The implications of Brexit on taking African claims to the UK: the end of suing British conglomerates in London?

Rupert Lipton[1]

Managing Director and Mediator, Indisputable, Nairobi

rupert.lipton@indisputable.co.ke

The idea of African group claims against UK-based corporates that have been brought to the English courts is not entirely new, but has seen a spate of claims in the last five years or so, suggesting that it is a trend that may be accelerating. Given that a UK corporate is almost certainly going to conduct its overseas business through locally incorporated entities, such actions have tended to revolve around a purported duty of care of, or assumption of responsibility by, the parent company.

However, as a direct result of Brexit, a rather technical change in the law of jurisdiction in the UK means that in future these types of cases might not make it past the first, jurisdictional base to begin with.

The Brussels regime

The UK acceded to the 1968 Brussels Convention with the enactment of the Civil Jurisdiction and Judgments Act 1982. The Convention (replaced by the Brussels I Regulation in 2001 and the Brussels Recast Regulation in 2012), enshrined into British law the fundamental principle that a defendant domiciled in an EU state shall be sued, subject to limited exceptions,[2] in the courts of that state. In 2005 the European Court of Justice clarified that this principle applies, irrespective of whether the claimant is in the EU or not.

This meant that when 218 Kenyan employees of Unilever Tea Kenya Limited sued the UK parent company Unilever PLC in the High Court in London,[3] seeking damages arising from the 2007 election violence which occurred on or near the tea plantation in Kericho, jurisdiction over the parent company was not in question.

It was the same situation for 1,826 Zambians suing mining company Vedanta Resources[4] following toxic emissions from a Zambian copper mine, and for approximately 42,000 members of Nigerian farming and fishing communities suing Royal Dutch Shell PLC[5] for the impact of oil leaks in the Niger Delta, which were allegedly the direct responsibility of Shell’s Nigerian oil exploration subsidiary.

Even where these claimants have failed to prove tortious liability of the parent, the ability to join the local African company to the English proceedings, as a ‘necessary and proper party’,[6] has meant that the English court could in theory award damages against an African subsidiary for damage caused, and having an effect solely, in Africa.

The same EU jurisdictional rules have allowed in excess of 200,000 Brazilian claimants to sue BHP Group PLC in London,[7] along with the Brazilian joint venture company that it owned 50 per cent of, for $7.2 billion, in what is believed to be the largest ever damages claim in the UK courts.

Forum non conveniens returns

But as a result of Brexit, with regard to any claims issued on or after 1 January 2021, UK jurisdictional law reverts to what was in place prior to the Brussels regime. That means that the forum non conveniens doctrine makes a comeback, but as we shall see, the doctrine only really found its feet in English law in the 1970s and 1980s and many questions remain as to how it will be applied and shaped in the modern context.

I note here that in recent times, and no doubt in part because of the effect of the Brussels regime, forum non conveniens and forum conveniens are frequently used without distinction. However, as set out by Lord Templeman in the seminal case of Spiliada Maritime Corporation v Consulex Limited[8] in 1986, the terms are different and in this article I will be faithful to that difference, which I explain below.

So what was the situation prior to the EU rules?

Prior to the Civil Jurisdiction and Judgments Act 1982, the English court’s jurisdictional law was derived in part from the Rules of the Supreme Court (RSC), and in part from the common law principles and precedents that the courts had developed. The courts had considerable discretion to decide their own jurisdictional limits and had a history of taking a rather globally elitist view over their remit.

To quote the estimable Lord Denning, then Master of the Rolls, in The Atlantic Star in the Court of Appeal in 1972,[9] ‘[y]ou may call this “forum-shopping” if you please, but if the forum is England, it is a good place to shop in, both for the quality of the goods and the speed of service.’ Lord Denning and the rest of the Court of Appeal, denied the defendant the requested stay of proceedings, in favour of Dutch courts, reflecting the then-prevailing view that anyone who had brought a legitimate claim to ‘the King’s courts’[10] should be allowed to pursue it. If that meant that there was a risk of irreconcilable judgements and increased costs of parallel proceedings, it was down to the parties to desist with any overseas actions![11]

The Court of Appeal’s decision in The Atlantic Star was reversed by the House of Lords, Lord Reid commenting on Lord Denning’s view saying ‘with all respect, that seems to me to recall the good old days, the passing of which many may regret, when inhabitants of this island felt an innate superiority over those unfortunate enough to belong to other races’.

