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Rail Cartel: Which court is competent for recovery claims against a former manager?

This is the first case in Germany in which a company has claimed for recovery from a former manager because he (allegedly) was responsible for the company infringing competion law. The decision of the Federal Labour Court (Bundesarbeitsgericht) was thus eagerly awaited.

By judgment of 29 June 2017 (docket number 8 AZR 189/15), the Federal Labour Court annulled the former judgment and referred it back to the court of appeal in order to make further determinations. According to the published press release it could not be excluded that a decision cannot be made without without prior clarification of competion law. In this case, the civil courts (chambers specialised in competion law), not the labour courts, would be solely competent.

Between 2001 and 2011, manufacturers of train rails participated in a range of bid-rigging (Angebotsabsprachen) and market sharing agreements which harmed railway infrastructure operators. The defendant was a manager with responsibilities in human resources, finance, IT and control between 1999 and 2011. The Plaintiff and the defendant disagree whether the manager was actively involved in, or at least aware of, anti-competitive activity. The plaintiff claimed recovery in the amount of EUR 191,000,000.

The previous courts rejected the claim and held that a fine imposed against a company may not be recovered from an individual. They argue that it would undermine legislative intent to fine individuals and companies separately if a company is able to recover its fine from an individual. However, this issue is considered fundamental and thus the appeal to the Federal Labour Court was permitted.

The company’s recovery claim therefore remains a possibility. The case will be referred back to the court of appeal and it will be several months until a decision can be made. If the labour courts are not competent, the case will have to be re-examined by the civil courts.