ON APPEAL FROM QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
(The Hon Mr Justice Coulson)
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE SIMON
LADY JUSTICE ASPLIN
| Dominic Liswaniso Lungowe and others
|- and -
|(1) Vedanta Resources Plc
(2) Konkola Copper Mines Plc
Herbert Smith Freehills LLP) for the Appellants
Richard Hermer QC, Marie Louise Kinsler QC and Edward Craven (instructed by Leigh Day) for the Respondents
Hearing dates : 5 and 6 July 2017
Crown Copyright ©
Lord Justice Simon:
A. The hearings and an outline of the claimants' claim
B. Vedanta's applications
C. KCM's applications
A. The hearings and an outline of the claimants' claim
1. The hearings
2. An outline of the claims
3. The pleaded claims
(i) The parts common to the claim against both appellants (paragraphs 1-77)
(ii) The claim against Vedanta (paragraphs 78-94)
assumption of responsibility for ensuring that [KCM]'s mining operations do not cause harm to the environment or local communities, as evidenced by the very high level of control and direction that [Vedanta] exercise at all material times over the mining operations of [KCM] and [KCM's] compliance with applicable health, safety and environmental standards.
(a) the businesses of [Vedanta] and [KCM] are in a relevant respect the same, namely they are both involved in the business of mining, processing, refining and selling natural mineral resources;
(b) [Vedanta] knew or ought reasonably to have known that [KCM's] operations and equipment at Nchanga Copper Mine were unsafe and were discharging harmful effluent into the waterways and local environment;
(c) [Vedanta] had or/ought reasonably to have had superior expertise, knowledge and resources in relation to relevant aspects of health, safety and environmental protection in the mining industry;
(d) [Vedanta] knew and/or ought to have foreseen that [KCM] would rely on [Vedanta's] superior expertise, knowledge and resources in respect of health, safety and environmental protection in the mining industry.
(iii) the claim against KCM
B. Vedanta's applications
Subject to the Regulation, persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State.
The prevailing view is that there is no scope for the application of forum conveniens to remove a case from a court which has jurisdiction under the Regulation, even as regards a defendant who is not domiciled in a Member State
In Owusu v Jackson the Court of Justice of the European Communities held that the rule in article 2 of the Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Measures 1968, which required that 'persons domiciled in a contracting state shall, whatever their nationality, be sued in the courts of that state', meant that the courts of that state had to assume jurisdiction, even though there was a third country which also had jurisdiction and even though that country was, on the face of it, the more appropriate forum in which to bring the action. Thus, the English court was not only empowered but obliged to assert and exercise jurisdiction rather than leave the parties to the jurisdiction of a state (Jamaica) which was not party to the Convention.
C. KCM's applications
93. KCM submit that the entire focus of this case is on Zambia. That is where the alleged torts were committed; that is where the damage occurred; that is where all the claimants live; that is where KCM are themselves domiciled; that is the law that applies. Accordingly, they say, on straightforward forum non conveniens grounds, the order permitting service out of the jurisdiction should be set aside. They submit that it makes no difference that there is a claim against Vedanta in the UK but, to the extent that it does or might matter, they maintain that 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. Further and in any event, they say that, the claimants' alternative argument that even if the United Kingdom is not the appropriate place for the trial, the claimants would not obtain justice in Zambia is wrong on the evidence.
94. The claimants say that, because there is a real issue between themselves and Vedanta, which they intend to pursue to trial in the United Kingdom, it is reasonable for this court to try that issue in the United Kingdom, so that is therefore the appropriate place for their claims against KCM. If they are wrong about that they rely on access to justice issues, and what they say is the impossibility of trying these claims in Zambia. Although Mr Hermer accepts that the mere fact of the Vedanta claim in the United Kingdom does not automatically lead to the conclusion that service out should not be set aside, he said that it 'weighed very heavily' in favour of such a conclusion.
3.1. The claimant may serve a claim form out of the jurisdiction with the permission of the court under rule 6.36 where
(3) A claim is made against a person ('the defendant') on whom the claim form has been or will be served (otherwise than in reliance on this paragraph) and
(a) there is between the claimant and the defendant a real issue which it is reasonable for the court to try; and
(b) the claimant wishes to serve the claim form on another person who is a necessary or proper party to that claim.
This is often referred to as the 'necessary or proper party' gateway.
The court will not give permission unless satisfied that England and Wales is the proper place in which to bring the claim.
This is a field in which differing conclusions can be reached by different tribunals without either being susceptible to legal challenge. The jurisdiction to stay is liable to be perverted if parties litigate the issue at different levels of the judicial hierarchy in the hope of persuading a higher court to strike a different balance in the factors pointing for or against a foreign forum.
appellate courts should be vigilant in discouraging appellants from arguing the merits of an evaluative interlocutory decision reached by a judge, who had to balance the various factors relevant to the appropriate forum, when the complaint is, in reality, that the balance should have been struck differently.