During the reset of the 70s and the early 80s, a number of cases, mostly relating to international shipping claims, fundamentally changed the English court’s approach to defendants seeking stays on the basis of the claim being more appropriately tried in a foreign jurisdiction. Thus the doctrine of forum non conveniens, borrowed from Scottish law, was stitched into English jurisprudence.

Forum non conveniens (literally ‘inconvenient forum’) allows the court to stay proceedings legitimately brought against an English domiciled or resident defendant, on the basis that there is a more appropriate jurisdiction where justice can be done. Thus these are known as ‘stay’ cases. On the other hand, ‘service out’ cases are those where the court gives permission for a claimant (from anywhere) to serve UK proceedings on a party who is not physically in the jurisdiction of the court.

‘Service out’ has been allowed by UK courts for well over 100 years but has changed considerably from the times when the English courts would easily assume jurisdiction over anyone, anywhere, to a more nuanced exercise, under the doctrine of forum conveniens (‘convenient forum’), of only allowing service out if the court is satisfied that it is the most appropriate jurisdiction to hear a claim.

Where the defendant was not domiciled in another EU Member State, the Brussels regime had no effect on the forum conveniens doctrine and therefore, against an ever-growing backdrop of international claims, there have been innumerable cases which have developed and modernised the English court’s rules on the allowability of foreign service. Brexit makes little difference to these ‘service out’ claims.

In contrast, forum non conveniens has been largely in the deep freezer thanks to being disallowed by the Brussels regime. There were a few cases[12] that erroneously used the doctrine prior to the European Court of Justice in 2005,[13] clarifying that even in cases where the claimant was outside the EU, UK defendants had to be sued in the UK. Also, where a defendant is sued by dint of temporary presence in the UK, or by having a corporate presence but no domicile, forum non conveniens still had applicability.

But the fact is that forum non conveniens has not been developed by the English courts for many years and in fact, in most of those 70s and 80s cases, jurisdiction had been obtained merely because of the presence of an arrestable ship in an English port, or based on the jurisdiction clause of a shipping insurance contract. There has never been a reported case, absent a valid jurisdiction clause, where an English resident and domiciled defendant was granted a stay in favour of future (rather than already commenced) proceedings in another country.

In fact, even Spiliada was actually a service out case, it just happening that the House of Lords considered both forms of the doctrine in parallel. Technically, the half of the judgment dealing with forum non conveniens, is obiter and sets no binding precedent. In practice, the judgment has been so regularly approved in later cases, that it is at least highly persuasive.

The Lugano Convention

At this point I digress, to explain where the Lugano Convention fits into all of this.

The parties to the Lugano Convention are the EU (and its Member States), Iceland, Norway and Switzerland. The convention largely replicates the Brussels regime, including the principle that defendants must be sued in their state of domicile. There had been the hope and assumption, in many minds, that the UK would independently accede to the Lugano Convention, which applies much of the EU jurisdictional law to its non-EU members.[14] However, the EU Commission has in the last few months made clear that it has no plans to provide the necessary agreement to this accession. Individual Member States may yet force the EU itself into a U-turn, and if they do, and it is a very big ‘if’, UK-based corporates will once again, be fair game for overseas claimants in England.

So where does that put us now?

It is of course early days for the post-Brexit regime claims to make their way to court. This writer is only aware of one such reported decision from the High Court as yet,[15] and it is certainly too soon for the subject to have been tackled under appeal by the Court of Appeal or Supreme Court. However, it can only be a matter of time before another African claimant or claimants put a UK corporate in their English court crosshairs. Absent a clear English jurisdiction agreement between the parties, and assuming the UK defendant resists, we are then likely to see the English courts dusting off some rather old jurisprudence on the matter, in deciding whether to grant a stay.

There is another complication in that, since the 70s and 80s, when the issue was last explored in detail by the appeal courts, the English court’s procedural rules have undergone wholesale change. The Rules of the Supreme Court have been replaced (in 1999) by the Civil Procedure Rules (CPR). The RSC’s Order 12.8 was written afresh in CPR 11. Order 12.8 dealt with applications to dispute the court’s jurisdiction, or to submit that the court should not exercise jurisdiction that it has. This, according to Floyd LJ, ‘does not differ in substance’[16] from the old rules. But of course, CPR 11 was written at a time when, thanks to the Brussels regime, a forum non conveniens stay was largely off the table.

