Posts Tagged abuse
I reviewed the High Court’s decision in Lungowe here. The Court of Appeal has now confirmed jurisdiction against the non-UK based defendants on largely the same, if slightly more structured and expanded arguments as the High Court. (Per Owusu, jurisdiction against the UK-based defendant is undeniable; the non-UK defendants need to be joined on the basis of residual English conflicts law).
Ekaterina Aristova has analysis of Simon LJ’s leading judgment here – I am happy to refer. Of particular note is the much more reserved approach of the Court of Appeal on the merits issue of the claim. As I noted in my review of Okpabi v Shell at the High Court, in that case Fraser J looked in serious detail into the issue of merits: not, I believe, justified at the jurisdictional stage. Appeal against Fraser J’s finding will be heard by the Court of Appeal.
European private international law, second ed. 2016, Chapter 8, Headings 22.214.171.124., 8.3.2
abuse, anchor, Anchor defendant, Chandler v Cape, Corporate social responsibility, CSR, environmental damage, Forum non conveniens, High Court, http://www.bailii.org/ew/cases/EWCA/Civ/2017/1528.html, http://www.bailii.org/ew/cases/EWHC/TCC/2016/975.html, lungowe v vedanta, parent company liability, piercing the veil, Pollution, Regulation 1215/2012, Shell,  EWHC 975 (TCC),  EWCA Civ 1528
In line with my previous post (readers unfamiliar with it may want to refer to it; and to very good Hill Dickinson summary of the case), of particular consideration here is the jurisdictional test under (old) Article 6(1) Brussels I, now Article 8(1) in the Recast, in particular the extent of merits review; and whether the subject matter of the claim comes within the succession exception of Article 1(2)(a) of the Brussels I Regulation.
As for the latter, the Court, after reviewing relevant precedent and counsel argument (but not, surprisingly, the very language on this issue in the Jenard report, as I mention in my previous post) holds in my view justifiably that ‘(t)he source of the ownership is irrelevant to the nature of the claim. ..The subject matter of the dispute is not whether Sana is an heir, but whether the defendants have misappropriated her property.‘ (at 161).
With respect to the application of Article 6(1) – now 8(1), the majority held in favour of a far-reaching merits review. Lady Justice Gloster (at 166 ff) has a minority opinion on the issue and I am minded to agree with her. As she notes (at 178) the operation of a merits test within Article 6(1) does give rise to risk of irreconcilable judgments, which can be demonstrated by reference to the present facts. She successfully, in my view, distinguishes the CJEU’s findings in Kolassa and in CDC, and the discussion at any rate one would have thought, merits CJEU review.
(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 126.96.36.199
abuse, Anchor defendant, Anchor defendants, Article 22(2), Bevoegdheid, Brussels I, BVG, C-98/06, Case C-98/06, CJEU, Court of Justice, Curia, ECJ, EEX, EEX Verordening, Exclusive jurisdictional rules, Ferrexpo, Ferrexpo v Gilson, FNC, Forum non conveniens, Freeport, http://www.bailii.org/ew/cases/EWCA/Civ/2017/1120.html, http://www.bailii.org/ew/cases/EWHC/Comm/2014/3233.html, Insolvency, Interpretation, Judgments Regulation, Jurisdiction, Jurisdiction Regulation, merits review, Mirror application, Reflexive application, Regulation 44/2001, Regulation 650/2012, related actions, Roche Nederland, Sabbagh v Koury, Scope of application, Succession regulation, United Kingdom, Wills and succession, Wills and succession exception,  EWHC 3233 (Comm),  EWCA Civ 1120
Postscript 13 June 2017 for a similar scenario in the Italian courts (hearings pending) see here: Ikebiri v ENI.
After Shell/Okpabi, the High Court has now for the second time in 2017 rejected jurisdiction to be established against the foreign subsidiary (here: in Kenya) using the mother company as an anchor. In  EWHC 371 (QB) AAA et al v Unilever and Unilever Tea Kenya ltd, Unilever is the ultimate holding company and registered in the UK. Its subsidiary is a company registered in Kenya. It operates a tea plantation there. Plaintiffs were employed, or lived there, and were the victims of ethnic violence carried out by armed criminals on the Plantation after the Presidential election in Kenya in 2007. They claim that the risk of such violence was foreseeable by both defendants, that these owed a duty of care to protect them from the risks of such violence, and that they had breached that duty.
