22 April 2006

Euro Defences: Sportswear appeal allowed

In my post of 6 Oct 2005 "Euro Defences: Another one bites the Dust", I noted Mr Justice Warren's decision in Sportswear Company Spa and another v Ghattaura [2005] EWHC 2087 (Ch) (3 Oct 2005) in which the judge struck out a Euro defence. The defendants appealed that decision and I must now report that the Court of Appeal has allowed the appeal (see Sportswear SpA and another v Stonestyle Ltd [2006] EWCA Civ 380 (11 April 2006).

As I have already set out the issues in my earlier post, it is enough for me to summarize the reasoning of the Court of Appeal. Lord Justice Lloyd said at paragraph [71]:
"it seems to me that the judge was wrong to conclude that the defence was bound to fail, on the basis that there was no arguable case of an adequate nexus between the anti-competitive agreement alleged, on the one hand, and the issue whether the Respondents have legitimate reasons to oppose further distribution."
Lord Justices Longmore and Waller agreed. The tragedy of this case was that it was due to come on for trial in May. Reinstating the deleted paragraphs will require more evidence at greater cost. The Lord Justices were very careful to stress that the issue was not whether the point would succeed but whether it was doomed to fail. It may therefore be irrelevant to the eventual outcome. However there was more at stake in the appeal than that particular Euro defence. Someone else may make something of the point in another action.

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