International Business Law Advisor : Miami International Business Lawyer & Attorney : Santiago Cueto Law Firm : Florida and Global Business Litigation

 American innovation spawned the personal computer, the internet and the Ipod.  All radically changed the way the world accessed information. Under a proposed EU Directive, another American innovation—the class action lawsuit—may radically change the way EU consumers' access justice.

Under the proposal presented by the EU Commission, consumers who suffer at the hands of companies that fix prices or abuse their dominant market position could soon find it easier to launch class action lawsuits for compensatory damages. In an attempt to avoid any abuse of class actions, however, the draft directive underlines that only state bodies or non profit-making organizations appointed by national governments in the EU can bring class action lawsuits in national courts. If adopted as a Directive by the European Commission, EU Member States would be required to implement it or face heavy fines.

In response to increased discontent among EU consumers and entrepreneurs over the rise of antitrust violations, the European Commission published a White Paper, Damage Actions for Breach of the EC Antitrust Rules to explore the utility of class action lawsuits in quelling anticompetitive behavior. The EU Commission wrote:

“With respect to collective redress, the Commission considers that there is a clear need for mechanisms allowing aggregation of the individual claims of victims of antitrust infringements. Individual consumers, but also small businesses, especially those who have suffered scattered and relatively low-value damage, are often deterred from bringing and individual action for damages by the costs, delays, uncertainties, risks and burdens involved. As a result, many of these victims currently remain uncompensated.

Opening the court house gates to private damage actions for alleged violations of EU antitrust law would represent a fundamental shift in EU competition policy on two fronts. First, the proposal would allow victims of EU antitrust violations to recover the estimated billions of Euros they forgo each year under the current enforcement regime.

Second, the proposed change would shift the Commission's overwhelming workload to private plaintiffs. As reported in the Financial Times article, Brussels accepts Microsoft’s browser offer and in the New York Times article, Europe Fines Intel $1.45 Billion in Antitrust Case, resources dedicated to the EU's antitrust enforcement efforts have been pushed to the brink. 

Opening the doors to class action redress, would best serve the interests of victimized EU citizens in the following ways:

1. Consumers would be allowed to  create an effective system of private enforcement by means of  lawsuits that complement, but do not replace or jeopardize, public enforcement;
2. Companies would be persuaded to play by the rules, as a greater number of antitrust violations would be detected, which would greatly increase the costs associated with noncompliance; and 
3. EU enforcement would become streamlined and produce beneficial effects in terms of deterrence of future infringements and greater compliance with EU anticompetition policy.

While opponents of the proposed directive fear that the EU would become a forum shopping haven for unscrupulous U.S. attorneys, the export of  American ingenuity by way of innovative jurisprudence will prove to be a positive evolutionary step in EU anticompetition law.

Trend to Watch: Look for the EU to Implement Collective Redress Mechanisims to Complement Existing Anticompetition Laws 

     -Santiago

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 Nothing is more interesting than the intersection of international business law and sports. Add Charlize Theron into the mix and things get, well, even more interesting. Over the weekend, Ms. Theron, representing the host country South Africa, announced the draw for World Cup 2010, the biggest sporting event on the planet.

If you haven’t already, you can read all about the draw in the Wall Street Journal article The Envelopes, Please and in the Financial Times article English hopes rise after World Cup draw. Also be sure to check out the Fédération Internationale de Football Association (FIFA) website, the go-to site for World Cup information.

EU Sports Are Big Business

Because of the massive revenue the World Cup generates for each participating nation, soccer  has become big business to which the rules on competitive and anti-competitive behavior apply. How these rules are applied often determine which teams ultimately qualify for the world’s greatest sporting event.

No region has more at stake than the EU, which is sending many of its members to South Africa. With so much on the table, it is unsurprising that the business decisions of EU football clubs are often contested under anti-trust laws. This is particularly true in the areas of M&A, salary caps and media rights.  