Laing J unusually first of (at 63 ff) all declines to reject the case on ‘case management’ grounds. Unlike many of her colleagues she is more inclined to see such stay as ignoring ‘through the back door’ Owusu‘s rejection of forum non conveniens. I believe she is right. Instead the High Court threw out the case on the basis that the claims, prima facie (on deciding jurisdiction, the Court does not review the substantial merits of the case; a thin line to cross) had no merit. Three issues had to be decided:
i) By reference to what law should the claim be decided? This was agreed as being Kenyan law.
ii) Are the criteria in Caparo v Dickman  2 AC 605 satisfied? (A leading English law case on the test for the duty of care). The relevance of English law on this issues comes about as a result of Kenyan law following the same Caparo test: as I have noted elsewhere, it is not without discussion that lex fori should apply to this test of attributability. Laing J held that the Caparo criteria were not fulfilled. The events were not as such foreseeable (in particular: a general breakdown in law and order). Importantly, with respect to the holding company and as helpfully summarised by Herbert Smith:
- the pleaded duty effectively required the holding to ensure that the claimants did not suffer the damage that they suffered, and not merely to take reasonable steps to ensure their safety;
- the pleaded duty also effectively imposed liability on that holding for the criminal acts of third parties, and required it to act as a “surrogate police force to maintain law and order”; and
- such a duty would be wider than the duty imposed on the daughter, as the actual occupier of the Plantation, under the Kenyan Occupiers’ Liability Act
At 103, Laing J discussed and dismissed plaintiff’s attempts at distinguishing Okpabi. In her view, like in Shell /Okpabi, the mother’s control is formal control exercised at a high level of abstraction, and over the content and auditing of general policies and procedures. Not the sort of control and superior knowledge which would meet the Chandler test.
iii) Are the claims barred by limitation? This became somewhat irrelevant but the High Court ruled they were not. (This, under the common law of conflicts, was a matter of lex causae: Kenyan law, and requiring Kenyan expert input. Not English law, as the lex fori).
The case, like Okpabi, is subject to appeal however it is clear that the English courts are not willing to pick up the baton of court of prefered resort for CSR type cases against mother companies.
(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 8, Heading 8.3.
2017 EWHC 89 (TCC), abuse, abuse of process, abuse of rights, Anchor defendant, article 7, case management, Chandler v Cape, Corporate social responsibility, CSR, Duty of care, environmental damage, FNC, Forum non conveniens, High Court, http://www.bailii.org/ew/cases/EWHC/QB/2017/371.html, http://www.bailii.org/ew/cases/EWHC/TCC/2017/89.html, Lex causae, lex fori, Locus damni, Locus delicti commissi, Nigeria, Okpabi v Shell, Owusu, piercing the veil, procedural law, Rome II, Shell, Unilever,  EWCA Civ 525,  EWHC 371 (QB)
Where does one look first? : as I reported last week, Ms Kiobel is now taking her US case to The Netherlands (this case essentially involves human rights), at a time when Shell is still pursued in the Netherlands by Milieudefensie, in a case involving environmental pollution in Nigeria.
That latter case now is being mirrored in the High Court in London in Okpabi v Shell  EWHC 89 (TCC). The dual proceedings are squarely a result of the split listing of Shell’s mother company, thus easily establishing jurisdiction in both The Netherlands and London, under Article 4 Brussels I Recast.
The only preliminary issue which the High Court had to settle at this early stage was whether Shell’s holding company, established in the UK, can be used as anchor defendant for proceedings against Shell Nigeria (Shell Petroleum Development Company of Nigeria – SPDC). It held that it could not. The questions dealt with are varied and listed as follows:
1. Do the claimants have legitimate claims in law against RDS?
2. If so, is this jurisdiction the appropriate forum in which to bring such claims? This issue encompasses an argument by RDS that it is an abuse of EU law for the claimants to seek to conduct proceedings against an anchor defendant in these circumstances.
3. If this jurisdiction is the appropriate forum, are there any grounds for issuing a stay on case management grounds and/or under Article 34 of the Recast Regulation in respect of the claim against RDS, so that the claim against SPDC can (or should) proceed against SPDC in Nigeria?
4. Do the claims against SPDC have a real prospect of success?
5. Do the claims against SPDC fall within the gateway for service out of the jurisdiction under paragraph 3.1(3) of CPR Practice Direction 6B?
