Ryanair Ltd v Esso Italiana Srl

A contractual jurisdiction clause covering disputes “under” an agreement does not ordinarily extend to a purely non-contractual competition-law damages claim merely because the claimant purchased goods under that agreement. The presumption favouring one-stop adjudication depends on a contractual dispute or closely analogous contractual claim.

A contractual price-adjustment clause, directed to governmental measures requiring contract prices to conform with the law, does not cover losses caused by a secret cartel. Competition law invalidates the cartel arrangements and supplies a statutory damages remedy; it does not make the customer’s contractual price unlawful. A term duplicating that statutory remedy will not be implied where it is unnecessary to give the contract business efficacy.

Ryanair claimed damages from Esso Italiana for losses allegedly caused by an Italian jet-fuel cartel prohibited by article 101 of the Treaty on the Functioning of the European Union. Its claim covered fuel supplied by Esso Italiana and fuel supplied by other alleged cartel members.

The parties’ supply agreement was governed by English law and submitted disputes “under” the agreement to the non-exclusive jurisdiction of the English courts. Ryanair argued that its statutory claim fell within that clause because the agreement also provided for the adjustment of prices that did not conform to applicable laws.

Eder J accepted jurisdiction in [2012] EWHC 200 (Comm). Esso Italiana appealed. The central issues were whether the price-adjustment provision supported an arguable contractual claim and, if not, whether the jurisdiction clause nevertheless covered the statutory claim.

1. Appeal allowed. The price-adjustment provision did not support a contractual claim for cartel-related losses. It contemplated a law, regulation or governmental order whose known effect required the parties to adjust a contractual price. A cartel infringement ordinarily operates secretly. Article 101 does not render the customer’s contractual price unlawful or require its adjustment to a lawful norm. It invalidates the arrangements between cartel participants and supplies a damages remedy for resulting loss.

2. The cancellation mechanism confirmed that construction. It granted the option to the party adversely affected by the governmental interference with the agreed price. Ryanair’s construction would irrationally give the cartel participant the relevant option and could not be reconciled with the language or commercial purpose of the clause. The contractual claim therefore had no reasonable prospect of success.

3. No term that prices would remain unaffected by infringements of EU competition law could be implied. Article 101 already supplied an appropriate statutory remedy. There was no necessity to duplicate that remedy in every affected supply contract.

4. The statutory claim consequently fell outside the jurisdiction clause. The close-connection principle stated in The Angelic Grace, [1995] 1 Lloyd’s Rep 87 (CA), concerns parallel or closely analogous claims in contract and tort. It provided no assistance once the alleged contractual claim failed.

5. The presumption in Fiona Trust that rational businesspeople intend one-stop adjudication is particularly associated with international arbitration agreements. It did not justify treating a non-exclusive clause for disputes “under” a supply agreement as extending to a wholly non-contractual claim concerning an Italian cartel, multiple suppliers and losses extending beyond the contractual supplies.

6. The court was entitled to examine the viability of the contractual claim as part of the jurisdictional challenge. Raising an argument legitimately connected with that challenge did not amount to submission to the jurisdiction. Patten and Tomlinson LJJ agreed with Rix LJ.

1. Court of Appeal (Civil Division): In [2013] EWCA Civ 1450, the court unanimously allowed Esso Italiana’s appeal. It held that the contractual claim had no reasonable prospect of success and that the statutory competition-law claim fell outside the English jurisdiction clause.
2. High Court, Commercial Court: In [2012] EWHC 200 (Comm), Eder J held that the statutory claim was sufficiently connected with the asserted contractual claim to fall within the jurisdiction clause.