See also, Lord Mance JSC in the same case at :
The case is one in which an appellate court should refrain from interfering, unless satisfied that the judge made a significant error of principle, or a significant error in the considerations taken or not taken into account.
where the issue is forum non conveniens or where the documentary evidence contains a sharp clash of evidence about the facts, the exercise carried out by the judge is an evaluative one, sometimes with a 'predictive' element, and with more than one possible 'right' answer. The evaluation of the factors relevant to the determination of the appropriate forum and of disputed evidence is very much the province of the first instance judge ... In such cases an appellate court should only interfere where it is clear that an error of principle has been made or that the result falls outside the range of potentially 'right' answers.
Question (1): whether the claimants' claim against KCM has a real prospect of success?
On an application for permission to serve a foreign defendant (including an additional defendant to counterclaim) out of the jurisdiction, the claimant (or counterclaimant) has to satisfy three requirements: Seaconsar Far East Ltd. v Bank Markazi Jomhouri Islami Iran  1 AC 438, 453-457. First, the claimant must satisfy the court that in relation to the foreign defendant there is a serious issue to be tried on the merits, i.e. a substantial question of fact or law, or both. The current practice in England is that this is the same test as for summary judgment, namely whether there is a real (as opposed to a fanciful) prospect of success: e.g. Carvill America Inc v Camperdown UK Ltd  2 Lloyd's Rep 457, at .
Question (2): whether there is a real issue between the claimants and Vedanta?
81. A question of law can arise on an application in connection with service out of the jurisdiction, and, if the question of law goes to existence of the jurisdiction, the court will normally decide it, rather than treating is as a question whether there is a good arguable case
84. The general rule is that it is not normally appropriate in a summary procedure (such as an application to strike out or for summary judgment) to decide controversial questions of law in developing area, particularly because it is desirable that the facts should be found so that any further development of the law should be on the basis of actual and not hypothetical facts.
86. In that case it was held that the claim against D1 was bound to fail because the claim against it was made as agent of the Crown and it was therefore entitled to Crown immunity (as it then was). That was not a case where the point of law was a difficult one. Lord Porter said (at 341) that 'when the various Acts and provisions are collated the answer is clear.' Consequently the observations of the members of the Appellate Committee are obiter, but although they do not all put it in the same way, the overall effect of the decision is that if the question is whether the claim against D1 is bound to fail on a question of law it should be decided on the application for permission to serve D2 (or on the application to discharge the order granting permission), but not where there is an exceptionally difficult and doubtful point of law: Lord Porter at 341, and cf at 338, per Lord Porter; Lord du Parcq at 351
(i) The claimants' Zambian statutory claims
(ii) The claim based on a duty of care in English law
the fact that the law does not impose liabilities upon companies in respect of the acts or omissions of other companies in the same group simply by reason of their common membership of the same group does not mean that circumstances cannot arise where in more than one company in the same group each incurs liabilities in respect of damage caused to a particular plaintiff.
the first defendant had taken into its own hands the responsibility for devising an appropriate policy for health and safety to be operated at the Rossing mine and either the first defendant or one or other of its English subsidiaries implemented that policy and supervised the precautions necessary to ensure so far as reasonably possible, the health and safety of the Rossing employees through the RTZ supervisors
The situation would be an unusual one; but if the pleading represents the actuality then, as it seems to me, the situation is likely to comprehend the three elements of proximity, foreseeability and reasonableness required to give rise to a duty of care
Whether a parent company which is proved to exercise de facto control over the operations of a (foreign) subsidiary and knew, through its directors, that those operations involved risks to the health of workers employed by the subsidiary and/or persons in the vicinity of the factory owes a duty of care to those workers and/or other persons in relation to the control it exercises over and the advice it gives to the subsidiary company?
The issues in the present cases fall into two segments. The first segment concerns the responsibility of the defendant as a parent company for ensuring the observance of proper standards of health and safety by its overseas subsidiaries. Resolution of this issue will be likely to involve an inquiry into what part the defendant played in controlling the operations of the group, what its directors and employees knew or ought to have known, what action was taken and not taken, whether the defendant owed a duty of care to employees of group companies overseas and whether, if so, that duty was broken. Much of the evidence material to this inquiry would, in the ordinary way, be documentary and much of it would be found in the offices of the parent company, including minutes of meetings, reports by directors and employees on visits overseas and correspondence.
this case demonstrates that in appropriate circumstances the law may impose on a parent company responsibility for the health and safety of its subsidiary's employees. Those circumstances include a situation where, as in the present case, (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. For the purposes of (4) it is not necessary to show that the parent is in the practice of intervening in the health and safety policies of the subsidiary. The court will look at the relationship between the companies more widely. The court may find that element (4) is established where the evidence shows that the parent has a practice of intervening in the trading operations of the subsidiary, for example production and funding issues.
