exchange Technical
If the non-technology owning partner discovers, or becomes aware of any application to product knowledge relating to the partners products included in this agreement, then such information should be disclosed to the technology owning partner immediately.
Term of the Agreement
………….
(2) Under normal circumstances in severance of the agreement, the non technology owning partner, agrees to a three year manufacturing exclusion from the product type/application. ………….
Product Exclusivity
(1) The partners agree that they will source and sell only their partner's products:
i.e. BCL will only source lint control products from Bim Kemi
Bim Kemi will only source antifoams from BCL."
Langley J described the dispute in the following way:
"…….At the heart of the present disputes is the question of what, if any, terms were agreed between the two companies to govern their relationship. Matters came to a head in December 1998 when Blackburn refused to supply Bim and Bim's Finnish subsidiary Cellkem Oy ("Cellkem") with any further deliveries of Blackburn's product known as BS 470. Bim issued proceedings in July 1999 claiming two years loss of profit on sales of BS 470 on the basis that under an agreement allegedly made in 1994 on the terms of a fax from Blackburn to Bim dated 20 December 1993 ("the December 1993 fax") Blackburn was obliged to give a year's notice from the anniversary of the agreement before it could terminate supplies of BS 470 to Bim. Blackburn denies that any such agreement was made and also asserts that even if it was made Bim was in repudiatory breach of it because Bim wrongfully sold its own (or Cellkem's products in Scandinavia. Blackburn also makes claims for damages against Bim under both the 1994 Agreement (if any) and an earlier written Agreement made in 1984."
About three months before the date fixed for the trial, Blackburn sought to make amendments to its defence to plead that if Bim had obtained 20% of the available market, so that it retained its exclusive sales' rights in Finland after three years, there was a breach of Article 81 of the EC Treaty and the whole of the 1994 Agreement was thereby rendered invalid. Finland was apparently the main market for the only product supplied under the 1994 Agreement. Bim objected to that amendment because of the lateness of it, because it raised wider issues and because those issues could not be fairly determined at the scheduled trial. Blackburn maintained that, as the plea was one of illegality, the Court had to consider it whether pleaded or not and that it was better that it should be pleaded out. Despite Bim's objection Langley J gave permission to Blackburn to amend its Defence and Counterclaim and to plead and serve a Rejoinder and Reply to Defence to Counterclaim which included this plea, but excluded the issues from the imminent trial. He gave Bim permission to make consequential amendments in the light of Blackburn's amendment, subject to the paragraph of the order in which he ordered a stay in the following terms:
"All further proceedings in respect of the pleas that the Agreement alleged by the claimant to have been made between the parties in 1994 was, if made, void under Article 85 of the Treaty of Rome or under the Restrictive Trade Practices Act 1976 shall be stayed until after the Trial of all other issues or further Order. "
The Article 81 plea which had been advanced by Blackburn is to be found in paragraph 6E of the Re-Re-Re-Re-Amended Defence and Counterclaim, following a plea in relation to the Restrictive Trade Practices Act. Paragraph 6E reads as follows:
"Further or in the further alternative if (which is denied) the claimant or its subsidiary Cellkem achieved a 20% share of the market for Antifoaming agents in Finland or in Scandinavia, the exclusive supply and sourcing obligations and restrictions on re-sale outside allotted territories of the alleged Agreement (if made) were void under Article 85(2) of the Treaty of Rome, in that it was an agreement between competing undertakings …. which was liable to affect trade between member states of the EC (namely the UK, Sweden and Finland) to a not insignificant extent and which had as its object or effects the prevention, restriction or distortion of competition within the common market by restricting competition between the said undertakings in the supply of antifoaming agents, alternatively silicone based antifoaming agents in Finland or Scandinavia; and the remainder of the alleged Agreement, if made, was thereby invalidated ……."
In its skeleton argument addressing the question of permission to amend Blackburn stressed the connection to the existing proceedings in relation to investigation of market share because the Court had to determine whether or not Bim had achieved 20% of the available market in the context of the existing dispute. Bim argued that the EC Treaty point raised difficult and substantial issues of law, fact and expert opinion and had much wider implications than the proposed plea. Bim also said that the pleading was inadequate for the lack of particularity. Both accepted that there were issues which would have to be developed and Langley J allowed the amendment but postponed any consideration of it so that the existing trial arrangements would not be jeopardised.
When Bim came to plead to the other amendments made, not being bound to plead to the new Paragraph 6E issue, it included the following:
"The claimant does not plead to paragraph …. 6E of the Defence. All proceedings arising from the allegations made in this paragraph have been stayed by the Order of Langley J dated 5 th October 2001. If the …. [1994] Agreement was invalid for the reasons given by the defendant, the claimant reserves the right:
(i) to contend that the 1984 Agreement was also invalid:
(ii) to claim damages from the defendant for breach of Article 85(81) of the Treaty of Rome."
Self evidently Bim did not accept the validity of the Article 81 plea raised by Blackburn since it proceeded with its claim. In his witness statement, Bim's solicitor says that Bim had not taken specialist advice and literally had no case on the issue at that stage....
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Bim Kemi AB v Blackburn Chemicals Ltd (No. 4)
...A3 Between: Blackburn Chemicals Ltd Appellant and Bim Kemi AB Respondent ALASTAIR WILSON Esq QC and JONATHAN [2004] EWCA Civ 1490 [2004] EWHC 166 (Comm) IN THE SUPREME COURT OF JUDICATURE COURT OF APPEAL (CIVIL DIVISION) ON APPEAL FROM THE HIGH COURT OF JUSTICE (Commercial Court) (Hon Mr J......
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