Legal Briefing Lungowe & Others v Vedanta Resources Plc & Konkola Copper Mines [2017]
Friday 13th October: An auspicious day for Zambian claimants On Friday 13 October 2017 the Court of Appeal handed down judgment in Lungowe & Others v Vedanta Resources Plc & Konkola Copper Mines [2017] EWCA Civ 1528 dismissing the appeals of both Vedanta Resources and Konkola Copper Mines in relation to the jurisdiction of the Courts of England and Wales to hear the claims of almost 2,000 Zambians regarding alleged environmental pollution. Background The Claimants are 1,826 Zambian citizens who commenced proceedings against Vedanta, a UK domiciled multinational mining company, and its Zambian subsidiary Konkola Copper Mines ( KCM ), a copper mining company operating one of the largest copper mines in the world. The Claimants allege that as a result of the Defendants toxic effluent discharge from their Nchanga Copper Mine they have suffered loss of income through damage to the land and waterways on which they rely. They further contend that many are suffering from personal injuries as a result of having to consume and use polluted water. They are seeking damages, remediation and cessation to the alleged continual pollution that they say is gravely impacting their lives. Following service of proceedings in August 2015 both Defendants challenged the jurisdiction of the English Courts, filing applications which sought, inter alia, a declaration that the court does not have jurisdiction to try the claims. In April 2016 Mr Justice Coulson (now Lord Justice Coulson), heard submissions and evidence from all parties during a three day hearing in the Technology and Construction Court. Coulson LJ s judgment of 27 May 2016 found categorically in favour of England as the most convenient forum for the resolution of the claims allowing the claims to proceed against both Defendants.
The legal framework for determining jurisdiction The English courts apply two separate sets of rules to determine jurisdiction in cases before it: i. The rules contained in the Recast Brussels Regulation for defendants domiciled within the EU, particularly Article 4 which states persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State ; and ii. For defendants domiciled outside of the EU the court generally applies common law principles. The decision in relation to Vedanta s appeal In the first instance decision, the Claimants relied on the judgment of Court of Justice of the European Union (the CJEU ) in Owusu v Jackson [2005] QB 801, where it was held that a national court is precluded from declining the mandatory jurisdiction conferred on it by Article 4 of the Recast Brussels Regulation on the grounds of forum non conveniens. In his judgment, Coulson J agreed with the Claimants explaining that Owusu v Jackson is authority for the proposition that forum non conveniens arguments are irrelevant to the claim against Vedanta, give the terms of what is now Article 4 [54] and further that it has been repeatedly held in subsequent decision in the United Kingdom that the decision in Owusu v Jackson prevents any consideration of the forum non conveniens principle when the defendant, or one of the defendants, is domiciled in the UK [56].
In their appeal, Vedanta contended that in fact Owusu is not dispositive of the jurisdiction in relation to Vedanta because: i. Owusu was a case on its own facts and did not apply to this case; ii. Owusu was not intended to apply where non-eu claimants are using the existence of a claim against an EU domiciled party as a device to ensure their claim against another defendant is heard in this jurisdiction; iii. The reasoning of the CJEU was flawed and should be followed in the circumstances of this case or that there should be a reference to the CJEU on the present case; iv. The approach in Owusu cannot apply where the proceedings amount to an abuse of EU law; and v. That there is no real issue between the Vedanta and the Claimants or if there is, the claim against Vedanta is so weak that this should be reflected in exercise of the court s discretion in allowing KCM s application, therefore a stay of the claim against Vedanta is justified. In the Court of Appeal s leading judgment, Simon LJ dismissed the first three arguments summarily by stating simply that these arguments are not open to Vedanta. The effect of the ECJ decision in Owusu v Jackson is that article 4 of the Recast Regulation precludes the English Court from declining what is a mandatory jurisdiction where the defendant is a company domiciled in England and Wales [34]. In rejecting Vedanta s fourth argument Simon LJ agreed with Coulson J in that the threshold was high for an abuse argument to succeed and that it does not do so in the present case [39]. The Judge s decision on Vedanta s fifth argument concerned arguments relating to the second Appellants application which are addressed next.
