ECJ rules on cost bearing and estimation of damages – many questions remain unanswered

This time, the preliminary ruling concerns the bearing of costs by the claimant in the event of partial dismissal of its claim and the prerequisites under which the national court is entitled to estimate the damage.[1] The Advocate General's opinion had raised high expectations for the ECJ’s decision. However, the analysis shows that its general impact is rather small, and many questions still remain unanswered.

I. Spanish Trucks cartel litigation

The decision was issued following a request for a preliminary ruling brought by a Spanish court.[2] The claimants brought an action for damages against Daimler claiming that, as a consequence of its anticompetitive price-fixing, they suffered damage consisting of an overcharge on the vehicles purchased. In support of their claim, they submitted an expert report which established an overcharge of around 16%. As usual, the defendant challenged that expert report by way of its own expert report. Following a preliminary hearing, the defendant granted the claimants access to the data taken into consideration in the defendant’s expert report.

The Spanish court then stayed the proceedings and referred three questions to the ECJ on the following aspects:

  • compatibility of the claimant’s bearing of costs in case of partial defeat under EU law;
  • admissibility of a judicial estimate of damages where the defendant has granted the claimant access to the defendant’s data;
  • admissibility of a judicial estimate of damages where the defendant marketed only part of the goods in relation to which an overcharge is alleged.

II. The ECJ’s findings

  1. Cost bearing in case of partial dismissal

The first question concerned the Spanish rules on costs in the event of a partial dismissal. The rules provide that in such an event the claimant has to bear its own costs and half of the common costs. The Spanish court raised the question whether this consequence was compatible with the right to full compensation under EU law, given that causal damage had been suffered and awarded (albeit not in the amount claimed).

The Advocate General opined that the Spanish rule to be contrary to European law with reference to the ECJ’s decision in Caixabank.[3] There, the ECJ had declared the same rule incompatible with the Directive on Unfair Terms in Consumer Contracts (Council Directive 93/13/EEC), as it creates a substantial obstacle that is likely to discourage consumers from bringing an action.[4] The Advocate General considered cartel damage cases to be suffering from a structural imbalance comparable to that in consumer contracts.[5] At least in cases where the partial dismissal was due to the excessive structural difficulty or even practical impossibility of quantifying damages, it therefore was not justified to impose the costs of enforcing on the claimant.[6]

The ECJ did not follow the Advocate General’s opinion – at least in its operative part. It first stated that there was no infringement of Article 3 of the Cartel Damages Directive (Directive 2014/104/EU), as the latter concerned full compensation with regard to the actual loss and loss of profit, plus the payment of interest, but not the allocation of costs in court proceedings.[7] The European legislator had intended to exclude the issue of costs from the scope of the Directive. [8]

Unlike the Advocate General, the ECJ also did not recognize an infringement of the principle of effectiveness, according to which national laws may not render the exercise of the right to full compensation for the harm suffered practically impossible or excessively difficult.[9] In particular, the ECJ did not consider the Caixabank case to be applicable to cartel damages actions. Unlike the case of consumer contracts, the Cartel Damages Directive provided for measures to redress the initial imbalance between claimant and defendant, namely disclosure claims, damages estimation, and presumptions.[10] The balance of power between the parties could thus be corrected.

While up to this point, the ECJ had taken the opposite position to that of the Advocate General, its concluding comments implied that, despite the absolute wording of the operative part, it might open up room for individual assessment. With reference to the opinion of the Advocate General, the ECJ concluded that it is reasonable for the claimant to bear its own costs as well as part of the common costs, provided that the origin of those costs is to be attributable to the claimant, for example due to the fact that the claimant made excessive claims or due to the manner in which it conducted the litigation.[11] This wording suggests that there may well be situations in which costs are not attributable to the claimant, for example, because the amount claimed is not "excessive" but merely a result of the structural difficulty of quantifying harm in cartel damages cases, and the claimant has exhausted all means available in the context of litigation in order to achieve the most accurate amount possible.[12]

It is questionable whether – in light of the operative part – one should overstate the importance of these remarks. However, the modalities of cost bearing have in any case not yet been fully assessed with this decision. This is particularly the case because the Spanish regulation at hand only concerns the claimant's own costs and the common costs. Hence, the ECJ did not comment on whether it is compatible with European law if the claimant has to bear the costs of the opposing party in case of partial defeat, as it would be the case under German law.

  1. Estimation of damages

The second and third questions addressed the preconditions under which a national court is entitled to estimate the amount of damages under Article 17 (1) of the Cartel Damages Directive.

The two scenarios referred to by the Spanish court - the defendant grants access to data or the defendant has not sold all the goods for which damages are claimed - can be narrowed down to the same core: the absence of information asymmetry between the claimant and the defendant. Whereas in the first scenario the initially existing imbalance was compensated by the data access, in the second scenario there is no imbalance from the beginning, since the defendant, who participated in the cartel but did not sell the goods in question, has just as little data as the claimant.

The ECJ clarified that an information asymmetry is not a prerequisite for the estimation of damages under Article 17 of the Directive.[13] Article 17 merely required that it is practically impossible or excessively difficult to quantify the amount of damage (we will come back to this in a moment). This could also be the case if the parties were on an equal footing as regards the information available.[14]

However, according to the ECJ, the national court should not rush to resort to the possibility of estimation provided for in Article 17 of the Directive. It is for the national court, before proceeding with an estimate of the damage, to determine whether the claimant has made use of the measures the EU legislature adopted to remedy the asymmetry of information, namely claims for disclosure.[15] “If the practical impossibility of assessing the harm is the result of inaction on the part of the claimant, it is not for the national court to take the place of the latter or to remedy its shortcomings.[16] The estimation under Article 17 should therefore - as one may well understand the ECJ - be ultima ratio.

But when is it practically impossible or excessively difficult to quantify the damage within the meaning of Article 17 of the Directive? The ECJ also made some general remarks that are very instructive, especially for German procedural law. The ECJ stated that actions for damages falling within the scope of the Cartel Damages Directive, like actions for civil liability in general, aim to compensate damage as precisely as possible, which cannot rule out that certain uncertainties remain when the national court rules in order to determine the amount of the compensation.[17] “That is why the mere existence of those uncertainties, inherent in proceedings concerning liability and which arise, in actual fact, from the confrontation of arguments and expert reports in the exchange of arguments, does not correspond to the degree of complexity in the assessment of damages required to allow the application of the judicial estimation provided for in Article 17(1) of that directive.[18]

There is much to argue that the ECJ is thereby suggesting different standards in estimation depending on the degree of uncertainty. Where there is merely an uncertainty inherent in any civil liability case, based on the confrontation of arguments and expert opinions, Article 17 of the Directive is not applicable. But – in German proceedings – section 287 of the German Code of Civil Procedure (ZPO) is applicable, which in principle allows the court in all damages proceedings to decide on the amount of damages at its discretion, based on the assessment of all circumstances.

Section 287 ZPO, which applies to all civil actions for damages, specifically addresses the general uncertainties in German damages proceedings, due to which damages can hardly ever be precisely quantified. It provides for a relaxation of the standard of proof to the normally applying standard of section 286 ZPO, according to which the court must be convinced of the truth of a fact.[19] Since the existence and amount of damages usually depend on hypothetical scenarios that can only be proven to a limited extent, section 287 lowers the standard of proof in damages proceedings, and enables the court to estimate the damages incurred. However, the claimant must present substantial facts and indications for the estimation, which, according to common understanding, also includes the quantification of a minimum amount of damage.[20] Thus, German courts still place rather high requirements on the claimant's pleading even within the framework of section 287 ZPO. If the claimant is not able to present sufficient indications, no damages will be awarded.

