Posts Tagged Corporate social responsibility
Kiobel v Shell in The Netherlands. Court confirms jurisdiction anchored unto mother holding and qualifies the suit as one in human rights: not tort. Also orders limited use of documents obtained in US discovery and limited continuation of the trial.
Update 26 July 2019 the English version of the judgment is now available here.
In January 2017 I reported that Ms Kiobel, following failure to convince the USSC of jurisdiction under the Alien Tort Statute, subsequently initiated proceedings in the Dutch courts to try and sue Shell over the case. (Evidently unrelated to the pursuit of Shell in The Netherlands on environmental grounds – a case which is still pending upon appeal).
The court in first instance at the Hague on 1 May accepted jurisdiction against
- both the mother holding. That was not at all under discussion: this is done via Article 4 Brussels Ia’s domicile rule. Use of Article 33 /34’s forum non conveniens-light mechanism was not suggested;
- two English-incorporated Shell daughters using Article 8(1) of the Brussels I a Regulation; and
- the Nigerian daughter company. Against the Nigerian daughter company, jurisdiction needs to be anchored unto the Dutch mother holding using Article 7 of the Dutch CPR, which is a near carbon copy of Article 8(1) Brussels Ia, whose CJEU authority is followed by Dutch courts in the interpretation of the Dutch residual rule.
Coming so soon after the UKSC in Vedanta the Dutch case has received quite a bit of attention. After first not considering an English translation (not surprisingly; these are the Dutch courts, not a World Service), the clerks have now announced that there will be one, coming up some time soon.
Readers of the blog will expect me to hold the judgment against a clear jurisdictional and conflict of laws lens – in doing so, I fear I have to be a little bit less optimistic than media soundbites following the case.
Jurisdictional issues were in the end dealt with fairly summarily. Most attention went to issues of evidence and discovery, as well as a first review of the substance of the case.
Of note is:
- At 4.3: acceptance by all parties of of Nigerian law as the lex causae; if need be, choice of law by all parties for Nigerian law as the lex causae. Rome II is not applicable ratione temporis. The case has this in common with the Milieudefensie case against Shell. This being a civil law jurisdiction, ius novit curia applies. The court has taken into account parties’ submissions on Nigerian law yet has also conducted its own research. Foreign law is ‘law’ in the civil law; not ‘fact’ as in the common law.
- Claimants suggest that in the events in Ogoniland Shell acted as one organisation and treated the issue as one engaging the Shell concern as a whole (4.7 in fine);
- Claimants purposedly do not wish their claim to be qualified as one engaging piercing of the corporate veil; duty of care; shareholders responsibility; or tort of negligence. Rather, as one engaging the Shell concern directly in a suit on infringement of human rights included in the African Charter on Human and Peoples Rights (ACHPR) and the Nigerian constitution. Tort is only suggested as an alternative should the court not follow the arguments on the basis of human rights (4.8).
- At 4.12 the Court accepts the horizontal direct effect of human rights under Nigerian law, referring for that finding to Nigerian case-law. At 4.19 the Court notes the absence of statutes of limitation for human rights violations under Nigerian law: thus qualifying this as an issue of substance (lex causae), not procedure (lex fori). It revisits the statute of limitation issue at 4.47 ff (holding that under Nigerian law the suits can still be brought).
- At 4.26 the court applies A8(1) BIa and A7 Dutch CPR in globo, given the same lines of interpretation, and finds succinctly that all conditions (Kalfelis; Roche Nederland; The Tatry) are met. It remarks at 4.26 in fine that given the same situation of law and fact, it was predictable for all parties that they might end up being sued in any of their corporate siblings’ domicile.
- At 4.27 the court discussed summary dismissal. As seen in Vedanta, despite Owusu European courts are within their rights to reject the case in summary judgment if there is no ‘real issue’ to be tried against the anchor defendant. However this only applies against non-EU based defendants. Application of Article 8(1) does not allow such summary dismissal for EU-based defendants (see also C-103/05 Reisch Montage). The Hague court reviews summary dismissal only vis-a-vis the Nigerian defendant but finds succinctly that the suit is not prima facie without merit. There is a serious issue to be tried.
