Flavio De Carvalho Pinto Viegas & Ors v Rosana Falcioni Cutrale & Anor

The court may order a limitation issue to be tried separately where it may dispose of the claim or resolve a major issue, materially reduce costs and trial time, and can be decided fairly without determining the general merits. Such applications require caution because apparently discrete issues may prove interlinked and bifurcation may cause delay or appeals. However, that caution does not displace the utility of a preliminary issue where a time bar may determine the litigation. Constructive knowledge under foreign limitation law may be assessed by reference to publicly available material and objective standards without resolving every underlying liability issue.

The claimants brought a large group claim for damages under Brazilian competition law, alleging that the defendants participated in an orange-pricing cartel between 1999 and 2006. The parties agreed that Brazilian law governed the claims, including a three-year limitation period under article 206 of Brazil’s Civil Code.

The defendants applied under the Civil Procedure Rules for limitation to be tried as a preliminary issue. They argued that the claims were statute barred because the relevant knowledge arose no later than the publicity surrounding Operation Fanta and related administrative proceedings in 2006. The claimants argued that limitation depended on resolving wider factual issues concerning the cartel, the TCCs and CADE’s Final Decision. The issue was whether limitation should be tried separately before the common liability issues.

1. Application granted. The limitation issues were ordered to be tried as a preliminary issue ahead of all other issues. The parties were encouraged to agree consequential directions.
2. Under Civil Procedure Rules 1998, rule 3.1(2)(j), the court may direct the trial of any issue separately. The court must proceed cautiously because an apparently discrete issue may later prove inseparably linked with factual or legal issues, and bifurcation may cause delay, expense or appeals. That caution should not deprive preliminary issues of their utility where a time bar or point of law may determine the case. The court applied the ten non-exclusive considerations summarised in Steele at [32].
3. The limitation question concerned when claimants were to be treated, under Brazilian law, as having become unequivocally aware of a potential competition-law violation, resulting damage and the identity of the alleged infringer. It was an objective constructive-knowledge inquiry, based on objective good faith and the average individual standard, rather than an investigation into each claimant’s actual knowledge.
4. The issue could be decided by construing the CADE Final Decision and, potentially, the TCCs, together with when those materials entered the public domain. It did not require determination of all general liability issues or examination of confidential material unavailable to persons said to possess constructive knowledge.
5. A separate trial could dispose of the claims if the limitation defence succeeded, or finally resolve a major issue if the claimants succeeded. It was estimated to require three to four days, compared with at least twelve weeks for a combined trial involving costs of millions or tens of millions of pounds. The likely saving in cost and court resources outweighed the risk of less than a year’s delay, including the claimants’ concerns about the age and death of some claimants.

This was a first-instance interlocutory decision on the defendants’ application for a separate preliminary trial of limitation issues.