Microsoft Mobile OY (Ltd) v Sony Europe Ltd and Others

JurisdictionEngland & Wales
CourtChancery Division
JudgeThe Honourable Mr Justice Marcus Smith,Mr. Justice Marcus Smith
Judgment Date28 February 2017
Neutral Citation[2017] EWHC 374 (Ch)
Docket NumberCase No: HC-2015-004110
Date28 February 2017

[2017] EWHC 374 (Ch)

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

The Honourable Mr. Justice Marcus Smith

Case No: HC-2015-004110

Between:
Microsoft Mobile OY (Ltd)
Claimant
and
(1) Sony Europe Limited
(2) Sony Corporation
(3) Panasonic Corporation
(4) LG Chem Limited
(5) Sanyo Electric Co Limited
(6) Samsung SDI Co Limited
Defendants

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The proceedings against the Third and Fifth Defendants have been withdrawn by the Claimant and they did not appear.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.

The Honourable Mr Justice Marcus Smith

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

Mr. Justice Marcus Smith

A. INTRODUCTION

(1) The Claimant

1

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.

2

Li-ion Batteries contain one or more lithium ion battery cells ("Li-ion Cells").

3

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.

4

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

5

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").

6

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

7

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.

8

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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