- At 4.28 interestingly the Court rejects relevance of the High Court and the Court of Appeal‘s dismissal of jurisdiction in Okpabi, arguing that these courts employed ‘English law’. This underscores the argument I have made elsewhere, that there is a serious blank in the discussion on lex causae for the duty of care or, depending on the case, the piercing issue. The Dutch court here notes without hesitation that the English courts apply lex fori to that test, and so therefore, I am assuming, should they (meaning Dutch law in their case)?
- At 4.29 it looks as if the Court considers some kind of reflexive argument which defendants seem to have made. Namely that the Dutch courts should respect the exclusive jurisdictional head under the Fundamental Rights (Enforcement Procedure) – FREP Rules, for the Federal High Court in cases involving alleged infringement of human rights. However the Dutch court considers this a mere internal jurisdictional distribution rule, which does not hinder the Dutch courts in their assessment of the claims. There is no written or unwritten rule in Dutch private international law which suggests such deference to a Nigerian civil procedure rule.
Importantly, a great deal of attention at 4.30 ff goes to the debate on the use of documents obtained in US discovery, in the Dutch proceedings. A fair amount of these had to be returned following a confidentiality agreement in the US proceedings. Claimants make recourse to Article 6 ECHR to regain access for use in the Dutch proceedings however the Dutch court curtails much of that. Common law discovery rules are notoriously more claimant friendly than those of the civil law (a comment also made by Marsh CM in Glaxo v Sandoz). It leads to Shell not having to turn over quite a large part of the documents claimants had hoped to use. [Note 18 May 2019 in my original post of 17 May I had ‘common’ law and ‘civil law’ accidentally mixed up in the previous sentence].
At 4.58 ff the Court then turns to the substance of the case for case management reasons, with a view to determining which parts of the claim may be made subject to further proof. It holds in a way which I imagine must have been very disappointing for claimants. Only limited claims (of the Nigerian daughter’s involvement in the bribing of witnesses) will be allowed to continue.
The court held that claims of controlling meddling in the Nigerian court proceedings were not proven with sufficient force for these claims to continue – instead it held that Shell’s policy of silent diplomacy, in line with its business policies, had been consistently carried out.
All in all I would suggest claimants have scored clear points on jurisdiction, minor points on discovery and a disappointing outcome for them on substance. Albeit that the witness bribe leg may still lead to a finding of human rights infringement.
(Handbook of) European private international law, second ed. 2016, Chapter 8, Headings 18.104.22.168., 8.3.2.
Alien Tort Statute, anchor, Article 8(1), Article 8(1) Brussels Ia, ATS, BIa, bizhumanrights, Brussels I recast, Brussels Ia, Brussels Regulation, Certiorari, Corporate social responsibility, CSR, discovery shopping, ECLI:NL:RBDHA:2019:4233, Extraterritoriality, Foreign Legal Assistance (FLA), https://uitspraken.rechtspraak.nl/inziendocument?id=ECLI:NL:RBDHA:2019:6670, Human rights, Jurisdiction, Kiobel, Netherlands, Right to fair trial, Royal dutch Petroleum, Shell, USSC
Modern Families. UK Supreme Court confirms CSR jurisdiction against mother and daughter in Lungowe v Vedanta and Konkola – yet with one or two important caveats.
Update 10 June 2019 for an update of Canadian case-law developments see here.
Update 30 April 2019 I cannot possibly keep up with all emerging scholarship on the issue yet this review by Penelope Bergkamp most complete and worthwhile.
Update 17 April 2019 Opinio Juris have relevant review here.
Update 16 April 2019 Nick Lees and Tim Pickworth have similar caution for overenthusiastic reaction to the UKSC judgment here.
The SC this morning held in  UKSC 20 Vedanta and Konkola v Lungowe, confirming jurisdiction in England for a human rights /environmental claim against a Zambia-based defendant, Konkola Copper Mines or ‘KCM’, anchored unto an EU-based defendant, Vedanta resources, the ultimate parent company of KCM. Both High Court and Court of Appeal had upheld such jurisdiction (the links lead to my blog post on both).