This issue requires consideration of two separate sub-issues, namely (a) whether the claims against RDS involve a real issue which it is reasonable for the Court to try; and (b) whether SPDC is a necessary or proper party to the claims against RDS.
6. Is England the most appropriate forum for the trial of the claims in the interests of all parties and for the ends of justice?
7. In any event, is there a real risk the Claimants would not obtain substantial justice if they are required to litigate their claims in Nigeria?
In detailed analysis, Fraser J first of all seems to accept case-management as a now established route effectively to circumvent the ban on forum non conveniens per Owuso (see Goldman Sachs and also reference in my review of that case, to Jong and Plaza). Over and above case-management he refers to potential abuse of EU civil procedure rules to reject the Shell Nigeria joinder. That reference though is without subject really, for the rules on joinders in Article 8 Brussel I recast only apply to joinder with companies that are domiciled in the EU – which is not the case for Shell Nigeria.
Of specific interest to this blog post is Fraser J’s review of Article 7 Rome II: the tailor made article for environmental pollution in the determination of lex causae for torts: in the case at issue (and contrary to the Dutch mirror case, which is entirely being dealt with under residual Dutch conflicts law) Rome II does apply to at least part of the alleged facts. See here for my background on the issue. That issue of governing law is dealt with at para 50 ff of the judgment.
For environmental pollution, plaintiff has a choice under Article 7 Rome II. Either lex damni (not appealing here: for Nigerian law; the judgment discusses at some length on the extent to which Nigerian law would follow the English Common law in issues of the corporate veil), or lex loci delicti commissi. This, the High Court suggest, can only be England if two questions are answered in the affirmative (at 79). The first is whether the parent company is better placed than the subsidiary to avoid the harm because of its superior knowledge or expertise. The second is, if the finding is that the parent company is better placed, whether it is fair to infer that the subsidiary will rely upon the parent. With reference to precedent, Fraser J suggest it is not enough for the parent company simply to be holding shares in other companies. (Notice the parallel here with the application of ATS in Apartheid).
The High Court eventually holds that there is no prima facie duty of care that can be established against the holding company, which would justify jurisdiction vis-a-vis the daughter. At 106, the Court mirrors the defendant’s argument: it is the Nigerian company, rather than the holding, that takes all operational decisions in Nigeria, and there is nothing performed by the holding company by way of supervisory direction, specialist activities or knowledge, that would put it in any different position than would be expected of an ultimate parent company. Rather to the contrary, it is the Nigerian company that has the specialist knowledge and experience – as well as the necessary licence from the Nigerian authorities – to perform the relevant activities in Nigeria that form the subject matter of the claim. … It is the specialist operating company in Nigeria; it is the entity with the necessary regulatory licence; the English holding company is the ultimate holding company worldwide and receives reports back from subsidiaries.
Plaintiffs have been given permission to appeal. Their lawyers have indicated to rely heavily on CJEU precedent, particularly T-343/06 Shell v EC. This case however concerns competition law, which as I have reported before, traditionally has had a theory on the corporate veil more easily pierced than in other areas. Where appeal may have more chance of success, I believe is in the prima facie character of the case against the mother company. There is a thin line between preliminary assessment with a view to establishing jurisdiction, and effectively deciding the case on the merits. I feel the High Court’s approach here strays too much into merits territory.
(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 8, Heading 8.3.
2017 EWHC 89 (TCC), abuse, abuse of process, abuse of rights, Anchor defendant, article 7, case management, Corporate social responsibility, CSR, environmental damage, FNC, Forum non conveniens, High Court, http://www.bailii.org/ew/cases/EWHC/TCC/2017/89.html, Locus damni, Locus delicti commissi, Nigeria, Okpabi v Shell, Owusu, Rome II, Shell
Lungowe v Vedanta and Konkola. One lb of Owusu and one lb of Chandler v Cape make for a powerful potion.
Here’s the recipe for Lungowe v Vedanta at the High Court.
Obtain one lb of C-291/02 Owusu: European authority: forum non conveniens has no place in the Brussels jurisdictional regime; particularly now in Article 4 of the Brussels I Recast for as Coulson J points out at 57 in his judgment in Lungowe, Articles 33-34 of the Recast Regulation do foresee consideration in the event of parallel proceedings outside of the EU.
Mix with one lb of Chandler v Cape : English authority: parent companies may in circumstances be held liable for the actions of their foreign subsidiaries; referred to with approval by the Dutch Courts in Shell.
