Arcadia v Visa revisited: the Court of Appeal takes a strict approach to limitation

Competition damages claims can be notoriously complex. According to the Court of Appeal, however, that is no reason to free them from the ordinary English rules of limitation – however strict those rules might be.

Unlike the large majority of European limitation rules, where time starts running from the date of the victim’s knowledge, the English rule under the Limitation Act 1980 (“LA 1980”) is that time starts running from the moment the wrong is done, unless the victim can show that the wrong was concealed from him. The claimants in Arcadia Group Brands Ltd & Ors v Visa Inc & Ors [2015] EWCA Civ 883 argued that various relevant facts had been concealed. Ultimately, their difficulty was that they did have sufficient facts available to them to plead their case.

The claimants lost their case in the High Court (see my previous blog entry). On appeal, they argued that the ordinary principles which had been identified in relation to s.32 LA 1980 in other contexts should not apply in the context of competition claims, given the complexity of such claims and the need to know and be able to plead the primary facts which inform “the economic contentions and assessments which form the basis of the claims under Article 101 and the domestic legislation(at [50]).

The Court of Appeal identified three key propositions (at [49]):

Johnson, the Mirror Group Newspaper case and The Kriti Palm are clear authority, binding on this court, for the following principles applicable to section 32(1)(b) of the 1980 Act: (1) a “fact relevant to the plaintiff’s right of action” within section 32(1)(b) is a fact without which the cause of action is incomplete; (2) facts which merely improve prospects of success are not facts relevant to the claimant’s right of action; (3) facts bearing on a matter which is not a necessary ingredient of the cause of action but which may provide a defence are not facts relevant to the claimant’s right of action”.

The Court was not convinced that competition claims should be treated differently as a matter of principle (at [51]). Moreover, it emphasised that “what is sufficient knowledge to constitute discovery within section 32(1) depends on the particular facts” (at [61]). In the particular circumstances of the case, it concluded that many of the relevant facts which the claimants argued they had insufficient information to plead went to the strength of the claim rather than the key facts necessary to plead it. A relevant consideration was that there had been “no suggestion of the discovery of sequential losses in the present proceedings, and indeed, as the respondents have emphasised, there is no suggestion of the discovery of any new facts between the Limitation Dates and the commencement of the present proceedings” (at [71]).

The Court also considered the principles in EU law of effectiveness of domestic remedies and the right to compensation for losses caused by unlawful conduct. The appellants argued that the application of the limitation period in the manner envisaged by the High Court effectively made it extremely difficult to bring this form of competition claim. However, the Court was not persuaded of this – particularly given its view that sufficient information had become available some time before to enable the claimants to plead their case (at [75]). It declined to consider the potential impact of the Damages Directive on the basis that it was not simply codifying old principles but was “new law” (at [78]).

Finally, the Court allowed an appeal against the Order of Simon J relating to costs – in the High Court, the judge had considered that “it ought to have been known to any reasonable litigator that the claim in respect of the period before July 2007 was bound to fail and so costs would be awarded on an indemnity basis. The Court of Appeal disagreed, emphasising that “[t]he weakness of a legal argument is not, without more, justification for an indemnity basis of costs, which is in its nature penal. The position might be different if proceedings or steps taken within them are not only based on a plainly hopeless case but are motivated by some ulterior commercial or personal purpose or otherwise for purely tactical reasons unconnected with any real belief in their merit” (at [83]).

In my previous post, I emphasised the significance of the Arcadia decision. This has now been reinforced by the authority of the Court of Appeal, and more full consideration of the issues at play, including EU law principles concerning effective remedies. In essence, the strict approach envisaged by Simon J remains, such that victims of unlawful conduct will need to act expeditiously, even if they do not have as full a cache of information as they would otherwise hope for. The Court of Appeal did recognise the complexity of the issue, however, by overturning the High Court’s somewhat harsh decision on costs. It remains to be seen whether this approach to limitation will accelerate the bringing or claims, or dissuade potential claimants from litigating, given the complexity and cost often involved in mounting such litigation.

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