The Bottom Line
- Home-Court Advantage: Businesses under investigation can now sue a foreign EU regulator in their own home country’s courts for damages caused by the regulator’s actions.
- Increased Strategic Options: This ruling gives your company greater flexibility and leverage when challenging the conduct of authorities during cross-border inspections, such as dawn raids.
- New Risk for Regulators: National authorities conducting investigations in other member states must now account for the risk of being sued in those foreign jurisdictions, not just their own.
The Details
The case centred on a classic cross-border enforcement scenario. The Slovak competition authority conducted a dawn raid on the premises of a company in Slovakia. During the inspection, an official allegedly asked an “unlawful question” that was directly related to the investigation’s subject matter. The company, whose centre of interests was in the Czech Republic, claimed it suffered financial damage there as a result—specifically, by incurring costs for legal advice to deal with the situation. The question before the court was simple but critical: could the company sue the Slovak authority for damages in the Czech Republic, where the harm was felt, or was it forced to litigate in Slovakia, where the raid took place?
The Court of Justice of the European Union (CJEU) provided a clear answer, siding with the company. The Court interpreted a key jurisdictional rule in the “Brussels I (recast)” Regulation, which governs cross-border civil litigation. This rule states that in matters of tort or delict (wrongful acts causing damage), a person may be sued in the courts for the “place where the harmful event occurred.” The CJEU clarified that this phrase covers both the location of the event giving rise to the damage (the raid in Slovakia) and the place where the damage itself occurs (the financial hit in the Czech Republic).
This judgment significantly empowers businesses facing regulatory scrutiny from abroad. By confirming that financial damage, such as incurring legal fees or operational disruption, is considered to have occurred at the company’s seat or “centre of interests,” the Court gives the aggrieved company a choice of where to bring its claim. This prevents a situation where a business is forced into an away game, litigating against a public authority in its own national courts. For regulators, the message is equally clear: your actions abroad can have direct legal consequences in those foreign courts, adding a new layer of accountability to cross-border enforcement.
Source
Source: Court of Justice of the European Union