Of note are:
1. First of all
Lord Briggs’ emphatic rebuke of parties (and courts, one assumes) having disproportionately engaged with the issue of jurisdiction. With reference to ia VTB Capital he underlines that jurisdictional dispute should be settled in summary judgment alone, and should not lead to a mini trial. Reference is made to the size of the bundles etc. A bit of an unfair comment perhaps given that clearly there was a need for SC intervention. At any rate, one imagines that current judgment settles a number of issues and that in future litigation therefore these at least will have to be met with less arguments; lest, as his lordship notes at 14, the Supreme Court’ will find itself in the unenviable position of beating its head against a brick wall.’
2. As noted by Coulson J at 57 in the High Court judgment, neither Vedanta nor KCM pursue an Article 34 Brussels Ia argument of lis alibi pendens with proceedings in Zambia. As I signalled in my succinct review of recent study for the EP yesterday, the A34 defence is likely to be important in future litigation.
3. Applicants’ arguments that pursuing the case against them is an abuse of EU law, were advanced and equally rejected at both the High Court and the Court of Appeal stage. They are pursued again with the SC (at the latter’s express instruction).
- At 29 Lord Briggs agrees with the HC and the CA and decides that the point that there has been no such abuse of EU law, is acte clair – no reference to the CJEU therefore.
- At 31 ff he discusses the limited authority (all of it discussed at the HC and the CA) on abuse of Brussels I (a), particularly abuse of the anchor defendant mechanism of (now) Article 8(1), including of course CDC and at 37 raises the interesting issue of remedy: if abuse is found, is it to be disciplined under a European remedy or rather using the common law instrument of forum non conveniens?
- And at 39: appellants argue that in CSR cases like these, Owusu has the almost inevitable effect that, providing a minimum level of triable issue can be identified against an English incorporated parent, then litigation about environmental harm all around the world can be carried on in England, wherever the immediate cause of the damage arises from the operations of one of that group’s overseas subsidiaries. With the case against the England-based defendant going ahead at any rate, per Owusu, the risk or irreconcilable judgments should jurisdiction against the subsidiaries be vacated, simply becomes to great. Not so hands tied behind the back, appellants argue, but forum non paralysis.
- At 40 Lord Briggs suggests an adjustment of the English forum non conveniens doctrine for cases like these: namely to instruct claimants of the need to avoid irreconcilable judgments, where the anchor defendant is prepared to submit to the jurisdiction of the domicile of the foreign defendant in a case where, as here, the foreign jurisdiction would plainly be the proper place, leaving aside the risk of irreconcilable judgments
4. Despite Owusu, the English courts are still within their rights to reject the case in summary judgment if there is no ‘real issue’ to be tried against the anchor defendant. Here, discussion turned at 42 ff as to whether one should merely apply Chandler v Cape  EWCA Civ 525, or whether this case involves the assertion of a new category of common law negligence liability.
- This was rejected, like it was by Sales LJ in AAA v Unilever plc  EWCA Civ 1532, which I review here.
- Lord Briggs 54 concludes that viz the common law of liability there is neither anything special nor conclusive about the parent /subsidiary relationship, and
- at 53 flags what instantly has become a favourite among commentators on the case: ‘Even where group-wide policies do not of themselves give rise to such a duty of care to third parties, they may do so if the parent does not merely proclaim them, but takes active steps, by training, supervision and enforcement, to see that they are implemented by relevant subsidiaries. Similarly, it seems to me that the parent may incur the relevant responsibility to third parties if, in published materials, it holds itself out as exercising that degree of supervision and control of its subsidiaries, even if it does not in fact do so. In such circumstances its very omission may constitute the abdication of a responsibility which it has publicly undertaken.’
4bis This part of course inevitably may give parent companies a means to prevent such liability (do not proclaim group-wide policies, let alone train or enforce them – as Gabrielle Holly also immediately noted here). However a variety of mechanisms may prevent this becoming a cheap trick to avoid liability: such compliance programs are often required under competition law, financial law etc., too; are relevant for directors’ liability; and of course may already (such as in the French devoir de vigilance) or in future (as mooted ia by the EC and the EP) be statutorily prescribed.
