Ontario Court of Appeal’s confirmation to dismiss in Rana Plaza: a relevant comparative marker for duty of care in the supply chain.

Update 06 05 2021 See for comparative purposes Begum v Maran here. That case most definitely advances the duty of care under English law beyond the discussions in earlier case-law which Das v George Wetson, Loblaws et al  had the benefit of discussing. Equally notably, the UK Supreme Court had not yet held in either Vedanta or Okpabi when the Ontario CA held. In light of Begum v Maran, many of the arguments against duty of care under Bangladeshi law may have to be revisited.

Thank you Bennet Jones for flagging, just before Christmas, Das v George Weston, Loblaws et al, 2017 ONSC 4129 in which the Ontario Court of Appeal confirmed the earlier decision to dismiss a claim by a proposed class in Ontario on behalf of individuals injured in the collapse of the Rana Plaza building in Dhaka, Bangladesh in 2013 and their families.

The case evokes a wide range of comparative law issues, including of course jurisdiction (not disputed here), duty of care (much disputed), applicable law (held to be Bangladeshi law as locus delicti commissi (as it would be eg in Australia, different from the EU), but with further discussion of the laws of England (Cape in particular) and India pro inspiratio [in particular M.C. Mehta v India, advancing the English rule of Rylands v Fletcher, in which the Supreme Court of India found that social costs of conducting hazardous activities should be borne by the profit-maker and not by the community].

The Court here discusses and part distinguishes ia Vedanta, Okpabi and Unilever, as Bennet Jones note: ‘Justice Feldman distinguished the English cases in that: (i) Loblaws had little control over the factories; (ii) Loblaws was not in the same business as the factories; (iii) Loblaws did not have superior knowledge or expertise about issues of structural safety; and (iv) Loblaws did not undertake to audit Rana Plaza for structural safety.’

I imagine the last word on what ‘control’ means in global value chains may not have been said.

Geert.

 

Dutch Shell Nigeria / Royal Dutch Shell ruling: anchor jurisdiction confirmed against Nigerian daughter.

Update 3 May 2021 Shell are appealing (only) the duty of care issue with the Supreme Court.

Update 1 February 2021 the Court has now upheld liability for certain aspects of the pollution, citing duty of care under Nigerian common law. Update 3 February 2021 see Lucas’ Roorda’a analysis here and update 4 February 2021 analysis by Meester Channa Samkalden, lead counsel for claimant in the case here.

Update 21 March a mirror case is going ahead in the High Court in London: jurisdiction against the mother company again is easily established because of Shell’s incorporation in the UK (its corporate headquarters are in The Netherlands (which is also where it has its tax residence). The High Court has allowed proceedings against Shell Nigeria to be joined. Shell is expected to argue forum non conveniens at a later stage.

Postscript 1 March 2016 in Xstrata Limited /Glencore Xstrata plc ., similar issues of corporate social responsibility and liability for a subsidiary’s actions are at stake.

As I have reported in December, the Gerechtshof Den Haag confirmed jurisdiction against Shell’s Nigerian daughter company in Eric Barizaa Dooh and Vereniging Milieudefensie v Royal Dutch Shell Plc and Shell Petroleum Development Company of Nigeria Ltd. (Please note the link first has the NL version of the judgment, followed by an EN translation). The proceedings can be joined with the suit against the mother company Royal Dutch Shell (RDS, headquartered in The Netherlands whence easily sued on the basis of Article 4 Brussels I Recast (Article 2 of the Regulation applicable to the proceedings)). I have finally gotten round to properly reading the court’s judgment (which deals with jurisdiction issues only). As I have pointed out, Article 6(1) (now 8(1) of the Brussels I Recast) cannot be used against defendants not domiciled in the EU. Dutch rules on joinders applied therefore. The Gerechtshof however took CJEU precedent into account, on the basis that the preparatory works of the relevant Dutch rules on civil procedure reveal that they were meant to be so applied. Consequently a lot of CJEU precedent is reviewed (the most recent case quoted is CDC). The Gerechtshof eventually holds that lest it were prima facie established that liability of RDS for the actions committed by its Nigerian daughter is clearly unfounded, use of RDS as an anchor can go ahead. Only clearly abusive attempts at joinders can be sanctioned. (A sentiment most recently echoed by the CJEU in Sovag).

The Gerechtshof Den Haag, without being definitive on the issue, also suggested that applicable law for considering whether merger operations inserting a new mother company were abusive (merely carried out to make Royal Dutch Shell escape its liability), had to be addressed using ‘among others’ the lex incorporationis (at 3.2). That is not undisputed. There are other candidates for this assessment.

The judgment being limited to jurisdiction, this case is far from over.

Geert.

