General Court of the EU: findings not binding in domestic proceedings

Findings of the General Court of the European Union were not binding in domestic proceedings under the EU principle of res judicata.

The General Court’s findings were not definitive, and may never become definitive, because they may be reversed or rendered redundant in the pending appeal before the Court of Justice of the European Union (CJEU).

A reference to the CJEU was unnecessary to decide the issues in the present case.

So held the Supreme Court, unanimously dismissing Servier’s appeal and upholding the Court of Appeal and the High Court of Justice:  Secretary of State for Health and others (Respondents)  v Servier Laboratories Ltd and others (Appellants) [2020] UKSC 44.

The EU principle of res judicata applied only to judicial decisions which had become definitive, either after all rights of appeal had been exhausted or after the time limits for exercising those appeal rights had expired.

The claimants in the domestic proceedings, the respondents to the appeal before the Court, were the national health authorities of England, Wales, Scotland and Northern Ireland.

The Appellants, Servier, developed and manufactured the drug Perindopril which fell within a class of drugs known as ACE inhibitors.

The claimants issued proceedings in England and Wales alleging that Servier had (i) breached Art.101 of the Treaty on the Functioning of the European Union (TFEU) and/or Chapter 1 of the Competition Act 1998 (the 1998 Act) by entering into anti-competitive agreements with potential generic manufacturers and/or suppliers, and (ii) abused its dominant position in the market contrary to Art.102 TFEU and/or Chapter 2 of the 1998 Act.

The national health authorities contended that this allegedly unlawful conduct had delayed the entry of cheaper generic versions of Perindopril onto the UK market which had, in turn, caused the claimants to suffer substantial financial loss.

Servier’s conduct in relation to this product was investigated by the European Commission (the Commission).

On 9 July 2014 the Commission issued a Decision which found that Servier had infringed Arts.101 and 102 TFEU.

Seeking to annul this decision, Servier appealed to the General Court which upheld all but one of the Commission’s findings of infringement of Art.101 TFEU, but found that Servier had not infringed Art.102 TFEU because the relevant product was not limited to Perindopril but extended to ACE inhibitors generally.

Servier did not have a dominant position in that wider market.

The Commission and Servier  appealed to the CJEU.

Because of significant overlaps, the domestic proceedings could not proceed to a final trial until the EU proceedings had been resolved.

However, Servier was granted permission to plead that the claimants failed to take reasonable steps to encourage switching from the prescription of Perindopril to cheaper generic ACE inhibitors.

Servier asserted that, even if liability and causation were established, the claimants’ damages should be reduced or extinguished (i) because the claimants failed to mitigate their loss; (ii) for contributory negligence; and (iii) because the losses claimed were too remote.

It was determined that there should be a trial of preliminary issues relating to this argument.

Servier contended that certain findings in the judgment of the General Court (particularly concerning the extent to which Perindopril could be substituted for other ACE inhibitors) were binding on the domestic courts in the preliminary issues trial.

But the Court held that the claim in domestic proceedings did not call into question or undermine the General Court’s judgment or its consequences in any way.

Nor did they contradict the General Court’s decisions as to what needed to be done to comply with EU law.

The Supreme Court was satisfied to the standard of acte clair that the EU principle of absolute res judicata did not apply.