At 60: in the case at issue, the SC finds that the High Court with sufficient care examined and upheld the essence of the claimants’ case against Vedanta, that it exercised a sufficiently high level of supervision and control of the activities at the Mine, with sufficient knowledge of the propensity of those activities to cause toxic escapes into surrounding watercourses, as to incur a duty of care to the claimants. At 61 Lord Briggs adds obiter that not all the material (particularly services agreements) would have persuaded him as much as they did the HC or the CA, however at 62 he emphasis again that the HC and CA’s judgment on same was not vitiated by any error of law.
5. At 66 ff then follows the final issue to be determined: forum non conveniens and the further advancement of the issue already signalled above: it troubles Lord Briggs at 75 that the trial judges did not focus upon the fact that, in this case, the anchor defendant, Vedanta, had by the time of the hearing offered to submit to the jurisdiction of the Zambian courts, so that the whole case could be tried there. (An argument which was considered by Leggatt J in VTB).
- Evidently the A4 BruIa case would have had to continue per Owusu, yet the reason why the parallel pursuit of a claim in England against Vedanta and in Zambia against KCM would give rise to a risk of irreconcilable judgments is because the claimants have chosen to exercise that right to continue against Vedanta in England, rather than because Zambia is not an available forum for the pursuit of the claim against both defendants: claimant-inflicted forum non.
- Why, at 75 in fine, (it may be asked) should the risk of irreconcilable judgments be a decisive factor in the identification of the proper place, when it is a factor which the claimants, having a choice, have brought upon themselves?
- Lord Briggs’ argument here is complex and I need to cross-refer more to the various authorities cited however the conclusion seems to be that Lord Briggs rejects the argument of Leggatt J in VTB and he finds that ! provided the ex-EU forum is a suitable forum, under English private international law claimants do have to make a choice: either only sue the A4 defendant in the EU but not the ex-EU subsidiaries; or sue all in the forum where they may all be sued (if there is such a forum), here by virtue of submission to the non-EU forum. The alternative would allow claimant to profit from self-inflicted risks of irreconcilable judgments.
- In the end the rule is of no impact in the case for Zambia was found not to be an appropriate forum, for reasons of ‘substantial justice’: among others because of the absence of Conditional Fee Agreements, and given the unavoidable scale and complexity of this case (wherever litigated), the trial judge was right that it could not be undertaken at all with the limited funding and legal resources which the evidence led him to conclude were available within Zambia.
6. By way of my conclusion so far: (update 11 April 2019: in the meantime echoed by Robert McCorquodale’s analysis here; and here; he was counsel for interveners in the case hence was able to refer to insight gained from having seen parties’ submissions)
The group policy direction, enforcement, compliance and communication of same -issue is an important take away from this case. Particularly as it may be expected that holding companies will not find it that straightforward simply to do away with such policies. Of great impact too will be the choice now put upon claimants in the forum non conveniens issue: suing nondom companies by virtue of anchoring unto the A4 mother company in England at least will be less straightforward (many usual suspects among the competing jurisdictions do have CFAs, allow for third party funding etc.). Yet the two in my view dovetail: the reason for bringing in the ex-EU subsidiaries often is because the substantial case against them tends to serve the case against the mother. With a tighter common law neglicence liability the need to serve the daughter may be less urgent.
European private international law, second ed. 2016, Chapter 8, Headings 22.214.171.124., 8.3.2
A34, abuse, anchor, Anchor defendant, Article 34, Cape v Lubbe, Cape v Lube, Chandler v Cape, Corporate social responsibility, CSR, environmental damage, forum non, Forum non conveniens, Fraud, Fraus, Fraus omnia corrumpit, High Court, http://www.bailii.org/ew/cases/EWCA/Civ/2017/1528.html, http://www.bailii.org/ew/cases/EWHC/TCC/2016/975.html, https://www.supremecourt.uk/cases/docs/uksc-2017-0185-judgment.pdf, Lis alibi pendens, lungowe v vedanta, parent company liability, piercing the veil, Pollution, Regulation 1215/2012, Shell,  EWHC 975 (TCC),  UKSC 20
As I turn to preparations for a talk on CSR litigation and conflict of laws, Thursday next (11 April) in Cork, (which incidentally will be a day after the UKSC will deliver its verdict in Vedanta), I was consulting the report made for the European Parliament on the issue of access to legal remedies for the victims of corporate human rights abuses.
A few supplementary thoughts, fed also by an upcoming chapter of mine in an edited volume for OUP.
The report does an excellent job at collating much of the relevant case-law in a variety of countries: there is no better way to appreciate the difficulties than to consider the law in action. Despite the efforts of the team, particularly for the UK a few important cases were not included: Bento Rodriguez, Gemfield, Kalma, Garcia v Total.
The report flags the absence of forum non conveniens in Brussels I but omits the important forum non-type mechanism of Brussels Ia: Articles 33-34. This is likely to be important for the future application of CSR cases in the EU.
Analysis of KIK could have focused on the problematic qualification of statutes of limitation under Rome II. (Particularly as the report seeks to make recommendations to the EP and the EU Institutions as a whole).
The often missed elephant in the conflicts room of lex causae for veil-piercing and /or allocating duty of care. Lex fori? Lex causea? Lex societatis (e.g. for the Shell cases in the UK).
The suggestions under 6.2.2 for a forum necessitatis were in fact discussed in the review of Brussels I and it was Parliament at the time which (not unjustifiably) rejected it.
Ordre public considerations would be served well by final completion and release by the EC of its report on the use of ordre public in the EU: the report would have been a good reminder.
Finally in discussing access to justice issues no mention is made of the role of third party financing: this essentially enables much of this type of litigation yet is often seen by many in the CSR community as suspicious.
All in all the conflicts-related recommendations of the report ought to have been fine-tuned: I hope the above is of some service.
(Handbook of) EU private international law, 2nd ed. 2016, Chapter 8.
Jabir and others v. KiK Textilien und Non-Food GmbH. German court kicks supply chain CSR litigation into the long grass. Questions on Statutes of limitation under Rome II left out in the open.
Update 11 April 2019 for Essex Law School /Anil Yilmaz legal opinion on the relevant common law principle at stake, see Opinion prepared for the case here.
Jonas Poell, Julianne Hughes-Jennett, Peter Hood and Lucja Nowak reported and succinctly reviewed Case No. 7 O 95/15 Jabir and Others v Kik early January – the ‘next week’ promise in my Tweet below turned out a little longer.
Survivors of a fire in a Pakistani textile supplying factory are suing Germany-based KIK as the “main retailer” of the merchandise produced in the Pakistani premises. Jurisdiction evidently is easily established on the basis of Article 4 Brussels Ia.
As Burkhard Hess and Martina Mantovani note here, claimants are attempting to have KIK held liable for not having promoted and undertaken, in practice, the implementation of “adequate safety measures” in the Pakistani factory (producing clothes), thus breaching an engagement they undertook in a Code of Conduct applicable to its relationship with its contractual counterpart.
Prof Hess and Ms Mantovani’s paper ‘Current developments in forum access: Comments on jurisdiction and forum non conveniens European Perspectives on Human Rights Litigation’ incidentally is an excellent stock taking on the issues surrounding mass tort (human rights) litigation.
The Dortmund court held that the case is time-barred under Pakistani law which was the lex causae per Rome II, Regulation 864/2007. Now, I have not had access to the full ruling (lest the 3 page ruling linked above is precisely that – which I am assuming it is not), so a little caveat here, however the court’s discussion of limitation periods is startlingly brief. Article 15 Rome II includes ‘the manner in which an obligation may be extinguished and rules of prescription and limitation’ in the scope of application of the lex causae’. Yet as the development inter alia of relevant English statute shows (discussed ia by Andrew Dickinson in his Rome II book with OUP), there are a multitude of issues surrounding statutes of limitation. One of them being Article 1(3) Rome II’s confirmation that evidence and procedure is not within its scope, another Article 26’s ordre public exception which certainly may have a calling here.
The court at Dortmund also rejects the argument that parties’ settlement negotiations before the claims were filed amount to choice of (German) law per Article 14(1). That would have triggered the 3 year German limitation period as opposed to the 2 year Pakistani one. Dr Jungkamp, the chamber president, argues that parties did not have any reflection on the Pakistani (or indeed German) limitation period in mind when they corresponded on the ex gratia out of court settlement, hence excluding the intention (animus contrahendi) required to speak of choice of law. I would suggest that is a bit of a succinct analysis to conclude absence of choice of law. Parties need not be aware of all implications of such choice for it to be validly made.
Appeal is possible and, I would suggest, warranted.
(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 4, Heading 4.7, Heading 4.8, Chapter 8, Heading 8.3.
Dortmund court found that the claims are time-barred under Pakistani law, which was applicable to the case pursuant to the Rome II Regulation.
Quite a few Rome II issues here. I have a blog post focusing on the conflicts issues forthcoming next week. https://t.co/dkcKLvugoa
— Geert Van Calster (@GAVClaw) January 12, 2019
Article 15, Bangladesh, Brussels Ia, Brussels Ia Regulation, Compact, Corporate social responsibility, CSR, Germany, http://www.lg-dortmund.nrw.de/behoerde/presse/Pressemitteilungen/PM-Urteil-KIK.pdf, Jabir and others v Kik Textilien, Jurisdiction, Kik, limitation, mass tort litigation, Pakistan, Rome II, statute of limitation, Supply chain liability, Tort, verjaring
Nevsun Resources Ltd. v. Gize Yebeyo Araya, et al. Some of the unanswered Kiobel and Jesner Bank issues now at the Canadian Supreme Court.
Plenty of goings-on in the Corporate Social Responsibility /mass torts category, as regular readers of the blog and /or my Twitter-feed will know. Thank you Jutta Brunnée for alerting us to Nevsun Resources v Gize Ybeyo et al, currently making its way through the Canadian Supreme Court. Thank you also Cory Wanless for pointing out the core of the issue: Nevsun are not contesting jurisdiction (its existence is secure; much like in the EU context) e.g. on forum non conveniens grounds. Rather, the Supreme Court is asked whether there should be a new tort of breach of international law, and whether the “act of state” doctrine prevents adjudication.
The first question undoubtedly will lead to a discussion of similar issues raised in Kiobel, where they were not discussed by the USSC, and in Jesner Bank, where the USCC refused to be the dealmaker on public international law. The second issue is likely to imply consideration of the very foreign poicy considerations which featured heavily in circuit considerations prior to Kiobel.
(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 8, Heading 8.3.
Act of State, Alien Tort Statute, Canada, Corporate social responsibility, CSR, Duty of care, foreign soverreign immunity, High Court, Jesner Bank, Kiobel, Nevsun, Nevsun Resources Ltd. v. Gize Yebeyo Araya, piercing the veil, Shell, Supreme Court, Unilever
The media have been reporting on a considerable class action lawsuit, underway in the English courts, in the Corporate Social Responsibility /mass torts category.
The class action case was filed against Anglo-Australian company BHP Billiton on behalf of 240,000 individuals, 24 municipal governments, 11,000 businesses, a Catholic archdiocese and about 200 members of the Krenak indigenous community. It concerns victims of the Samarco dam collapse in Mariana three years ago.
I am reporting the case simply to ensure complete overview of the CSR /jurisdiction /applicable law issues reported on the blog. For as I am co-counsel acting for the claimants, I am not in a position to comment on the case until and if legal analysis will be in the public domain.
(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, Bento Rodrigues, BHP Billiton, case management, Chandler v Cape, Corporate social responsibility, CSR, Duty of care, environmental damage, FNC, Forum non conveniens, Gemfield, 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, Samarco, Shell, Unilever,  EWCA Civ 525,  EWHC 371 (QB),  EWCA Civ 1532
Unilever. Court of Appeal summarily dismisses CSR jurisdiction against mother company, confirming High Court’s approach. Lex causae for proximity again left undiscussed.
Update 21 September 2018 further litigation on similar issues is underway in Gemfield [AAA and others v Gemfields Plc and Montepuez Ruby Mining Limitada]. See overview of issues here.
The Court of Appeal in  EWCA Civ 1532 has confirmed the High Court’s approach in  EWHC 371 (QB) AAA et al v Unilever and Unilever Tea Kenya ltd, holding that there is no good arguable case (the civil law notion of fumus boni iuris comes closes, as Bobek AG notes in Feniks) against Unilever, which could then be used to anchor the case in the English jurisdiction.
Pro memoria: jurisdiction against Unilever is clear, following Article 4 Brussels I Recast. That Regulation’s anchor mechanism however is not engaged for Article 7(1) does not apply against non-EU based defendants. It is residual English private international law that governs this issue.
Appellants appeal in relation to the High Court’s ruling that neither Unilever nor UTKL (the Kenyan subsidiary) owed the appellants a duty of care. Unilever has put in a respondent’s notice to argue that the judge should have found that there was no duty of care owed by Unilever on the additional ground that, contrary to her view, there was no proximity between Unilever and the appellants in respect of the damage suffered by them, according to the guidance in Chandler v Cape Plc. Unilever and UTKL also sought to challenge that part of the judgment in which the judge held that, if viable claims in tort existed against Unilever (as anchor defendant) and UTKL, England is the appropriate place for trial of those claims. Unilever also cross-appealed in relation to a previous case management decision by the judge, by which she declined an application by Unilever that the claim against it should be stayed on case management grounds, until after a trial had taken place in Kenya of the appellants claims against UTKL.
The legal analysis by Sales LJ takes a mere five paragraphs (para 35 onwards). Most of the judgment is taken up by an (equally succinct) overview of risk management policies within the group.
At 35 Sales LJ notes ‘Having set out the relevant factual background in relation to the proximity issue (i.e. whether the appellants have any properly arguable case against Unilever in the light of Chandler v Cape Plc and related authorities), the legal analysis can proceed much more shortly. It is common ground that principles of English law govern this part of the case.‘
– the ‘common ground’ presumably being lex loci incorporationis.
This is an interesting part of the judgment for I find it by no means certain that English law should govern this part of the case. In one of my chapters for professor Vinuales’ en Dr Lees’ forthcoming OUP book on comparative environmental law, I expand on that point.
The long and the short of the argument is that Unilever did not intervene in the affairs of its subsidiary in a more intensive way than a third party would have done. Reference at 37 is made to the contrasting examples given by Sir Geoffrey Vos in Okpabi, ‘One can imagine … circumstances where the necessary proximity could be established, even absent the kind of specific facts that existed in Vedanta … Such a case might include the situation, for example, where a parent required its subsidiaries or franchisees to manufacture or fabricate a product in a particular way, and actively enforced that requirement, which turned out to be harmful to health. One might suggest a food product that injured many, but was created according to a prescriptive recipe provided by the parent. …’
and, at 38, to the raison d’être of mother /daughter structures,
“… it would be surprising if a parent company were to go to the trouble of establishing a network of overseas subsidiaries with their own management structures it if intended itself to assume responsibility for the operations of each of those subsidiaries. The corporate structure itself tends to militate against the requisite proximity …
– subject evidently to proof of the opposite in the facts at issue (a test seemingly not met here).
(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, Gemfield, 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),  EWCA Civ 1532
- NMBS v Mbutuku Kanyeba et al. A very relaxed CJEU on the notion of ‘contract’ (in EU transport law). 14/11/2019
- PrivatBank v Kolomoisky and Boholiubov. The Court of Appeal reverses the High Court ia on abuse of the anchor mechanism. Further consideration, too, of the reflexive effect of Article 28’s lis alibi pendens, and of Article 34. 12/11/2019
- Saugmandsgaard ØE in Libuše Králová v Primera Air Scandinavia: the Feniks ‘contractual relation’ train thunders on, yet restraint is shown on the consumer section, even for package travel. 11/11/2019
- Swamdi Ramdev v Facebook, Google, Youtube et al at the Delhi High Court: Worldwide removal ordered without much hesitation. 05/11/2019
- VEB v BP: locating purely financial damages in cross-border securities class actions. 30/10/2019
Also of noteMy Tweets