The decision in relation KCM s appeal In their initial application, KCM submitted that because the entire focus of the claim is on Zambia, on straightforward forum non conveniens grounds, the order permitting service out of the jurisdiction under paragraph 3.1 of Practice Direction 6B (often referred to as the necessary or proper party gateway) should be set aside. The Claimants argued in response that because there is a real issue between themselves and Vedanta it is reasonable that the court tries the issues in the UK. The parties agreed with Coulson J s assessment of the issues that arise in order to consider properly CPR Part 6.37(3): i. Whether the Claimants claim against KCM has a real prospect of success; ii. If so, whether there is a real issue between the Claimants and Vedanta; iii. Whether it is reasonable for the court to try that issue; and iv. Whether England is the proper place in which to bring that claim? Simon LJ in his judgment on KCM s appeal dealt with the above points in the same order:- (i) Does the Claimants claim against KCM have a real prospect of success? In addressing the first question Simon LJ recognised the importance of courts not expressing general views about the underlying merits when faced with a jurisdiction challenge [56] whilst agreeing with Coulson J s conclusion that the Claimants had a real prospect of success against KCM for the same reasons, namely: KCM was the operator of the Nchanga mine, there had been recorded discharges of toxic effluent from the mine, under some of the Zambian statutes there is strict liability for consequences of toxic discharges and the underlying basis of the claimants claim has not been challenged [56]. (ii) Is there a real issue between the Claimants and Vedanta? In addressing the second question, Simon LJ recognised that it gives rises to an initial question as to how the court should approach an issue of law in the underlying litigation which may be fundamental to the court s jurisdiction. In coming to his conclusion he relied on the Altimo Holdings case and decided that the observations in [84] of the Altimo Holdings case suggest that the court should proceed on the basis of a pleaded case and that the more doubtful the point of law, the more cautious the court should be, since the question of law goes to the existence of the jurisdiction [63].
The Judge accepted that Coulson J was entitled to rely on the Claimants expert evidence from Mr Mwenye SC that liability under Zambian statute was not limited to KCM as the mine licence holder and there was a real prospect of success against Vedanta under these statutory provisions on the basis that it exerted the relevant control over KCM s operations [66]. Simon LJ then went on to consider whether Vedanta could owe a duty of care under English law since if the court concluded that no common law duty of care could arise as a matter of English law, the foundation of the claimants expert view of Zambian law would be decisively undermined [67]. The Judge went onto to consider a large body of case law on the issue. From his assessment of the case law he drew the following conclusions: (1) The starting point is the three-part test of foreseeability, proximity and reasonableness. (2) A duty may be owed by a parent company to the employee of a subsidiary, or a party directly affected by the operations of that subsidiary, in certain circumstances. (3) Those circumstances may arise where the parent company (a) has taken direct responsibility for devising a material health and safety policy the adequacy of which is the subject of the claim, or (b) controls the operations which give rise to the claim. (4) Chandler v. Cape Plc and Thompson v. The Renwick Group Plc describe some of the circumstances in which the three-part test may, or may not, be satisfied so as to impose on a parent company responsibility for the health and safety of a subsidiary s employee. (5) The first of the four indicia in Chandler v. Cape Plc [80], requires not simply that the businesses of the parent and the subsidiary are in the relevant respect the same, but that the parent is well placed, because of its knowledge and expertise to protect the employees of the subsidiary. If both parent and subsidiary have similar knowledge and expertise and they jointly take decisions about mine safety, which the subsidiary implements, both companies may (depending on the circumstances) owe a duty of care to those affected by those decisions. (6) Such a duty may be owed in analogous situations, not only to employees of the subsidiary but to those affected by the operations of the subsidiary. (7) The evidence sufficient to establish the duty may not be available at the early stages of the case. Much will depend on whether, in the words of Wright J, the pleading represents the actuality [83]. Simon LJ went on to assess the evidence submitted by the Claimants in support of the assertion that Vedanta owed them a duty of care and concluded that there is a serious question to be tried which should not be disposed of summarily, notwithstanding the question goes to the court s jurisdiction [90].
