Regional jurisdiction under private international law: the AG opinion in the Apple case

Advocate-General Campos Sánchez-Bordona rendered an interesting opinion on how article 7(2) Regulation no. 1215/2012 (“Brussel I Recast”) should be applied in collective actions. The Amsterdam District court had referred questions to the ECJ in a case against Apple.

In essence, the Advocate-General opines:

• In case of a tort-based collective action claim, the place of establishment or residence of the purchaser may serve as the place where both the harmful event and the damages occurred. Thus, the court of the place of residence/establishment of the victim has both international and territorial jurisdiction.
• This reading of article 7(2) Brussel I Recast is no different if the claim is initiated by a legal entity that represents the collective interests of many, such as in a collective action under the Dutch collective action regime. This means that a representative organization must file a collective action in all different districts of a Member State, in order to represent all users that reside in the different districts.
• However, the Advocate-General also finds that nothing in Brussel I Recast precludes the application of a rule such as the one laid down in 220 of the Dutch Code of Civil Procedure (“DCCP”). This Dutch rule allows courts to transfer connected claims to a single court. Thus, when cases are filed in different district courts (based on article 7(2) Brussels Recast I), the courts can decide to refer the cases to a single court. Whether the rule of referral must be applied should be dependent on the weighing of the interests of effectiveness and predictability of the Brussel I Recast on the one hand and the sound administration of justice on the other.

If the Advocate-General will be followed by the ECJ, this would mean that article 7(2) of the Brussels I Recast Directive is ill-suited for collective actions regimes. Any jurisdictional rule which designates the court where each individual victim is domiciled or established as the only court with both international and territorial jurisdiction, is bound to be problematic in the context of collective claims on behalf a large group of victims. Fortunately, the Advocate-General allows the Dutch courts to resolve the matter via an internal reference of claims to one single court. But as I will explain in my comments on the case, I hope that the ECJ will find a more elegant solution.

Background of the case

Two foundations initiated collective actions under the Dutch class action regime – the “WAMCA” – against Apple on behalf of all users of Apple products and services through the Dutch App Store (“Dutch Apple Users”). In the WAMCA-proceedings, the foundations, inter alia, argue that Apple has infringed and continues to infringe European competition law, in particular article 102 TFEU. The foundations assert that the infringement causes damage to all Dutch Apple Users, and compensation for such damage is claimed.

The foundations base the Amsterdam district court’s jurisdiction on article 7(2) Brussel I Recast, which reads “A person domiciled in a Member State may be sued in another Member State: (…) in matters relating to tort, delict or quasi-delict, in the courts for the place where the harmful event occurred or may occur”. Apple contested the jurisdiction of the Amsterdam district court, arguing inter alia that article 7(2) Brussel I Recast not only designates the court that has international jurisdiction, but also determines which court has regional jurisdiction. Thus, Apple argues, the Amsterdam district court does not have jurisdiction in relation to the claims of all Dutch Apple Users, but only in relation to those domiciled in Amsterdam.

For context some relevant facts: 

To purchase apps from Apple through the Apple Store, one must have an Apple account (“Apple ID”);

• The Apple ID is linked to a country or region (in this case the Netherlands);
• Apple Ireland acts as app supplier for European users of the App Store;
• Apple has an App Store for every country;
• Apple redirects Apple users with an Apple ID linked to the Netherlands to the Apple Store Netherlands;
• In order to change the country to which the Apple ID is linked to, users need to accept new terms and conditions and have a payment method valid in that country.

The preliminary questions

The Amsterdam district court decided to refer questions regarding its jurisdiction in cases like this, which means in cases with:

(i) claims for compensation of damages due to the alleged infringement of article 102 TFEU by means of sales of digital products or services through an online platform, which platform targets all users of a member state, by an entity from another member state; and

(ii) where the claim is brought as a collective action within the meaning of article 3:305a of the Dutch Civil Code (“DCC”).

In essence, the court asked:

• how to determine the place where the harmful event occurred (Handlungsort) and the place where the damages occurred (Erfolgsort) in a case as described above under (i);
• whether it is relevant that the claim is brought by a representative organization, which represents the collective interests of numerous users domiciled in different court districts; and
• whether a provision allowing the referral of cases to a single court when multiple courts have been seized, would be contrary to article 7(2) Brussel I Recast.

Opinion of AG Campos Sánchez-Bordona

Starting off with some general observations, AG Campos Sánchez-Bordona considers that article 7(2) Brussel I Recast contains a special rule, that is to be interpreted strictly and independently without reliance on national concepts. He asserts that the rule in question is not designed to favor the victim, but to designate a single court with a particularly close connection to the dispute by reason of proximity to objective elements, and as such the rule serves to contribute to the sound administration of justice. The rule designates directly and immediately the court with both international and territorial jurisdiction.