European private international law, second ed. 2016, Chapter 8, Headings 8.3.1.1., 8.3.2

Royal Dutch Shell. Watch those stockings. Nigeria / RDS judgment on appeal expected end December.

Postscript 1 March 2016 in Xstrata Limited /Glencore Xstrata plc ., similar issues of corporate social responsibility and liability for a subsidiary’s actions are at stake.

Postscript 18 December: quick update, more to follow: in an interim judgment, jurisdiction was upheld.

I have earlier referred to Shell’s arguments in appeal (in Dutch) on the specific issue of jurisdiction, which may be found here .  Judgment in first instance in fact, as I reported, generally was quite comforting for Shell (and other holding companies in similar situations) on the issue of substantive liability.

However on jurisdiction, the Dutch court’s approach of joinders under residual national jurisdictional rules, was less comforting. The rules on joinders, otherwise known as ‘anchor defendants’, in the Brussels regime (Brussels I as well as the Recast) do not apply to defendants domiciled outside of the EU. Consequently national rules of civil procedure decide whether an action against a daughter company, established outside of the EU, can be successfully anchored to an action against the mother company (against which jurisdiction is easily established per Article 4 of the Recast, Article 2 of the former Regulation). In first instance, the Court at The Hague ruled in favour of joining a non-EU defendant to a case against its mother company in The Netherlands.

In its submission for appeal, Shell (with reference to relevant national case-law) borrows heavily from CJEU case-law on what was Article 6(1) (now Article 8(1)), suggesting that Dutch residual law was meant to apply as a mirror the European regime, with one important difference: precisely the issue that under the Dutch regime, none of the parties need to be domiciled in The Netherlands. Any jurisdictional rule which leads the Dutch courts to accept jurisdiction against one defendant, even if that anchor defendant is not domiciled in the country, can lead to others being drawn into the procedure. This means, so Shell suggests, that the Dutch rule (Article 7(1) of the Dutch code of civil procedure) is more in need of precautions against abuse, than the equivalent European rule.

As part of the efforts to avoid abuse, the Dutch courts need to make a prima facie assessment of the claims against the anchor defendant: for if those claims are spurious, anchoring other claims to such loose ground would be abusive. On this point, the Court of Appeal will have to discuss the corporate veil, piercing it, Chandler v Cape etc. Shell’s submission does not in fact argue why piercing needs to be assessed by the lex causae (here: Nigerian law as the lex loci damni) and not, for instance, by the lex fori. I doubt the Court of appeal will raise it of its own accord. (See here for a consideration of the issues in an unrelated area and further pondering here).

A little bird tells me that appeal judgment will be issued on 18 December. I may or may not be able to review that before the Christmas break. In the negative, it will have to be an Epiphany posting. (Potentially in more than one meaning of the word).

Geert.

 

No big surprises in Dutch Shell Nigeria / Royal Dutch Shell ruling

Postscript/2015: Shell’s arguments in appeal (in Dutch) on the specfic issue of jurisdiction, may be found here

As reported earlier, Shell’s top holding has been hauled before a Dutch court by a Dutch environmental NGO (Milieudefensie), seeking (with a number of Nigerian farmers) to have the mother holding being held liable for environmental pollution caused in Nigeria. Judgment came yesterday and generally is quite comforting for Shell (and other holding companies in similar situations).

The court stuck to its decision to join the cases, hence allowing Shell Nigeria to be pursued in the Dutch Courts, together with the holding company (against which jurisdiction was easily established under the Brussels I Regulation).  On this point, one imagines, Shell might appeal.

The court held against application of the Rome II Regulation for temporal reasons and did therefore not entertain any (unlikely) options in that Regulation which may  have led to Dutch law: the events which gave rise to the damage occurred before the entry into force of that Regulation. The Court therefore applies lex loci damni. If I am not mistaken, prior to Rome II, The Netherlands applied a more or less complex conflicts rule, not necessarily leading to lex loci damni, neither to lex loci delicti commissi, which was the rule in most EU Member States prior to the entry into force of the Rome II Regulation.

Nigerian law applied and any route to apply Dutch law was rejected.  Incompatibility with Dutch ordre public, for instance, was not withheld. Nigerian law running along common law lines, the court ran through negligence in tort, applied to environmental cases, leading amongst others to the inevitable Rylands v Fletcher. The  court found that the damage occurred because of sabotage, which under Nigerian law in principle exhonerated Shell Nigeria. Only for two specific instances of damage was liability withheld, for Shell Nigeria had failed to take basic precautions.

The conditions of Chandler v Cape (2012) to establish liability for the holding company, were not found to be met in the case at issue. The court did not establish a specific duty of care under Nigerian law (with the loop to the English common law) for Royal Dutch Shell (RDS), the mother company. A general CSR committment was not found not to alter that.

No doubt to be continued in various forms of appeal.

Geert.

%d bloggers like this: