Finding the right forum? Samsung’s LCD cartel contribution claim blocked in England
In a recent judgment, the 'Court of Appeal (CoA)' upheld the High Court’s ruling that England is not the appropriate jurisdiction for a contribution claim filed by Samsung against LG. The contribution claim was filed by Samsung after it had settled a 2015 claim brought against it in England by a number of local authorities in connection with a cartel in the LCD panels market.
The courts reached the conclusion that the contribution proceedings could instead be brought in South Korea or Taiwan, where respectively both Samsung and LG were headquartered, and the cartel meetings took place.
In December 2010, the 'European Commission (the Commission)' adopted a 'decision (the Decision)' against several Korean and Taiwanese companies for participating in a cartel in the sector of 'liquid crystal display (LCD)' panels used in screens. The cartelists, including Samsung and LG group companies, held regular cartel meetings, mainly in hotels in Taiwan.
Several sets of follow-on proceedings were filed in England against Samsung and, in some actions, other cartelists, including the LG companies. The contribution claim in question was filed against LG only after a settlement was reached by Samsung with the claimants in one of these actions. LG contested jurisdiction, submitting that Samsung had failed to show that England was clearly the appropriate forum for the claim.
Below we focus on the two grounds for appeal discussed at length by the CoA in its judgment.
The “Cambridgeshire factor”
Samsung argued that the contribution claim should continue in England because the settlement related to claims for damages arising out of a cartel that was alleged to have been implemented in or intended to affect England. The English courts had already taken jurisdiction over a series of actions relating to the cartel, including a claim in which LG was a defendant: iiyama v Samsung Electronics Ltd.
The High Court had acknowledged, and the CoA agreed, that the fact that the underlying claim is proceeding in England could be a powerful, and even overwhelming, factor in favour of hearing the contribution claim within the jurisdiction. However, where the underlying claim had already been settled, the only question for consideration is what forum is most appropriate for the trial of the contribution claim.
The fact that the English courts took jurisdiction of claims relating to the LCD cartel (and a related cathode ray tubes cartel) in iiyama v Samsung Electronics Ltd was not given much weight. The High Court sided with LG in concluding there was a distinction between proof of the infringement and the analysis of responsibility as between the infringing parties, with only the latter in issue in the contribution proceedings.
The CoA considered that the fact that the same set of solicitors in England have acted in similar proceedings concerning the same cartel (including public enforcement proceedings before the Commission) could constitute a weighty argument against contribution proceedings being commenced elsewhere, where the parties would have to start from scratch with new local lawyers. This would be the “connecting factor”, also known as the “Cambridgeshire factor”, named so after the ship at the centre of a seminal case on jurisdiction issues: Spiliada Maritime Corporation v Cansulex Ltd  AC 460. Unfortunately for Samsung, the CoA concluded that insufficient evidence in this respect was produced before the High Court judge and the Cambridgeshire factor was not made out.
Bindingness of the Commission Decision
Samsung argued that England would be an appropriate forum in view of the Commission Decision which was binding on the English courts and in which the Commission had decided that the tortfeasors were equally responsible. To the extent there needed to be further reference to the events which occurred in Asia, Samsung submitted that the Commission had already produced extensive evidence annexed to the Decision.
With respect to the bindingness of the Decision, the High Court judge was not invited to read the Commission Decision in detail, nor was he directed by the parties to read the “Remedies” section of the Decision in which the Commission considered and rejected LG’s arguments that it should receive a lesser fine for its participation in the cartel. It therefore appears that this factor was not taken into account in terms of keeping the contribution claim within the jurisdiction. The CoA stated that, had this argument been properly made out before the High Court, the judge could not possibly have reached the conclusion that “the relative responsibility of the tortfeasors was of no interest to the Commission”. It was at least arguable that the Decision was binding on this issue and, in that case, any evidence to contradict the Decision’s findings would not be admissible. In addition, the question of the extent to which the Commission’s findings are binding is a question of English and/or EU law, which would be better determined in England than in Asia. However, on the evidence available to him, the judge was entitled to reach the conclusion he did.
The CoA was sceptical that, as LG argued, there would be significant further evidence regarding the culpability of the cartelists given that LG had sought immunity in the public enforcement proceedings which carries a condition that it would fully co-operate with the Commission and provide it with all available evidence. However, it accepted that the judge could have rationally reached a conclusion to the contrary, in particular given that Samsung’s counsel accepted there might be some additional documents available.
The outcome of this contribution claim is a useful reminder that a party wishing to resist a jurisdiction challenge must bring all relevant arguments to the table before the first instance judge and submit detailed evidence in support. It is also of note that, if sufficiently evidenced, the existence of similar proceedings in the jurisdiction as well as the existence of any binding regulatory decisions may prove to be weighty arguments in favour of claims being heard in England.
As for the contribution claims, the ability for claimants to bring proceedings against only one of the parties jointly and severally liable for the damage caused (such as in case of multi-party competition law infringements) has always been an important tactical tool. The claimants are able to avoid the strategic complications of pursuing their claims against impecunious defendants or those companies against whom the judgment would be difficult to enforce. It of course remains the defendants’ right to bring contribution proceedings against the other culpable parties independently of the underlying proceedings (and they have two years following the payment of damages in which to do so). Defendants have tended to bring contribution claims in parallel to the underlying proceedings (e.g. in the Trucks litigation) and in such cases both underlying and contribution proceedings have been jointly case managed by the courts. It is therefore unlikely that the judgments will lead to a very marked difference in approach going forward.