Handlungsort

The AG continues that, assuming that the event causing the harm is the sale of apps via App Store NL by Apple Ireland, the fact that Apple Ireland specifically targets users based in the Netherlands and restricts access to App Store NL, is insufficient to justify jurisdiction in the Netherlands. This approach would fail to identify a specific court, which article 7(2) Brussel I Recast intends to do. Therefore, one should, according to the AG, instead rely on the ‘location fiction’ that the user at the time of the purchase of the relevant app through the Apple Store NL was located in the Netherlands. Because it is impossible to identify where in the Netherlands the device was at the time of the purchase and acknowledging that the sale and purchase takes place in the digital universe and not in a material space, a location fiction should be applied that the place where the harmful event occurred is at the user’s place of residence.

Erfolgsort

In relation to the question where the damage occurred in cases where the damage essentially consists of increased costs as a result of artificially high prices, jurisdiction is based on two elements: (i) the affected market and (ii) the place where the particular victim suffers harm. Furthermore, the unlawful act has resulted in a transfer of the victim’s assets to the infringer. Therefore, the victim’s place of domicile or establishment, within the affected market, may also be considered to be the place where the damages occurred in line with the ECJ’s case-law.

Special rules for collective actions?

The Advocate-General states that the meaning of article 7 (2) Brussels I Recast should not be understood differently in case of collective actions than in individual actions. He argues that, firstly, the collective nature of the proceedings does not change the subject matter of the proceedings. The proceedings still aim to obtain compensation for damages for the Dutch Apple Users. Secondly, the determination of the place where the harmful event occurred cannot depend on the structure of proceedings, which varies per EU member state. The AG adds to this, however, that this can be different if a member state has designated a single competent court to hear collective actions (which the Netherlands has not).

National rules for internal referral

In relation to the Dutch rules on the transfer of connected cases to a single court (Article 220 DCCP), the AG opines that nothing in the Brussel I Recast precludes the application of such a rule. The application of this rule should in his view depend on the weighing of the interests of effectiveness and predictability of the Brussel I Recast on the one hand and the sound administration of justice on the other.

Comments

I have doubts about the AG’s view that article 7(2) Brussel I Recast does not allow multiple courts to be competent courts for the entire representative action in collective actions such as the WAMCA. Granted, when there is only one plaintiff, article 7(2) Brussel I Recast designates a single court. But in my opinion, that should not preclude the representative organization from choosing one of the courts with jurisdiction as the competent court for the entire representative action. Especially, given the fact that article 7(2) Brussel I Recast aims to contribute to the sound administration of justice. I further fail to see why this would be unpredictable for the defendant, given that, in such a case, the court that is chosen already has jurisdiction in relation to at least part of the group (the part that is domiciled in the court district of the court seized).

However, even if we assume that the designation of multiple courts is an undesirable and unintended outcome, as the AG opines, any jurisdictional rule which designates the court where the victim is domiciled or established as the only court with both international and territorial jurisdiction, is bound to be problematic in the context of collective claims on behalf a large group of victims. This because in collective actions, the victims are more often than not domiciled throughout the territory of a Member State. Admittedly, to the extent that the victims all reside within the same country, the Advocate-General does provide at the very least a stop-gap solution to the problem. But the solution is not very satisfying.

This is partly due to the fact that this case concerns digital services and products offered on an online platform, and the fact that a collective claim – by its very nature – aims to bring a single case before a single court on behalf of a large group on individuals which may reside anywhere.

While article 7(2) Brussel I Recast aims to designate a court with a particular close connection to the dispute, it is less likely that a specific court has such a particularly close connection to the harmful event, when the harmful event took place in the digital space.

The strict interpretation of article 7(2) Brussel I Recast as suggested by the AG leads to an outcome that is cumbersome and costly for the plaintiff. In the Netherlands, the outcome will mean in practice that in tort-based WAMCA-cases against non-Dutch defendants, the representative organization will often need to serve 11 materially identical writs – one for every court district. Next, the plaintiff will then have to request 10 of the 11 courts to refer the case to the court that was first seized with the same matter. 

This situation is unnecessarily burdensome for the plaintiff (i.e. the representative organization) and defendants alike. The resulting delay of the proceedings may be welcome for certain defendants, but it comes at a risk that plaintiffs may simply choose to litigate the same matter in different courts at the same time. Thus, defendants may be confronted with litigation on multiple fronts. It should be noted that the Dutch legislator had intended to prevent that.

In closing, I note that the Advocate-General discusses different possible solutions to the challenges posed by article 7(2) Brussels I Recast, but one solution was not discussed. That is unfortunate, because this solution may be a way out. When (i) the damages are the result of a harmful event that occurred in the digital space, (ii) the users of a particular country were targeted and (iii) when dealing with a collective claim, why not rely on the fiction that the harmful event took place in the capital of the country that was targeted? Although this solution relies on a fiction, so does the one proposed by the Advocate General, who suggests relying on the ‘location fiction’ that the user at the time of the purchase of the relevant app through the Apple Store NL was located in the Netherlands. My proposed solution is predictable (if you target the online market of a Member State you may be sued before the court of the capital city of that Member State) and it benefits the sound administration of justice.

The ECJ will provide the final decision on the matter at hand, and we look forward to updating you as soon as we learn more.