Cross-border
disputes are likely to welcome more Claimants from developing countries to commence
proceedings against powerful corporate groups subsequently to the judgement in Lungowe. Permitting service out of
jurisdiction should be more feasible, with England and Wales being the
potential courts. This is crucial for the ‘underdog’ Claimants, as the choice
of jurisdiction has an influence on the procedure, legislative costs,
experience and quality of judges, and the length of proceedings – all factors
that have an impact on achieving justice.

 

This essay
will examine Vedanta’s objection to be tried in England, with the analysis of
the Brussels I Recast and fundamental case law that proves responsibility of
parent companies whilst assessing the relevance of forum conveniens. This essay will also draw upon KCM’ objection as
a local company to be tried in England with a in-depth breakdown of Lord
Collins’ test to see if it can be applied. Finally, the judgements in the near
identical cases, Connelly1 and Lubbe2, will be outlined and
compared to Lungowe.

 

This essay will
ultimately conclude that whilst judicial imperialism of the advanced states by
utilisation of extraterritorial jurisdiction may be a threat, but the
objections of the Defendants who argued against the exportation of the case to
the UK were legally defeated correctly. Regardless of the forum, justice should
be achieved perpetually, therefore Simon LJ correctly brought attention to the necessity
of developing the Zambian legal system.

 

 

Facts of Lungowe
v Vedanta

 

In 2015, a large
group of 1,826 Claimants commenced proceedings from Chingola in Zambia. The
claim was that Konkola Copper Mines and its parent company Vedanta Resources PLC were
allegedly liable for causing personal injury, property damage, and both loss of
income and enjoyment of land. This claim was on the grounds of breaching duty
of care on behalf of Vedanta in ensuring that its Zambian subsidiary KCM were
not harming the environment through discharges from the copper mines.3

 

The Defendants, as multinational corporate groups customarily do in
cases where claims are brought against them based on overseas operations,
argued that the natural forum to achieve justice was evidently Zambia.4
Thus, denying English Courts in exercising jurisdiction, they attempted to move
this case to the Court of Appeal. Ultimately, the High Court ruling was
entirely upheld and both KCM’s and Vedanta’s application for a declaration that
the court did not have the rights to try this case was precluded by Coulson J.

 

Vendanta’s objection to
jurisdiction

 

Art 4 Brussels I Recast

The
most straightforward segment of this judgement was to establish the
jurisdiction through the Brussels I (Recast), Regulation 1215/2012. The essential
objective of the Regulation was to harmonise European law and the upgrade
encompassed different elements. These included facilitating the circulation of
judgments in civil and commercial matters, strengthening choice of court
agreements, whilst optimizing the enforcement across Member States inter alia.5

Under Article 4 of the Brussels I Recast, the Claimants aimed to
establish that as Vedanta is company domiciled in England and Wales6,
there is a direct route to ascertain jurisdiction in the UK. In order to be
subject to the court’s jurisdiction, Article 4 must recognise the Defendant’s
domicile to be in a member state.7
The provision that one should use to determine, for the purpose of this
Regulations, when a defendant company is domiciled in the United Kingdom is Article 63. It states that the company is domiciled at the
place where it has its: (a) statutory seat; (b) central administration; or (c)
principle place of business.8 Judging by these criteria,
Vedanta was fittingly domiciled in England and as they are registered and
incorporated in the UK by the Companies Act 1985.9 Whilst
one could argue that Article 63 allows for a company to be domiciled in more
than one state, if a Member State is included, it will take priority.10 Therefore,
the court rightly used Article 4 in order to reject the jurisdiction challenge.

 

Parent
Company

 

Although the
opportunities to sue English parent companies based on their domicile were
always existent, claimants traditionally found two obstacles. These were
effectively utilised by the Defendant when attempting to distinguish the facts
of the case from previous case law, yet Coulson J defeated the impediments.

 

