Microsoft Mobile OY (Ltd) v Sony Europe Ltd and Others
| Jurisdiction | England & Wales |
| Judge | The Honourable Mr Justice Marcus Smith,Mr. Justice Marcus Smith |
| Judgment Date | 28 February 2017 |
| Neutral Citation | [2017] EWHC 374 (Ch) |
| Docket Number | Case No: HC-2015-004110 |
| Court | Chancery Division |
| Date | 28 February 2017 |
[2017] EWHC 374 (Ch)
The Honourable Mr. Justice Marcus Smith
Case No: HC-2015-004110
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr. Kieron Beal, Q.C., Ms. Laura Elizabeth John and Mr. Andrew Scott (instructed by Mishcon de Reya LLP) for the Claimant
Mr. Thomas de la Mare, Q.C. and Mr. David Bailey (instructed by Cleary Gottlieb Steen & Hamilton LLP) for the First and Second Defendants
Ms. Marie Demetriou, Q.C. and Mr. Angus Rodger (instructed by Steptoe & Johnson LLP) for the Fourth Defendant
Mr. Daniel Beard, Q.C. and Mr. Henry Forbes Smith (instructed by Allen & Overy LLP) for the Sixth Defendant
The proceedings against the Third and Fifth Defendants have been withdrawn by the Claimant and they did not appear.
Hearing dates: 16, 17, 18 and 19 January 2017
Approved Judgment
I direct that pursuant to CPR PD 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.
Contents
| A. | INTRODUCTION | Para. 1 |
| (1) | The Claimant | Para. 1 |
| (2) | The Cartel | Para. 5 |
| (3) | The Defendants | Para. 7 |
| (4) | The factual case pleaded by Microsoft Mobile against the Defendants | Para. 10 |
| (5) | Applicable law | Para. 16 |
| (6) | Aggregation of claims and Microsoft Mobile's pleaded case | Para. 17 |
| (7) | Service of the proceedings on the Defendants and the present applications | Para. 22 |
| B. | STAY OF THE PROCEEDINGS AGAINST D1/SONY EUROPE IN FAVOUR OF ARBITRATION | Para. 32 |
| (1) | Introduction | Para. 32 |
| (2) | The arbitration clause | Para. 34 |
| (3) | Section 9 of the Arbitration Act 1996 | Para. 37 |
| (4) | The approach to construction | Para. 42 |
| (5) | The relevant provisions of the PPA | Para. 55 |
| (6) | The scope of the arbitration clause | Para. 67 |
| (7) | Is Article 25.2 to be applied, even if wide enough to embrace the claims against D1/Sony Europe? | Para. 74 |
| (8) | Can and should the court determine the scope of the arbitration clause? | Para. 82 |
| C. | STAY OF THE PROCEEDINGS AGAINST D2/SONY CORPORATION IN FAVOUR OF ARBITRATION | Para. 85 |
| D. | OBJECTIONS TO JURISDICTION: AN OVERVIEW OF THE RELEVANT PRINCIPLES | Para. 86 |
| (1) | Three requirements | Para. 86 |
| (2) | The duty to make full and frank disclosure | Para. 90 |
| (3) | Challenging an order permitting service out of the jurisdiction | Para. 91 |
| E. | THE FIRST REQUIREMENT: SERIOUS ISSUE TO BE TRIED | Para. 95 |
| (1) | The law | Para. 95 |
| (2) | The parties' agreement to "park" the issue | Para. 97 |
| F. | THE SECOND REQUIREMENT: A GOOD ARGUABLE CASE THAT THE CASE FALLS WITHIN ONE OR MORE OF THE GATEWAYS | Para. 99 |
| (1) | Good arguable case regarding one or more Gateways | Para. 99 |
| (2) | The Gateways relied upon by Microsoft Mobile | Para. 102 |
| (3) | Gateway (3): whether D2/Sony Corporation, D4/LG Chem and/or D6/Samsung are necessary or proper parties to Microsoft Mobile's claims against D1/Sony Europe | Para. 105 |
| (i) | Requirements that have to be satisfied | Para. 105 |
| (ii) | The first requirement: the claim against the anchor defendant | Para. 107 |
| Sole reason for joining D1/Sony Europe was to found jurisdiction against the other Defendants | Para. 110 | |
| The arbitration clause and section 9 of the Arbitration Act 1996 | Para. 112 | |
| Aggregation of claims | Para. 119 | |
| (iii) | The second requirement: necessary or proper party | Para. 126 |
| Introduction | Para. 126 | |
| What does "proper" mean? | Para. 130 | |
| Are the Defendants "proper parties"? | Para. 139 | |
| (4) | Gateway (9)(a): damage within the jurisdiction | Para. 140 |
| (i) | The wording of the Gateway | Para. 140 |
| (ii) | Basis upon which Microsoft Mobile contended that there had been damage within the jurisdiction | Para. 144 |
| (iii) | Legal aspects regarding the Gateway | Para. 147 |
| The relevant law to determine whether the requirements of the Gateway are satisfied | Para. 149 | |
| Assignment and disaggregation | Para. 155 | |
| Substantial damage | Para. 161 | |
| Direct and indirect damage | Para. 164 | |
| (iv) | Application in the present case | Para. 166 |
| Microsoft Mobile's first contention: damage because Nokia and/or the Claimant purchased 12.1m units from D1/Sony Europe | Para. 167 | |
| Microsoft Mobile's second contention: damage because the PPAs are governed by English law and Article 4(3) of Rome II applies | Para. 173 | |
| Microsoft Mobile's third contention: damage through the sale of handsets in England and Wales and "volume effects" | Para. 177 | |
| Microsoft Mobile's fourth contention: purchases by Nokia UK Ltd | Para. 182 | |
| (5) | Conclusion on Gateways | Para. 185 |
| G. | CLEARLY AND DISTINCTLY THE PROPER FORUM FOR THE TRIAL | Para. 186 |
| H. | NOT FULL AND FRANK | Para. 201 |
| Annex 1 | Terms and Abbreviations used | |
| Annex 2 | Evidence relied upon by the Defendants |
A. INTRODUCTION
(1) The Claimant
The Claimant, Microsoft Mobile Oy (Ltd) (the "Claimant" or "Microsoft Mobile"), 1 is a company established with limited liability under the laws of Finland. It is a wholly owned subsidiary of the Microsoft Corporation. It was, and is, a manufacturer and distributor of mobile telephone handsets, which contain lithium ion batteries ("Li-ion Batteries"). These Microsoft Mobile purchased from third parties.
