Vedanta v. Lungowe Symposium: A Non Conveniens Revival–The Supreme Court's Approach to Jurisdiction in Vedanta
24 Apr Vedanta v. Lungowe Symposium: A Non Conveniens Revival–The Supreme Court's Approach to Jurisdiction in Vedanta
24.04.19 | 1 Comment
[Gabrielle Holly is a business and human rights specialist and an experienced commercial disputes practitioner with Omnia Strategy LLP, who acted for the International Commission of Jurists and the CORE Coalition in this case. You can find her on twitter at @Gabriellellell.]
With the rise in power of multinational groups and the intricacies of global supply chains, the question of where a company should bear responsibility for its adverse impacts is increasingly becoming as important as the questions of what it should bear responsibility for and to whom.
In Vedanta Resources PLC and anor v Lungowe and ors, the Supreme Court found that the claimant group of impecunious Zambian villagers could proceed with their claim in England, notwithstanding that Zambia was overwhelmingly the proper place for the claim to be tried (at [85]).
The Vedanta decision was concerned only with matters of jurisdiction. The defendants to the underlying claim were Vedanta Resources Plc, the UK parent company, and Konkola Copper Mines (KCM), the Zambian subsidiary. AlthoughVedanta could be served under ordinary rules of service, service against KCM out of the jurisdiction required the claimants to show that it was a "necessary and proper party" to the claim.
Satisfying that test required that: the claims against Vedanta involved a real issue to be tried; that it would be reasonable for the courts of England and wales to try those claims; that KCM was a necessary or proper party; that the claims against KCM had real prospects of success; and crucially:
"that, either, England is the proper place to bring the combined claims, or that there is a real risk that the claimants would not obtain substantial justice in the alternative foreign jurisdiction, even if it would otherwise have been the proper place or the convenient or natural forum" at [20].
Readers may be forgiven for thinking that this last criterion sounds suspiciously familiar to the test used in the context of an application for a stay of English proceedings on the basis of forum non conveniens that was applicable under English law prior to Owusu v Jackson. Those suspicions are well founded, as the Supreme Court explicitly acknowledged that this was the self-same test (at [88]).
The Supreme Court went on to say:
"The question whether there is a real risk that substantial justice will be unobtainable is generally treated as separate and distinct from the balancing of the connecting factors which lies at the heart of the issue as to proper place, but that is more because it calls for a separate and careful analysis of distinctly different evidence than because it is an inherently different question. If there is a real risk of the denial of substantial justice in a particular jurisdiction, then it seems to me obvious that it is unlikely to be a forum in which the case can be tried most suitably for the interests of the parties and the ends of justice" at [88].
Despite the apparent resurgence of the doctrine of forum non conveniens, it appears that the Supreme Court has left the courts of England and Wales with a relatively wide discretion to determine their own jurisdiction on substantial justice grounds.
In substance and effect, if not in name, this discussion of substantial justice is not radically dissimilar to the doctrine of forum necessitatis. This doctrine has never been expressly endorsed by English courts (and universal civil jurisdiction for torture has been expressly rejected: Jones v Saudi Arabia and Belhaj v Straw). However, the increasing number of states where the forum necessitatis is available with varying degrees of qualification (see summary in Naït-Liman v Switzerland at [84]) shows that the sense of such an approach may yet find favour.
The Supreme Court's decision to allow the claim to proceed in England turned solely on the affirmation of the trial judge's finding that there was a real risk that substantial justice would not be obtained by the claimants if the claim were to proceed in Zambia.
The Supreme Court made plain that their finding in relation to substantial justice had nothing to do with any lack of independence or competence in the Zambian judiciary, nor any lack of a fair civil procedure suitable for handling large group claims. Indeed, the Vedanta judgment was unsubtle in its finding that Zambia was overwhelmingly the proper place for the claim to be heard, stating:
"If substantial justice was available to the parties in Zambia as it is in England, it would offend the common sense of all reasonable observers to think that the proper place for this litigation to be conducted was England" at [87].
Rather, the question of substantial justice it turned on the practical impossibility of funding the claim in circumstances where the claimants were in extreme poverty, and the absence of suitably experienced and resourced legal teams to effectively prosecute litigation of the size and complexity of the instant claim.
The Supreme Court went to some lengths to emphasise that lack of funding should only ground a finding that access to substantial justice was at risk in exceptional circumstances (at [93]). That may be so, but reliance on a costs point may well be the more palatable approach, neatly avoiding the necessity of critiquing the legal and judicial systems of another jurisdiction in order to find that access to substantial justice is at risk.
English courts have generally been reluctant to enter into that kind of critique. Where they have done so, they have been careful to confine criticism to a narrow set of facts in the instant case, rather than make general criticisms, as in Deripaska v Cherney or restricting it to circumstances where there has been a near total breakdown of the civil administration, as in Alberta v Katanga Mining Ltd.
This should give prospective claimants some pause. The Supreme Court has affirmed that costs and funding are an exceptional ground, and it is clear that there is a general reluctance to debate the adequacy of another jurisdiction for reasons of comity. Those bringing future claims should ensure that a sufficiently robust argument can be mounted to show either that their claim has some connecting factors to the jurisdiction of England and Wales, or make their case that their prospects for obtaining substantial justice are at risk in a manner palatable to the court.
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Simon Baughen
Has forum non conveniens ever gone away? Certainly there is no scope for it with a claim against a defendant domiciled in the UK, as confirmed by the Supreme Court in Vedanta. However, a version of this analysis has always applied for applications to serve a non- EU defendant out of the jurisdiction under the CPR. As regards conflict of laws there is nothing novel in Vedanta. As regards parent corporation liability for subsidiary operations, that may be a different matter.
Gabrielle Holly