Bim Kemi AB v Blackburn Chemicals Ltd

Under the Henderson v Henderson principle, a later defence is barred only where pursuing it would constitute an abuse of the court’s process. The inquiry is broad and merits-based, requiring consideration of all the circumstances, including fairness, harassment, finality and the public interest.

A defence based on an allegedly illegal agreement may justify allowing the issue to be raised despite earlier omission, particularly where the illegality concerns a prohibitory and penal competition provision protecting the public. A party that introduced a competition-law defence late in the proceedings cannot fairly prevent the other party from relying on the same defence after the first party abandons it.

This was an application by Blackburn Chemicals Ltd to strike out parts of Bim Kemi AB’s proposed defence to Blackburn’s assessment of damages.

Earlier proceedings established contractual liability and left competition-law issues under Article 81 of the EC Treaty unresolved. Blackburn had originally pleaded that the agreement was void under Article 81, but later withdrew its competition-law case after succeeding on appeal. Bim then sought to rely on Article 81 to resist Blackburn’s counterclaim for damages.

The central issues were whether Bim was barred by cause of action estoppel or abuse of process, and whether the public policy underlying Article 81 required the court to hear the illegality defence.

1. Application dismissed. Bim was permitted to advance its Article 81 defence to Blackburn’s claim for damages.
2. The modern Henderson v Henderson principle is distinct from cause of action and issue estoppel, although it serves the same public interest in finality. The question is whether, in all the circumstances, the later plea is an abuse of process. The burden lies on the party alleging abuse.
3. The assessment is broad and merits-based. Relevant considerations include whether the point could and should have been raised earlier, whether allowing it would cause unjust harassment or manifest unfairness, the parties’ conduct, and the public and private interests involved.
4. The unusual procedural history was material. Blackburn introduced the Article 81 issue late, obtained a stay of that issue, required Bim to plead in response, and later abandoned its own competition case after succeeding on appeal. Bim’s reliance on the same issue was therefore not unfair or abusive.
5. Article 81 was prohibitory and penal, and protected the public from anti-competitive practices. Where a strong prima facie case of illegality remains capable of determination on full argument and evidence, the court should not exclude the issue merely because it was not previously pleaded.
6. The authorities on manifest illegality, including North Western Salt v Electrolytic Alkali Company and Bank of India v Transcontinental, concerned a different situation. They did not provide the appropriate test where estoppel or abuse of process was relied upon to exclude an arguable illegality defence.

The court reserved consequential orders and provisionally directed that the costs of the application follow the result.

The judgment records earlier decisions in the same litigation. Langley J determined contractual and market-share issues, and the Court of Appeal made orders on 13 February 2003 and 24 June 2003. Those orders left the availability of Bim’s Article 81 defence open. The present judgment determined Blackburn’s subsequent strike-out application.