Li-ion Batteries contain one or more lithium ion battery cells ("Li-ion Cells").
By a Stock and Asset Purchase Agreement dated 2 September 2013 (the "SAPA"), the Microsoft group of companies acquired the mobile devices business of Nokia Corporation and its relevant subsidiaries ("Nokia" 2). Nokia Corporation was a multinational communications and information technology company, established under the laws of Finland. Microsoft Mobile alleges that prior to the SAPA, when these activities transferred to the Microsoft group of companies, its activities included the manufacture, distribution and sale of mobile telephone handsets, which contained Li-ion Batteries purchased from third parties.
Microsoft Mobile alleges that both it and Nokia also sold replacement Li-ion Batteries in an after-market. Again, these were purchased from third parties.
(2) The Cartel
Microsoft Mobile brings these proceedings in its own right and as assignee of the rights of Nokia and its relevant subsidiaries. Microsoft claims damages for losses caused by allegedly anti-competitive conduct in relation to the sale to Nokia and/or to Microsoft Mobile of Li-ion Batteries (the "Cartel").
More specifically, Microsoft Mobile contends that:
i) The products that were the subject of the Cartel were Li-ion Batteries. For the purposes of market definition, Microsoft Mobile identifies:
a) "Downstream Products", being products into which Li-ion Batteries have been incorporated; and
b) "Upstream Products", being Li-ion Batteries purchased on the upstream wholesale market either for incorporation into Downstream Products or for sale on the after-market.
ii) The relevant geographic markets are defined by Microsoft Mobile as follows:
a) For Upstream Products, global and/or regional, alternatively the EU and/or the EEA as a whole, alternatively national (including at least Finland, Germany, Hungary, Romania and the United Kingdom (within the EU/EEA) and Brazil, China, Hong Kong, India, Japan and South Korea (outside the EU/EEA)).
b) For Downstream Products, the relevant geographic markets are similarly defined.
iii) The period over which the Cartel is said to have operated by Microsoft Mobile is from at least August 1999 to at least May 2011. Microsoft Mobile also pleads a "run-off" period, and seeks to claim damages "in so far as either the Cartel continued to operate and/or be implemented…and in so far as it continued to affect the prices charged for Li-ion Cells and/or Li-ion Batteries" (the "Run-Off Period"). 3
(3) The Defendants
There were, originally, six defendants to these proceedings. Proceedings against the Third Defendant, Panasonic Corporation, and the Fifth Defendant, Sanyo Electric Co Limited, were withdrawn by Microsoft Mobile. Save incidentally, these defendants do not feature in this Judgment: they did not appear before me.
As pleaded in the Amended Particulars of Claim, the remaining defendants are:
i) The First Defendant, Sony Europe Limited, a limited company established in England ("D1/Sony Europe").
ii) The Second Defendant, Sony Corporation, a company established under the laws of Japan (D2/Sony Corporation). It is the parent company of the Sony group, including of D1/Sony Europe, and of the various other companies set out in paragraphs 20 and 21 of the Amended Particulars of Claim.
It is alleged by Microsoft Mobile that D1/Sony Europe and D2/Sony Corporation were part of a single economic unit, and so an "undertaking" for the purposes of EU and EEA competition law.
iii) The Fourth Defendant, LG Chem Limited, a company established under the laws of South Korea ("D4/LG Chem"). D4/LG Chem is the ultimate parent company of LG Chem (Nanjing) I&E, and it is alleged by Microsoft Mobile that these entities were part of a single economic unit and so an undertaking for the purposes of EU and EEA competition law.
iv) The Sixth Defendant, Samsung SDI Co Limited, is a company established under the laws of South Korea ("D6/Samsung"). It is the parent company of the companies set out in paragraphs...
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