Firstly,
instituting a claim for the actions of the subsidiary company is a challenge,
since attributing liability to the parent company for overseas operations is
legally difficult.11
The issue did not arise in the shape of a jurisdictional obstacle when
assessing Vedanta’s domicile, but instead when using it as an anchor to justify
why KCM – a foreign subsidiary – should be tried in a UK court. However, the
Court of Appeal undermined the strength of this obstacle in their decision in Chandler v Cape.12
This case recognised that the concept of liability should be broadened by
developing a unique test to assess the responsibility of parent companies for
the injuries and damages caused by the subsidiary company.13 The
four-part test laid out that in order to prove responsibility, there must be
proximity between parent and subsidiary company; parent company must possess
superior knowledge on relevant health and safety aspects; the parent company
knew or ought to have known that subsidiary’s methods were unsafe; and the
parent company knew or ought to have foreseen that the subsidiary depended on
that superior knowledge.14
Whilst Coulson J believed that the elements were satisfied in the case of
Vedanta and that the Claimants had a strong case to be tried, the assumption of
responsibility is still a fluid concept as to what extent satisfies the
elements of adjacency.1516
There is an existing argument in Reeman17 that duty of care
should not be taken in isolation, which is perhaps the case with Vedanta.
Coulson J noted in paragraph 33 of his judgement that the Defendant argued that
the reference made to the Chandler test
is unarguable, which is endorsed by claims that the facts in each case should
be examined more precisely – the degree of control and involvement may warrant
to duty, but it may not in other cases.18 Nevertheless,
the responsibility test is anticipated to be a triviality in comparison to the
subsequent obstacle that was proving England to be the forum conveniens.

 

The doctrine of forum non conveniens can be found in
common law judicial systems, providing courts the discretion to decline a case
as a trial in an alternative court would be more in the interest of serving
justice.19
This principle was heavily criticised by Zhenjie for its application, including
discrimination20,
delays21 and manipulation22 by the courts, and thus
leads us to believe that there may be a challenge to the judgment’s use of the
doctrine for Vedanta. Evidently, it is difficult to warrant service out of the
jurisdiction since the applicable connecting factors all point to Zambia.
However, Owusu
v Jackson23 dispersed the issue, on the
basis that an English court cannot decline jurisdiction by the reason of Article
2 of the Brussels Convention24. The application of this
case was a formidable choice as it established jurisdiction over both Vedanta
and KCM, and there are undoubtedly concerns that ask Vedanta’s case to be
distinguished from Owusu.

 

The facts are observably
different in the two cases; Vedanta is a group action with claimants over 1,800
in number, whilst Owusu was a unitary claim surfacing from a single incident. Conversely,
the judgement resided with the decision of the Court of Justice of European Union
in that there shall be no circumstance in which a plea of forum non conveniens
might succeed.25
From this we can argue that Owusu prevents the possibility of a local court to
host a trial until the case is overruled, as the universal judgement binds Vedanta
without regard to the facts of the case. Furthermore, with the application of
the Owusu judgement in Vedanta, there is potentially a claim for abuse of EU
law.26 This argument, however,
requires evidence that the Claimant to proceed against Vedanta with the purpose
to depose the jurisdiction of the Zambian court – a claim that was difficult to
attest. Regardless, Coulson J held that from the significant ties between
Vedanta and the damage caused by the pollution, Vedanta is rightfully a
Defendant and thus it cannot be said that the solitary reason for the
proceeding was to ascertain a jurisdictional advantage.

 

KCM’s objection to jurisdiction

 

For the
purpose of Lord Justice Simon’s argument that cases should not be exported and
rather the Zambian legal system needs advancement in order to provide access to
justice, KCM’s challenge to jurisdiction raises worthwhile points as to why
England is the proper forum when all the actions occurred in Zambia.27

 

Permit Service Out of
Jurisdiction

 

The basic requirements that
must be fulfilled in order to permit service out of the jurisdiction are set
out by Lord Collins in AK
Investment CJSC28: (a) one “ground in paragraph 3.1 of Practice
Direction 6B” must be established29;
(b) must be “a reasonable prospect of success”30;
(c) “The court
will not give permission unless satisfied that England and Wales is the proper
place in which to bring the
claim”.31 When analysed one-by-one,
despite of attempts to challenge their applicability, Vedanta qualifies to be
have the case tried in England. For the first step, it falls within the 20
grounds set out in PD 6B, paragraph 3.1 and also connotes a significantly
weaker argument than of the Claimants.32 Secondly, there is an
issue that is worthy to be tried based on its merits and a realistic prospect
of succeeding as opposed to speculations.33 Coulson J rightly dismissed
these two oppositions on the basis of Chandler,
yet in reference to Lord Justice Simon, the third point raised the question
whether or not England is the ‘proper place’ in which to bring the claim.

