Joint Venture Agreement for the development of software packages / Influence of the filing of a complaint by Claimant with the EEC Commission upon the jurisdiction of the Arbitral Tribunal / Power of the Arbitral Tribunal to examine ex officio whether an agreement falls under the prohibition of restrictive agreements of Article 85 of the EEC Treaty, yes / Public policy character of Article 85 / No violation of Articles 85 and 86

The dispute arose out of an alleged breach of a ten-year Joint Venture Agreement, signed in 1985, for the development, marketing and support of software packages to build a device allowing concurrent use of banking applications. The Arbitral Tribunal had its seat in Paris. The agreement was subject to Belgian law.

'According to the Terms of Reference, Claimant maintains:

- that the Joint Venture Agreement provides that a common Software Environment would be maintained and shared jointly by the parties to support the payment system software, which would function as integrated applications;

. . .

- that an interpretation of the Joint Venture Agreement that would prohibit Claimant from having access to the results of the joint development work without the consent of Respondents would violate Article 85 and/or Article 86 of the Treaty establishing the European Economic Community.

. . .

On the influence of the filing of a complaint by Claimant with the EEC Commission upon the jurisdiction of the Arbitral Tribunal

According to the Terms of Reference, Claimant asserts that if the Joint Venture Agreement is interpreted to preclude Claimant's right to use the source code for its own purposes, the Agreement would violate Articles 85(1) and 86 of the EEC Treaty.

In its application of . . . 1991 to the Commission of the European Communities, Claimant has requested the Commission to institute proceedings ordering Defendant to put an end to the infringement of Articles 85 and 86 of the EEC Treaty.

In its letter of . . . 1992, to Defendant, the Commission of the European Communities announced that it did not intend to open an investigation pending the outcome of the arbitration proceeding.

In view of this letter, the filing of a complaint by Claimant with the Commission of the European Communities does not prevent the Arbitral Tribunal from deciding on Claimant's request based upon articles 85 and 86 of the EEC Treaty.

On the application of Article 85 of the EEC Treaty

In Claimant's oral argument, it was stated that "Claimant does not challenge the validity of the non-competition obligation which is contained in Article 1.6 of the Agreement and which provides that, for the duration of the Agreement, Claimant will not develop an alternative link, which means a product competitive with the . . ."

In view of the public policy character of Article 85, the Arbitral Tribunal does however have to examine ex officio whether Article 1.6 of the Agreement is not caught by the prohibition of restrictive agreements.

An agreement that would otherwise fall within Article 85(1) nonetheless falls outside the prohibition where it is unlikely to restrict competition to any appreciable extent (Bellamy & Child, Common Market Law of Competition, 3d ed. No. 2-139), even outside the quantitative criteria indicated by the Commission (Notice of September 3, 1986 on agreements of minor importance, second sentence of point 3).

In the present case, Claimant was not present on the Community market when it entered into the Joint Venture Agreement; its first appearance on the community market was in 1988. A ten-year restriction applying to an undertaking that had, at the time of entering into the restriction, no presence on the EEC market cannot appreciably affect competition on that market. The fact that Claimant does not challenge the validity of Article 1.6 of the Agreement is fully consistent with this analysis.

Claimant's position is based on Article 2.B of Regulation 418/85 and states that "if the Agreement is to be interpreted as depriving it of access to the results of the work, which means in this case to the source code of the [software], the Agreement would not be exempted by the Regulation 418/85".

Mr X made it clear that Claimant's claim based on Article 2.B of Regulation 418/85 is restricted to the source code that was developed jointly . . .

Claimant also claimed "that the interpretation of ownership given by Respondents under the Joint Venture Agreement would violate articles 85 and 86 of the EEC Treaty".

In this last respect, Respondents have withdrawn their claims, described, for compensation in respect of misappropriation of the [software] source code documentation, misuse of the know-how embodied therein, infringement of copyright and other property rights in the [software] and unauthorised customisation of the [software]. Respondents have also stated that they have no objection to Claimant using the source code of the [software] to the extent necessary to maintain compatibility between the two systems.

The Arbitral Tribunal has decided that the Joint Venture Agreement requires that Respondents, when planning a modification to the [software] that would affect the common Environment Software and cause an interruption of the integration, consult with Claimant and, if no agreement is reached on these modifications, provide Claimant with all information, including the source code, necessary to modify the duplicate image of the Environment Software in due time and bear the cost of the adaptations required of the interface software.

Granting Claimant access to the [software] source code for its own purposes does not have to be discussed as it would involve deciding ultra petita, since Claimant made it clear in the oral argument that it claimed the source code""in order to be able to support the . . . system", not in order to "modify, distribute, customise the [software] or the source code of the [software] to third parties".

Parties have extensively discussed whether the Joint Venture Agreement was a research and development agreement covered by Regulation No. 418/85 or a subcontracting agreement covered by the Commission notice of December 18, 1978.

The Arbitral Tribunal does not find it necessary to pass on this question. It merely decides that, in its interpretation of Article . . ., the Agreement does not violate Article 85(1).

On the application of Article 86 of the EEC Treaty

In view of Respondents' duty to provide the source code of the [software], to the extent necessary to restore its previous level of integration with the system and of Respondents' willingness to do so, the question of abuse does not arise.

It is therefore not necessary to pass on the discussions concerning the existence of a dominant position.

. . .

DECISION

. . .

The filing of a complaint by Claimant with the Commission of the European Communities does not prevent the Arbitral Tribunal, in view of the Commission's letter of ... 1992, from deciding on Claimant's request based upon articles 85 and 86 of the ECC Treaty.

(a) The non-competition obligation contained in Article 1.6 of the Joint Venture Agreement, applying to an undertaking that had, at the time of entering into the restriction, no presence on the EEC market cannot appreciably affect competition on that market and does not fall therefore under Article 85 of the EEC Treaty.

(b) Claimant's request to have access to the [software] source code "in order to be able to support the . . . system" is met by the recognition of its right, under Article . . . of the Joint Venture Agreement, to receive when needed "all information, including the source code, necessary to modify the duplicate image of the Environment Software". In this interpretation of Article . . ., the Agreement does not violate Article 85(1) of the EEC Treaty.

In view of Respondents' duty to provide as necessary the source code of the [software] and of Respondents' willingness to do so, there is no possible violation of Article 86 of the EEC Treaty.'