It is clear that Arden LJ intended this formulation to be descriptive of circumstances in which a duty might be imposed rather than an exhaustive list of the circumstances in which a duty may be imposed. I respectfully adopt the formulation of the editors of Clerk & Lindsell on Torts, 20th edition, 3rd supplement 2013 at para 13-04:
The factors set out in (1)-(4), however, do not exhaust the possibilities and the case merely illustrates the way in which the requirements of Caparo v Dickman may be satisfied between the parent company and the employee of the subsidiary.
There is no evidence that the Renwick Group Limited at any time carried on any business at all apart from that of holding shares in other companies, let alone that it carried on either a haulage business or, as would in fact be required were the Respondent's case to have a prospect of success, a business an integral part of which was the warehousing or handling of asbestos or indeed any potentially hazardous substance. Thus, the first of Arden LJ's indicia is not satisfied. This is no mere formalism, for as the balance of Arden LJ's indicia indicate, what one is looking for here is a situation in which the parent company is better placed, because of its superior knowledge or expertise, to protect the employees of subsidiary companies against the risk of injury and moreover where, because of that feature, it is fair to infer that the subsidiary will rely upon the parent deploying its superior knowledge in order to protect its employees from risk of injury.
(1) The Vedanta report entitled 'Embedding Sustainability', which stresses that the oversight of all Vedanta's subsidiaries rests with the Board of Vedanta itself and expressly refers to problems with discharges into water. That section of the report makes an express reference to the particular problem at the mine in Zambia, and states that, 'we have a governance framework to ensure that surface and ground water do not get contaminated by our operations.'
(2) A Management and Shareholders Agreement by which Vedanta was under a contractual obligation to provide KCM with, among other things (a) 'geographical and mining services', (b) 'employee training services', (c) 'metallurgical consulting services', (d) 'administrative and financial support services,' (e) 'assistance with management systems and technical and information technology and other services', (f) 'strategic planning, business and corporate strategy and planning including product development and management'. Further, under the KCM Shareholder Agreement, Vedanta was required amongst other things to undertake or procure feasibility studies into various large-scale mining projects and to do so in accordance with 'acceptable mining, metal treatment and environmental practices conducted in Southern Africa'.
(3) Vedanta's provision of environmental and technical information and Health Safety and Environmental training 'across the Group' on a range of health, safety and environmental issues, including, 'training on specific topics such as health and safety management, environmental incidents'. The training is detailed and specific, and conducted by the Vedanta Group under the auspices of the Vedanta's Sustainability Framework, and in conjunction with Vedanta's Sustainability Committee.
(4) Vedanta's financial support for KCM. Vedanta has stated that it has invested approximately US$3 billion in KCM since it acquired the company in 2004. According to Vedanta's documents, it 'has continuously supported the company financially', including loans to KCM of hundreds of millions of dollars and acting as a guarantor for over half a billion dollars of external financing, which, the claimants contend, goes considerably beyond a conventional parent-subsidiary relationship.
(5) Vedanta's various public statements regarding its commitment to address environmental risks and technical shortcomings in KCM's mining infrastructure. For example, a document which explains that, 'most of the infrastructure that Vedanta acquired when it purchased KCM was old and in need of modernization.' As a result, 'Vedanta inherited several legacies, including old tailings pipelines, susceptible to frequent leaks.' In addition, 'Once Vedanta acquired KCM, we immediately designed a comprehensive and well-funded program to address the legacy environmental issues. We particularly focused on the areas that most affected the surrounding communities when modernizing infrastructure to local and global industrial norms.'
(6) Evidence from a former KCM employee about the extent of Vedanta's control of KCM. Davies Kakengela, who was employed by KCM for over a decade until January 2015, has made a witness statement in which he gives evidence of the high degree of control Vedanta exercised over KCM's operational affairs: 'once Vedanta took over KCM, working practices changed significantly. It became clear that cost cutting was the supreme objective. This compromised other areas of work Almost all senior positions at KCM were given to people from Vedanta Group companies.' He adds that, 'when Vedanta took over most of the existing management and operational policies were discarded or became irrelevant.'
(iii) The claim based on a duty of care in Zambian law
123. I have an enormous amount of evidence on the issue of whether, in Zambian law, the sort of duty identified in Chandler v Cape would be imposed on Vedanta. Former Chief Justice Sakala says that no such duty would be imposed and he gives detailed reasons for that conclusion. On the other hand, Mr Mwenye SC is of the view that the duty of care pleaded by the claimants has a realistic prospect of success.