 

KCM’s argument for the
third element of Lord Collins’ test was resilient in the sense that the court
did not disagree and thus recognised that this was a Zambian dispute.34 With all the relevant
factors overwhelmingly pointing towards Zambia, it should have been an apparent
method of providing justice without exporting the case. On the other hand,
Vedanta’s existence was crushingly decisive. With the absence of Vedanta, the
case would have been most likely tried in Zambia as England would not have been
the appropriate forum. The leading case is Konamaneni35 on English courts hearing
cases concerning foreign organisations because they are a necessary party to
the claim. However, the priority is to provide justice regardless of the
natural forum. If a fair trial is at risk in Zambia, as it was in Russia for Cherney v Deripaska36, England should receive
the priority as the ‘appropriate’ forum. By contrast, the Claimants must
provide evidence that real justice is at risk, since not all circumstances rule
out a jurisdiction for lack of fair trial, as seen in Abramovich37 and Pacific International Sports Clubs38. Nevertheless, the most
decisive reference in the judgment was Credit Agricole Indosuez.39 It
was held that the proceedings should remain in England as the duplication of a
case with the same facts would be “undesirable”.40 If
we apply it to our case, two trials in different courts would be “unthinkable”
and may lead to a controversial difference in outcomes due to the lack of
quality law in Zambia.
Overall, there is no
regulation against a court evaluating a foreign court as lacking independence
and expertise, and thus Lord Justice Simon’s words bear no malicious attack on
the Zambian legal system, but a fair comment on need for improvement.41

 

Lastly, the choice
in Vedanta to refrain from arbitrating based on the evaluation of the Zambian
legal system42
is a procedure harmonized with past practice of UK courts. This was the case in
Connelly, where the emphasis was on
the Claimant’s ability to acquire legal aid for the pursuing of expensive
litigation, instead of assessing the ability of the justice system in Namibia
to provide access to justice.43 Furthermore in Lubbe, unlike in the US, the court did
not consider the public and private factors when deciding on the jurisdiction.44 In accordance to Lungowe v Vedanta,
all three cases show that where all factors indicate that another forum is more
appropriate, the English courts should defend their right to jurisdiction to
satisfy the ends of justice.45

 

Conclusion

 

Similarly to Simon LJ’s judgement, Coulson J
also held that there was no “intention” to “criticise the Zambian legal system”
and thus the decision should not be perceived as “colonial condescension.”46
This is essentially the core of the arguments against exporting cases from ‘undeveloped’
legal systems, and Edgar Lungu the Zambian President, had publicly criticised the
conclusions that local courts only have the potential for weak remedies.47
Yet the facts are there; there is approximately one lawyer for every 17,695
people in Zambia48
which makes it inevitable for a case with 1,826 claimants to be tried
elsewhere. The case law further substantiates that legally it is possible to
transfer service out of jurisdiction – the question is for how long before the
Zambian legal system starts to develop in order to provide justice to all.

1 Connelly v. RTZ Corporation Plc and Others 1997 UKHL
30

2 Lubbe and Others v Cape Plc. and Related Appeals
2000 UKHL 41

3 Simon LJ in Lungowe v Vedanta 2017 per paragraph 1: “The respondents (whom it is convenient
to refer to as the claimants) are Zambian citizens who live in the Chingola
region of the Copperbelt Province in the Republic of Zambia. On 31 July 2015,
they brought proceedings against the first and second appellants (‘Vedanta’ and
‘KCM’ respectively) alleging personal injury, damage to property and loss of
income, amenity and enjoyment of land, due to alleged pollution and
environmental damage caused by discharges from the Nchanga copper mine (‘the
Nchanga mine’) since 2005.”

4 Simon LJ in Lungowe v Vedanta 2017 per paragraph 4-5: “On 15 September 2015,
Vedanta applied
for a declaration that the Court did not have jurisdiction to try the claims;
alternatively, that it should not exercise such jurisdiction that it might
have, pursuant CPR Part 11(1)(a) and/or (b); and a stay of proceedings pursuant
to CPR Part 11(6)(d) and/or CPR Part 3.1(2)(f).” and “On 5 October 2015,
KCM applied for a declaration that the Court did not have jurisdiction to try
the claims, or alternatively, that it should not exercise any jurisdiction that
it had, pursuant to CPR Part 11(1)(a) and/or (b); and an order setting aside
the order of 19 August giving permission to serve out of the jurisdiction, or
alternatively, a stay of proceedings.”

5
http://www.zuccarelli-avocats.fr/BRUSSELS.pdf
– ‘The Brussels Regulation Recast’

6
para 32 of Lord J Simon

7
p.213 Cheshire, North
& Fawcett Private International Law

8
section 63 of Brussels I recast

9
http://www.vedantaresources.com/media/9393/vedantaacqofcairnindiacircular25nov10.pdf

10 The Deichland 1990
1 QB 361, CA; The Rewia 1991
2 Lloyd’s Rep 325, CA.

11 Establishing Liability for
Multinational Oil Companies in Parent/Subsidiary Relationships, Lee J McConnell – Lexis

12 Chandler v Cape 2012 WLR 3111

13 Assumption
of Responsibility in Corporate Groups:
Chandler v Cape plc Martin Petrin1 University of Leicester, School
of Law.