German cartel damages law, specifically section 33a (1) of the German Act Against Restraints of Competition, simply refers to section 287 ZPO, which is applied regularly by German courts in cartel damages proceedings.[21] However, the ECJ's comments in para. 52 suggest that Article 17 of the Directive provides for a different type of damage estimation compared to general civil damages proceedings.[22] Article 17 of the Directive is likely to grant the court significantly greater power. Therefore, it is quite reasonable for the ECJ to impose stricter conditions on its application.

However, the implications of the ECJ’s latest decision for German cartel damages law are rather limited in this regard. In particular, the requirement established by the ECJ that the court must ensure that the claimant has previously made use of all possibilities of clarification, in particular by claiming disclosure, before estimating damages pursuant to Article 17, is not applicable to the estimation pursuant to section 287 ZPO.

*Dr. Ann-Christin Richter is Deputy Managing Partner and Dr. Asja Zorn is an associate in Berlin.

Footnotes

[1] Judgement of the European Court of Justice of 16 February 2023, C-312/21 – Tráficos Manuel Ferrer SL.
[2] Judgement of the European Court of Justice of 16 February 2023, C-312/21 – Tráficos Manuel Ferrer SL, para. 23 et seqq.
[3] AG Kokott, Opinion of 22 September 2022, C-312/21 – Tráficos Manuel Ferrer SL, para. 50 et seqq.
[4] Judgement of the European Court of Justice of 16 July 2020, C-224/19 and C-259/19 – Caixabank and Banco Bilbao Vizcaya Argentaria, para. 99.
[5] AG Kokott, Opinion of 22 September 2022, C-312/21 – Tráficos Manuel Ferrer SL, para. 52.
[6] AG Kokott, Opinion of 22 September 2022, C-312/21 – Tráficos Manuel Ferrer SL, para. 69.
[7] Judgement of the European Court of Justice of 16 February 2023, C-312/21 – Tráficos Manuel Ferrer SL, para. 37.
[8]Judgement of the European Court of Justice of 16 February 2023, C-312/21 – Tráficos Manuel Ferrer SL, para. 38.
[9] Judgement of the European Court of Justice of 16 February 2023, C-312/21 – Tráficos Manuel Ferrer SL, para. 40 et seqq.
[10] Judgement of the European Court of Justice of 16 February 2023, C-312/21 – Tráficos Manuel Ferrer SL, para. 45.
[11] Judgement of the European Court of Justice of 16 February 2023, C-312/21 – Tráficos Manuel Ferrer SL, para. 47.
[12] See AG Kokott, Opinion of 22 September 2022, C-312/21 – Tráficos Manuel Ferrer SL, para. 68, 69; this is also suggested by Kersting, WuW 2023, 189, 190.
[13] Judgement of the European Court of Justice of 16 February 2023, C-312/21 – Tráficos Manuel Ferrer SL, para. 52 et seq.
[14] Judgement of the European Court of Justice of 16 February 2023, C-312/21 – Tráficos Manuel Ferrer SL, para. 54.
[15] Judgement of the European Court of Justice of 16 February 2023, C-312/21 – Tráficos Manuel Ferrer SL, para. 57.
[16] Judgement of the European Court of Justice of 16 February 2023, C-312/21 – Tráficos Manuel Ferrer SL, para. 57.
[17] Judgement of the European Court of Justice of 16 February 2023, C-312/21 – Tráficos Manuel Ferrer SL, para. 52.
[18] Judgement of the European Court of Justice of 16 February 2023, C-312/21 – Tráficos Manuel Ferrer SL, para. 52 (emphasis added).
[19] Judgement of the German Federal Court of Justice of 28 January 2020, KZR 24/17 – Schienenkartell II, para 35.
[20] See, e.g., Judgement of the German Federal Court of Justice of 13 October 1981, VI ZR 162/80; Judgement of the German Federal Court of Justice of 13 March 1967, III ZR 8/66.
[21] See, e.g., Judgement of the German Federal Court of Justice of 22 September 2020, KZR 35/19 – Lkw-Kartell.
[22] This might also be suggested by Kersting, WuW 2023, 189, 192.