Court of Appeal upholds striking out of economic tort claim

16/07/19

On 12 July 2019 the Court of Appeal handed down judgment in The Secretary of State for Health and Ors v Servier [2019] EWCA Civ 1160, in which it upheld Roth J’s August 2017 decision to strike out the Claimants’ claim based on the tort of causing loss by unlawful means (see here).

The Claimants allege that Servier made false representations to the European Patent Office and the High Court in the course of applying for, defending and prosecuting a particular patent in respect of a particular form of the pharmaceutical known as perindopril, which they allege led to a delay in the market entry of generic perindopril. They allege that this infringed the EU and UK competition law prohibitions against abuse of a dominant position. In addition, they allege that Servier’s conduct gave the Claimants a common law cause of action in the economic tort of causing loss by unlawful means.

On Servier’s application, Roth J struck out the economic tort claim on the basis that the majority of the House of Lords in OBG v Allen [2007] UKHL 21 decided that the tort of causing loss by unlawful means only arises where the defendant acts wrongfully as against a third party, thereby interfering with that third party’s freedom to deal with the claimant. The Claimants accepted that Servier had not interfered with the EPO or English Courts’ freedom to deal with the Claimants or indeed anyone else. On that basis, Roth J held that the tort was not made out.

On appeal, the Claimants argued that the references in OBG to a need for an interference with freedom to deal did not establish a binding precedent that such an interference was needed in all cases. They argued that such interference was merely one situation in which the more general test of interference with the actions of a third party in which the claimants have an economic interest could be satisfied. The Claimants argued that if the majority in OBG had intended to articulate a fixed requirement for an interference with dealings for all cases, such a rule should not be regarded as binding because it went beyond what was needed to decide the cases that were before the House in OBG.

The Court of Appeal rejected those arguments. It agreed with Roth J’s analysis of the majority’s reasoning in OBG, and found that the need for an interference with the third party’s freedom to deal with the claimant had been the subject of argument, analysis and conclusion in the majority speeches, and therefore constituted binding ratio. The Court also said that even if OBG was not a binding precedent, it would have struck out the claim as bound to fail, given the comprehensive analysis of a clear majority of the House of Lords in that case.

The judgment is here.