(iii) Is it reasonable for the court to try the issue between the Claimants and Vedanta? The Appellant s appeal in respect of this question centred on the Red October case by relying on it to assert that Coulson J had erred in deciding that it was reasonable for the court to try the issue between the Claimants and Vedanta. Simon LJ recognised that the facts of the Red October case were considerably different to those in the present case: i) the Claimants sue Vedanta in this jurisdiction pursuant to the Recast Regulations and Owusu; and ii) that the claimants wish to proceed against Vedanta as a company that has sufficient funds to meet any judgment of the English court [96]. The Judge concluded that Coulson J at first instance was plainly right and in any event it was a conclusion open to him. (iv) Is KCM a necessary and proper party to the claim against Vedanta? This was not a major issue between the parties and therefore Simon LJ dealt with this summarily agreeing with Coulson J s conclusion that Vedanta and KCM can be regarded as broadly equivalent defendants [100]. (v) Is England and Wales the proper place in which to bring that claim? At first instance, Coulson J identified two questions that were required in order to decide this issue, namely: i) whether England and Wales was the appropriate place to try the Claimants claims against KCM; and ii) if not, whether the Claimants would get access to justice in Zambia. The Judge reached three conclusions in addressing these questions: i) ignoring the claim against Vedanta, England is not the appropriate forum; ii) however, taking into account the Vedanta claim, England is the most appropriate forum; and iii) if he were wrong, the Claimants would not get access to justice in Zambia in any event. The Appellants were appealing the latter two decisions. In considering whether Coulson J was right to conclude that given the Vedanta claim England is the appropriate forum, Simon LJ considered a number of relevant cases which assisted in his conclusion that Coulson J was correct: it was inappropriate for the litigation to be conducted in parallel proceedings [117]. In addressing whether Coulson J had erred in deciding that there was a real risk the Claimants would not obtain justice in Zambia, Simon LJ recognised that the burden of proof was on the Claimants. The Appellants argued that the Claimants had not discharged this evidential burden and that Coulson J had reversed the burden i.e. that it lay on the Appellants. The latter submission was rejected by Simon LJ. In addressing the former submission, Simon LJ provided a summary of the substantial evidence relied on by the Claimants and whilst acknowledging there were some partial contradictions in the evidence, the criticism amounted to what might be described as nibbling around the edges rather than making any substantial bites into the cogency of the Judge s findings [132]. He therefore rejected this ground of appeal.
Conclusion Simon LJ therefore found no grounds for re-opening Coulson J s decision, a conclusion that Lord Justice Jackson and Lady Justice Asplin sitting with him agreed with. In dismissing the appeal Simon LJ stated: in my view, he did not reach a view that was wrong; he reached a conclusion that was in accordance with the law. Oliver Holland, solicitor, international group claims team at Leigh Day oholland@leighday.co.uk - 020 7650 1362 Footnotes (1) Lungowe & Others v Vedanta Resources Plc & Konkola Copper Mines [2016] EWHC 975 (2) Regulation No. 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (3) Dominic Liswaniso Lungowe & Others v (1) Vedanta Resoources Plc and (2) Konkola Copper Mines Plc [2016] EWHC 975 (TCC) (4) Altimo Holdings and Investment Ltd v. Kyrgyz Mobil Tel Ltd and others [2012] 1 WLR 1804 (5) Caparo Industries Plc v. Dickman [1990] 2 AC 605; Ngcobo and others v. Thor Chemicals Holdings Ltd (November 1996, per Maurice Kay J, unreported); Connelly v. RTZ Corporation Plc [1999] C.L.C. 533; Lubbe and ors v. Cape Plc [2000] 1 WLR 1545; Chandler v. Cape Plc [2012] EWCA Civ 525, [2012] 1 WLR 3111; Thompson v. The Renwick Group Plc [2014] EWCA Civ 635. (6) Erste Group Bank AG, London Branch v. JSC VMZ Red October and ors [2015] EWCA Civ 379 www.leighday.co.uk