Mackrell Turner Garrett

 
 

High Court kicks out Microsoft’s claim on jurisdiction grounds 

In a substantial judgement recently handed down by Mr Justice Marcus Smith sitting in the Chancery Division of the High Court, the scope of an arbitration clause on non-contracting parties is determined – Microsoft Mobile OY (Ltd) v Sony Europe Ltd and others [2017] EWHC 374 (Ch).

The hearing lasted five days and the claim centred on allegations by Microsoft that the Defendants had caused loss by engaging in anti-competitive conduct relating to the sale of Li-ion Batteries over a period of 12 years. The Claim was valued at £1/2 billion.

Background

In 2001 Nokia and the Sony Corporation (the Second Defendant) concluded a Product Purchase Agreement for the Li-ion Batteries; this agreement contained an English choice of law clause and required any dispute to be resolved by way of arbitration in the International Chamber of Commerce (ICC). Microsoft became the assignee of these rights following its purchase of parts of Nokia in 2013 and therefore could bring claims in contract against Sony Corporation and claims in tort against the other three Defendants. Sony Corporation is a subsidiary of the Sony Europe Limited (“Sony Europe” the First Defendant).

Pleadings

The pleadings were typical of cartel claims and included allegations that the Defendants exchanged commercially sensitive information; agreed to fix prices; agreed to restrict the output of the product; agreed to limit the product’s technological development; agreed to share or allocate markets and/or customers and engaged in bid-rigging.

Jurisdiction

Microsoft’s sole objective in claiming against Sony Europe rather than Sony Corporation with whom it has the agreement to arbitrate was to bring the Claim and the other Defendants within the jurisdiction of England & Wales. It was noted by Justice Marcus Smith that the location of the parties, witnesses and documents often pointed towards Japan or Korea.

Outcome

It was determined that the agreement between Microsoft and Sony Corporation to arbitrate in the ICC also extended to the parent company Sony Europe and therefore proceedings against all Defendants were stayed in favour of ICC arbitration with English law.

Aside from being a helpful recent authority on the satisfaction of the English jurisdictional gateways, it determines that an arbitration clause between two parties can affect the jurisdiction in which a claim is brought against non-signatories, in this case a parent company. The claims in tort against the remaining Defendants fell away as not falling within the Jurisdiction or the arbitration agreement.

Kirsty WrightKirsty Wright
Litigation Solicitor
Tel: 00 44 (0) 207 240 0521
Email: Kirsty.Wright@mackrell.com

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