Brick Court silk proves causation of loss is vital in damages claims

Claimants must prove causation of loss if follow-on damages claims are to be successful, the Court of Appeal (CoA) has ruled.

Orrick Herrington & Sutcliffe (Europe) partner Douglas Lahnborg instructed Monckton Chambers’ Paul Lasok QC to represent appellants Enron Coal Services (ECS) in its case against English, Welsh & Scottish Railways (EWS).

In 2006, EWS was found to have abused its dominant position in the market for coal haulage by rail in the UK. One of the abuses found by the ORR was that EWS had in place a practice of discriminatory pricing against ECS.

In December 2009, the Competition Appeal Tribunal rejected ECS’ follow-on claim for damages on the basis that it failed to prove that EWS had caused the loss claimed.

ECS’s legal team argued that EWS had put it at a competitive disadvantage causing it to lose a tender for coal haulage issued by Eddison Mission Energy in 2001. Had it secured the tender, it was argued, ECS would have secured a four year ‘end-to-end’ contract.

It was further argued that the CAT was bound by all of the findings of fact made by the ORR in its decision. However, the CAT said any findings would be dependent on the facts of the case, and that regulatory findings of competitive disadvantage do not relieve claimants from proving the competitive disadvantage caused a demonstrable loss.

The CoA panel of three, which included Lord Justices Jacob, Lloyd and Patten, upheld the CAT decision unanimously. Lloyd LJ stated: “What the tribunal cannot adjudicate on, in a claim for damages, is whether there’s been any, and if so what, infringement. That’s the sole preserve of the court in a stand-alone claim.”

The ruling handed a victory to Brick Court’s Mark Brealey QC, who lead Maya Lester. The duo were instructed by Freshfields Bruckhaus Deringer partner Jon Lawrence.