14 Arden LJ’s judgement
in Chandler v Cape 2012 WLR 3111 (paragraph 80): “(1) the businesses of
the parent and subsidiary are in a relevant respect the same; (2) the parent
has, or ought to have, superior knowledge on some relevant aspect of health and
safety in the particular industry; (3) the subsidiary’s system of work is
unsafe as the parent company knew, or ought to have known; and (4) the parent
knew or ought to have foreseen that the subsidiary or its employees would rely
on its using that superior knowledge for the employees’ protection.”

15 Smith v Bush 1990 1 AC 831 per Lord Griffith  

16 K. Barker, ‘Unreliable
Assumptions in the Modern Law of Negligence’ (1993) 109 LQR 461

17 Eg Reeman v
Department of Transport (1997) PNLR 618, 625 per Philips LJ

18 pg 10 Tort Litigation against Multinational Corporations
for Violation of Human Rights: An Overview of the Position Outside the United
States By Richard Meeran City University of Hong Kong Law Review

19 Common Law Forum Non Conveniens: Four
Countries, Four Approaches Ronald A. Brand chapter, page 1

20 Hu Zhenjie, Forum Non
Conveniens: An Unjustified Doctrine, 48 NETHERLANDS INTERNATIONAL LAW
REVIEW 143 (2001) at 163-165?

21 157-158

22 159-160

23 Owusu
v Jackson (t/a Villa Holidays Ball-Inn Villas) and others 2002 EWCA Civ 877

24 Brussels Convention on
Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters
1968

25 Who is my neighbour? Legal Update Commercial Bill Davies

26 Jurisdiction
of the English Courts over Overseas Human Rights Violations The Cambridge Law Journal,
75 2016, pp 468–471

27 “the claim is an illegitimate hook being used to permit claims
to be brought here which would otherwise not be heard in the United Kingdom.”
Paragraph 93.

28 AK INVESTMENT CJSC V KYRGYZ MOBIL TEL
LTD. 2011 UKPC 7

29 CPR 6.37(1)(a)

30 CPR 6.37(1)(a)

31 CPR 6.37(3)

32 Canada Trust Co. v Stolzenberg
(No. 2) 1998 1 WLR 547; Bols Distilleries BV v Superior Yacht Services Ltd
2006 UKPC 45

33 Carvill
America Inc. V Camperdown UK Ltd 2005 EWCA Civ 645

34 paragraph 106 of judegment: „The claimants are all Zambian citizens,
resident in Zambia. The claims involve personal injury or damage to land; the
injuries were suffered in Zambia and the land that was damaged is also in Zambia; the alleged discharges into the
waterways occurred in Zambia, so the place of the commission of the alleged
tort is Zambia; the Nchanga mine is owned and operated by KCM, a Zambian
company, operated pursuant to the terms of a Zambian licence; the proper
regulation of the mine would have to be considered by reference to Zambian
statutes and regulations; and the applicable law is Zambian law, see judgment
at 153″

35 Konamaneni v Rolls-Royce Industrial Power (India) Ltd 2002 1 WLR 1269

36 Cherney v Deripaska 2009 EWCA Civ 849

37 OJSC Oil Co. Zugraneft v Abramovich 2008 EWHC 2613

38 Pacific International Sports Clubs Ltd v Soccer Marketing International Ltd
2009 EWHC 1839

39 Credit Agricole Indosuez v Unicof Ltd and others 2003 EWHC 2676

40 paragraph 36 per Cooke J: „Duplication
of proceedings by having the original claims determined here and the new claims
determined in Kenya is unthinkable, so that any decision on the exercise of the
court’s jurisdiction on the original claims has the effect of determining the
court’s exercise of jurisdiction on the new claims, provided there is the
juridical basis for it which I have found.”

41 pg 367 Blackstone’s
Civil Practice 2013: The Commentary By The Rt Hon Lord
Justice Maurice Kay

42 paragraph 133 of
judgement

43 The Liability of Multi-national
Corporations for the Torts of Their Subsidiaries European Business Organization Law Review (2002) 3: 51–81 at 79

44  Lord Bingham in Lubbe v Cape: “public
interest considerations not related to the private interests of the parties and
the ends of justice have no bearing on the decision which the court has to
make”.

45 The demise of Forum Non Conveniens? Journal of
International Banking and Financial Law

(2014)
8 JIBFL 509 at 510

46 Coulson J. in his
judgment at 198

47 https://zambiadailynation.com/2016/03/23/lungu-blasts-musa-mwenye/

48 pg 723 The troubling shortage of african lawyers: examination of
continental crisis using zambia as a case study – Nicholas A. Kahn-Fogel

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