Have Zambian claimants in a case of environmental pollution employ Article 4 to establish jurisdiction against a holding company established in England. The company is a holding company for a diverse group of base metal and mining companies, including the second defendant, Konkola.
The fact that Vedanta are domiciled in the United Kingdom is, evidently, one of the principal reasons why they have been pursued in these proceedings (see Coulson J’s acknowledgment of same at 76). This is a manifestation of forum shopping which the CJEU has certainly encouraged. Moreover, as Coulson J suggests at 77-78, claimants also wish to pursue Vedanta because they are seen as the real architects of the environmental pollution in this part of Zambia. The argument is that, since it is Vedanta who are making millions of pounds out of the mine, it is Vedanta who should be called to account. On balance, the use of Vedanta as an anchor defendant can hardly be seen as a malicious ‘device’ or an abuse of the anchor defendant mechanism.
On that issue of abuse, reference is made by the High Court to Freeport and to CDC at the CJEU. There is no suggestion of course that either are direct precedent for the anchor defendant mechanism in residual national private international law. (Which is the case here: for the Brussels Recast joinder mechanism in Article 7 most certainly does not apply to defendants domiciled outside of the EU). It is telling therefore that the Court does refer to them here. (And inevitably raises the question whether English Court will continue to do so after Brexit).
European private international law, second ed. 2016, Chapter 8, Headings 188.8.131.52., 8.3.2
abuse, anchor, Anchor defendant, Chandler v Cape, Corporate social responsibility, CSR, environmental damage, Forum non conveniens, High Court, http://www.bailii.org/ew/cases/EWHC/TCC/2016/975.html, lungowe v vedanta, parent company liability, piercing the veil, Pollution, Regulation 1215/2012, Shell,  EWHC 975 (TCC)
The French Cour de Cassation’s in Banque Privee Edmond de Rothschild Europe v X held that a unilateral jurisdiction clause was invalid under (doubtful) reference to (then) Article 23 of the Brussels I Regulation. The clause was held not to be binding under the French doctrine of clauses potestatives, even though the agreed forum was Luxembourg (whence the validity of the clause was judged under the lex fori derogati, not prorogati; that will no longer be possible under the recast Jurisdiction Regulation). In Credit Suisse, it extended this view (without reference this time to clauses potestatives) to choice of court in the context of the Lugano Convention.
In Apple Sales international v eBizcuss.com, the Cour de Cassation effectively qualifies its Rotschild case-law. The Court of Appeal held as unacceptable, under the theory of clauses potestatives, choice of court obliging eBizcuss to sue in Ireland, while allowing Apple Sales International to sue either in Ireland, or the place of registered office of eBizcuss, or any place where Apple Sales would have suffered damage. The Cour de Cassation now held that this clause is perfectly acceptable under Article 23 (now 25)’s regime for it corresponds to the need of foreseeability. (Which more extreme unilateral clauses arguably do not have). As always, the judgment is scant on details of the underlying contract whence it is not entirely clear whether French law was lex contractus or whether the Cour stuck to lex fori as determining validity of choice of court.
13-27.264, 13.27264, 14-16.898, 25 mars 2015, abuse, Article 23, Banque Privee Edmond de Rothschild Europe v X, Brussels I Regulation, chambre civile 1, Choice of court, clauses potestatives, Cour de Cassation, ECHR, ECLI:FR:CCASS:2012:C100983, ECLI:FR:CCASS:2015:C101053, High Court, https://www.courdecassation.fr/jurisprudence_2/premiere_chambre_civile_568/1053_7_32739.html, https://www.courdecassation.fr/jurisprudence_2/premiere_chambre_civile_568/983_26_24187.html, Jurisdiction, Jurisdiction Regulation, lex fori derogati, lex fori prorogati, Lugano Convention, One-sided jurisdiction clauses, Regulation 1215/2012, unilateral jurisdiction clauses
- Court of Appeal confirms jurisdiction in Lungowe v Vedanta and Konkola. 20/10/2017
- Kubicka: Narrow CJEU interpretation of the ‘property law’ exception. 19/10/2017
- Fasten your (Road and) belts. China to follow example of DIFC and ICC. 18/10/2017
- Farrell and direct effect. CJEU holds that Foster criteria apply disjunctively. 17/10/2017
- Wiseley v Amazon: on consumer contracts, click-wrap and putative laws. 16/10/2017
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