124. I agree with Mr Hermer that, in the light of this clear dispute between the Zambian law experts, there is little that the court can do at this stage, other than to say that it is obviously arguable that Zambian law would impose the relevant duty ... Thus, having concluded that the claim is arguable in English law, I reach the same conclusion in respect of Zambian law.
Question (3): whether it is reasonable for the court to try the issue between the claimants and Vedanta?
Question (4): whether KCM is a necessary and proper party to the claim against Vedanta?
Question (5): whether England and Wales is the proper place in which to bring that claim?
The court will not give permission [to serve the claim form out of the jurisdiction] unless satisfied that England and Wales is the proper place in which to bring the claim.
the task of the court is to identify the forum in which the case can be suitably tried in the interests of all the parties and for the ends of justice
But faced with a stark choice between one jurisdiction, albeit not the most appropriate in which there could in fact be a trial, and another jurisdiction, the most appropriate in which there never could, in my judgment, the interests of justice would tend to weigh, and weigh strongly in favour of that forum in which the plaintiff could assert his rights.
the claimants will almost certainly not get access to justice if these claims were pursued in Zambia.
(i) Ground 2: the relevance of the claim against Vedanta
caution must always be exercised in bringing foreign defendants within our jurisdiction under Ord 11, r1(1)(c). It must never become the practice to bring foreign defendants here as a matter of course, on the ground that the only alternative requires the more than one suit in more than one different jurisdiction.
Lord Goff could not have foreseen, however, the subsequent distortion which would be brought about by the decision of the European Court in Owusu v Jackson. The direct effect of that case is that where proceedings in a civil or commercial matter are brought against a defendant who is domiciled in the United Kingdom, the court has no power to stay those proceedings on the ground of forum non conveniens. Its indirect effect is felt in a case in which there are multiple defendants, some of whom are not domiciled in a Member State and to whom the plea of forum non conveniens remains open: it is inevitable that the ability of those co-defendants to obtain a stay (or to resist service out of the jurisdiction) by pointing to the courts of a non-Member State which would otherwise represent the forum conveniens, will be reduced, for to grant jurisdictional relief to some but not to others will fragment what ought to be conducted as a single trial There is no doubt, however, that the Owusu factor will have made things worse for a defendant who wishes to rely on the principle of forum non conveniens when a co-defendant cannot.
Although the burden is on a claimant to show, when seeking leave to serve out of the jurisdiction, that England is the appropriate forum where the case can most suitably be tried for the interests of all the parties and the ends of justice, the fact of continuing proceedings in England against other defendants on the same or closely allied issues virtually concludes the question, since all courts recognise the undesirability of duplication of proceedings and the lis alibi pendens cases make this clear. Although there are connecting factors with Kenya to which I refer later in this judgment, if proceedings are going on in this jurisdiction on the self-same or linked issues, this is clearly the most appropriate forum for those common or connected issues to be tried between all relevant parties
I accept that if the claim against the second defendant were a freestanding claim, all those factors would point overwhelmingly to Russia being the appropriate forum for the claim. However, the context is that the claim against the second defendant is not a freestanding claim, and it has to be considered in circumstances where the claimant has chosen to bring, and is entitled to bring, claims against the first and third defendants in England, which it says it anyway wishes to pursue, regardless of whether the second defendant is brought into these proceedings or not. What therefore has to be considered, as [counsel for] the claimant submits, is not whether England or Russia is the more suitable forum for the claim against the second defendant, other things being equal, but whether it is appropriate to have proceedings against the second defendant in Russia in circumstances where proceedings involving identical or virtually identical facts, all the same transactions, witnesses and documents, will anyway be taking place in England. The real question, in other words, is whether the factors which connect the claim against the second defendant with Russia carry weight in circumstances where to require the claim to be pursued in Russia would result in duplication of cost and the risk of inconsistent judgments - the same factors which make the second defendant a necessary or proper party.
(ii) Ground 3: the challenge to the Judge's conclusion in relation to access to justice
Comity requires that the Court be extremely cautious before deciding that there is a risk that justice will not be done in the foreign country by the foreign court and that is why cogent evidence is required to establish the risk.
33. allegations as to why the appropriate forum should be displaced must amount to an allegation that the forum is or will be unavailable for the trial of the claim. This must be clearly demonstrated against an objective standard and supported by positive and cogent evidence.
This is complex and expensive litigation involving over 1,800 claims. Detailed evidence is going to be necessary in respect of personal injuries, land ownership and damage to land; and expert evidence as to pollution, causation and medical consequences. On the evidence before the court, it is quite unrealistic to suppose that the lawyers would fund such large and potentially complex claims, essentially out of their own pockets, for the many years that litigation might take to resolve.
Lady Justice Asplin
Lord Justice Jackson