EU Anti-Competition Law Increasingly Applied to Sports

England, Spain, Germany, France and Portugal are considered the European Union’s top contenders to win the World Cup in 2010. And all of them are subject to the same EU Anti-Trust laws, which are contained in Articles 81 and 82 of the EEC, which state:

Agreements, decisions and concerted practices between undertakings which have as their object or effect the prevention, restriction or distortion of competition are prohibited by art. 81 (1) of the Treaty of Rome if and in so far as they may affect trade between EC member states.”

The following is an overview of the areas and issues where EU Anti-trust laws are frequently invoked to contest the business decisions made by EU football clubs.

• M&A Activity: At present, no two or more clubs participating in a UEFA club competition may be directly or indirectly controlled by the same entity or managed by the same person. However, one might question how legitimate this rule is given the broad definition of 'control' that is typically adopted in the context of mergers. Should an investment fund be prevented from buying more than one club, if it is just a financial holding company with no right to influence the club's management?
• Salary Caps: Salary caps have an inherent potential to breach EC competition rules. They may constitute an anti-competitive agreement or concerted practice between national or international sporting associations and either clubs or players' unions under article 81(1) EC. Equally, there is a potential for violation of article 82 EC, given that sporting associations can be dominant in the market for the competitions they control. Need I mention the Yankees?
• Media Rights: The restricted structure of the broadcasting market has frequently raised issues under articles 81(1) and 82 EC. Team owners in the industry show a clear willingness to seek redress under EC law when their commercial interests are threatened, and may be even more likely to do so as bottom lines are squeezed in the current recession. As the largest revenue stream in sport, media rights will continue to be the focus of disputes across the EC and beyond. The next major battlegrounds are likely to include access to content on the internet and territorial broadcasting restrictions

As these issues illustrate, competition law remains at the heart of EU sports law disputes and often impact how each national team fills its roster. Ultimately, this plays a central role in which teams qualify for the World Cup.

Trend to Watch: Look for EU Anti-Competition Law to Be Increasingly Applied to Sports …And Look for Spain to Take the World Cup in 2010.

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I received several calls today from clients doing business in the EU about the Lisbon Treaty and what it means for their European business operations. In the short term—absolutely nothing. The Lisbon Treaty is essentially just a clarification and simplification of previous European treaties into one single document.

In the long term, however, the Treaty is a boon for business. Why? Because it will galvanize and embolden the EU to rise again as a major global player in an arena currently dominated by China, India and Brazil.  Until now, Europe has been largely stagnant in comparison to these economic juggernauts. In fact, Gross domestic product in the EU is expected to rise by only about 0.7 percent in 2010 and official data show unemployment is expected to rise above 10 percent next year.

You can read more about the Lisbon Treaty's international debut in the BBC article EU Lisbon Treaty Comes into Force and in the Irish Times article Lisbon Treaty Comes into full force in the EU.

The immediate aim for the Lisbon Treaty is to streamline EU decision-making, which had become increasingly unwieldy as it took on an additional 10 countries in the past five years.  The long term aim of the Treaty is to lay the foundations for the EU's efforts to wield more economic influence in today’s globalized environment.   

Fredrik Reinfeldt, the Swedish prime minister who is currently steering the EU presidency said earlier today:

A new era of European co-operation begins today. With the Treaty of Lisbon, EU citizens get a union that can meet the demands of the 27 member states for transparency, democracy and efficiency; a union that can better meet the challenges of globalization."

These are great words, but it will take more than a speech to bring the EU in line with the rest of the world's competitive prowess.

From a judicial standpoint, the Treaty makes some minor changes. The Court of Justice has published this very useful short guide to the changes that the Lisbon Treaty makes to the Court of Justice itself, the General Court, as the Court of First Instance is now known, their jurisdiction and their procedures.

Overall, the Lisbon Treaty is simply a matter of form over substance for the time being and it will have marginal effect on business in the upcoming year.

Trend to Watch: Look for Europe to Wield More Economic Force in Late 2010 and Early 2011.

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As recently reported in the Wall Street Journal in the article The Last Hurdle for the Lisbon Treaty, Ireland’s Oct. 3 approval of the Lisbon Treaty strengthened the odds for the European Union to gain global clout on issues from the economy and climate change to war and peace. An excellent overview on the Treaty is provided by BBC in its article Q&A: The Lisbon Treaty.

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The last post discussed the enforcement of Chinese judgments in the United States. In this post, I’ll head across the pond to discuss the implications of a recent English High Court decision on the enforcement of judgments and Freezing Injunctions.

EU Enforcement Law

In D’Hoker v Tritan Enterprises Limited [2009] EWHC 948 (QB), the High Court examined the problem encountered with the "Brussels Regulation" in the context of Freeze Orders. The Brussels Regulation is the principle mechanism for the enforcement of judgments between Member States within the European Union and requires Member State to recognize and enforce judgments of other Member States. The circumstances in which such reciprocal enforcement of judgments is not required include the following:

1.  Where enforcement of the relevant judgment would be manifestly contrary to public policy in the Member State in which recognition is sought (Article 34(1) Brussels Regulation); and
2.  Where the judgment in question was granted ex parte and is intended to be executed without notice (Denilauler v SNC Couchet Fréres (1980) ECR 731).

As discussed in D'Hoker,  these exceptions can create difficulties when enforcing freezing injunctions under the Brussels Regulation because the public policy of each Member State must be examined and ex parte orders are not permitted. So how does one enforce a Freeze Order in the United Kingdom while avoiding these pitfalls?

Public Policy

In considering the public policy exception outlined, above potential claimants should first determine whether the terms of the proposed injunction would offend public policy in any Member State in which it is anticipated that the injunction might need to be enforced.

Second, Claimants should determine whether the injunction was modified after it was initially filed because the Brussels Regulation provides no mechanism for dealing with an order or a judgment that was subsequently modified. The implication of this is that claimants must, upon the modification of a freezing injunction, re-register it as if it were a fresh judgment.

Ex Parte Orders

Orders made without notice fall outside the Brussels Regulation (see Denilauler above) and ex parte freezing injunctions will therefore continue to be treated as unenforceable in England.

An alternative for claimants wishing to enforce a European freezing injunction in England, is to apply for a free-standing injunction in support of foreign proceedings. In England, section 25 of the Civil Jurisdiction and Judgments Act 1982 (Interim Relief) Order 1997) provides that courts may grant interim relief in support of foreign court proceedings.

An application for such a free-standing injunction is not necessarily straightforward, however, and in most cases will be more expensive and time-consuming than enforcement under the Brussels Regulation.

Conclusion

The D’Hoker case demonstrates that the enforcement of freezing injunctions raises particular difficulties under the Brussels Regulation. As a result of those difficulties it is not always a simple matter to ensure the reciprocal enforcement of freezing injunctions within the European Union.

Trend to Watch: Look for the English High Court to Clarify the Brussels Regulation as they apply to Freezing Injunctions

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To allay fears concerning the handling of users’ personal information, European  regulators have established operating guidelines for social-networking web sites to ensure they comply with the region's privacy laws. As reported in The Wall Street Journal, EU Lays Out Web Privacy Rules, the guidelines were established to shore up EU data privacy laws already in place.

Although the new EU guidelines are specific to social networking sites, they highlight the general rigidity of EU privacy laws. These laws have significant implications for litigation based in the United States. Collecting evidence for U.S. litigation among domestic states can be a challenging task. The task becomes backbreaking when dealing with EU nations. While not an impossible endeavor, it does require that attorneys become familiar with the requirements of EU data privacy law to ensure that data will be available upon request. Doing so will ensure that an e-discovery demand won't expose their clients to prosecution for violation of EU data privacy laws.

Any litigation reaching the European continent promises to frustrate and confound with a level of complexity not normally present in a purely American lawsuit. It is imperative that counsel confer with their clients as to the laws that will govern data created in the EU. This will guide clients in implementing procedures designed  to streamline the flow of data should litigation ever occur. It is equally essential to have access to lawyers versed in European law when litigation does arise. In this manner, the e-discovery can be conducted in the EU itself, which will limit the risk of any liability for  violation of its data privacy laws.

Privacy laws in the European Union derive from EU Directive 95/46/EC and protect personal data from disclosure in virtually all cases. The protection afforded by this directive is in sharp contrast to Federal Rule of Civil Procedure 26, which mandates that parties disclose relevant information regarding “any matter not privileged.”

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