It remains to be seen what lacunae and anomalies of principle will be thrown up given the many different flavours of jurisdictional dispute and the myriad of applicable rules.

The real question for private international law practitioners to grapple with is how the ‘old’ forum non conveniens rules will be applied, and no doubt evolved, with the renewed possibility of stays being granted in Unilever/Vedanta/Shell type cases.

The basic principles

So, what are the forum non conveniens principles as thawed out for re-use?

At its root, forum non conveniens expects the English court to ask:

1. Can the defendant show that there is some other jurisdiction available, where it is more appropriate to deal with the matter in the interests of all the parties and the ends of justice?

An unlimited number of factors, such as: convenience for parties and witnesses; the governing law involved; likely costs; and where the parties are based will be relevant to consider.

2. If the defendant can satisfy the court of a more appropriate jurisdiction, can the claimant show that there are special circumstances that nevertheless, in the interests of justice, require that the case is heard in England?

One such circumstance could be that there is a real risk that the claimant will not be able to obtain justice in the alternative jurisdiction.[17]

Jurisdiction ‘not lightly disturbed’

In Spiliada Lord Goff, while tempering the previously high-handed attitude of the English courts with forum non conveniens, never-the-less repeated that the English courts ‘would not lightly disturb jurisdiction’ where a claimant has paid for and issued a claim in England and legitimately served it with the jurisdiction. This contrasts with the situation in service out cases, where it clearly falls to the claimant to satisfy the court that permission to serve the claim in a foreign jurisdiction should be granted.

Under the Brussels regime, the English appeal courts have dealt with jurisdictional stays, (because of exclusive jurisdiction clauses or parallel proceedings) and it is notable, whatever the status of Lord Goff’s words, that this ‘legacy’ idea of some kind of common law entitlement to pursue claims in the English court, has not been repeated by modern appeal court judges.[18] Equally the idea has never been expressly deprecated, and it remains to be seen the extent to which the courts will preserve this ‘access to the court as of right’ philosophy in its treatment of stay cases.

Changing forces

The nature of international disputes has significantly evolved in the last four decades and they have also increased in number. According to the English Judiciary’s report on the activity of the Commercial Court in 2019-2020,[19] 74 per cent of cases heard were international in nature. A cursory look at High Court judgments prior to 1982 suggests that this number has grown significantly since the courts were last routinely applying forum non conveniens to claims against UK domiciled defendants.

How then, will the modern and compendious forum conveniens jurisprudence play into the court’s re-animation of forum non conveniens?

With regard to the former, the CPR (Part 6.30-47) provides a comprehensive code and there have been very many relevant cases laying down a large body of jurisprudence on the subject, outside of Brussels regime issues. Practice Direction B to part 6 of the CPR, at paragraph 3.1, gives a comprehensive list of ‘gateways’ to such an ‘exorbitant’[20] jurisdiction, including criteria based on: contractual and tortious relationships; claims for injunctions; counterclaims and additional claims; claims about trusts; and claims for breach of confidence.

The question then is to what extent are these ‘service out’ considerations, and the case law that has grown up around them, going to influence the treatment of stay cases?

Who carries the burden?

Indeed, the CPR Part 6 regime, and its interpretation, includes a stipulation that a claimant seeking foreign service, satisfies the court of a reasonable prospect of success of the claim. Will the courts put the burden on foreign claimants to demonstrate the viability of their claim when the defendant applies for a forum non conveniens stay?

While the modern practice is that applicants in interim applications must set out sufficient facts and law to support their application, the fact is that the CPR does not mandate where the burden of proof lies. There is no rule of principle or procedure which would stop the courts from reversing the burden of proof in the case of an application for a jurisdictional stay. Indeed, under the ‘old’ RSC, in the case of a summary judgment application it was the respondent who had to prove that they had a reasonable prospect of success in a case. Will this ‘respondent proves’ philosophy return?

European jurisprudence

And what of the jurisprudence of the Court of Justice of the European Union (CJEU)? (And its predecessor, the European Court of Justice). The UK European Union Withdrawal Acts[21] have created the concept of ‘retained EU law’ by which UK courts remain bound by CJEU decisions in so much as they relate to EU law that the UK has converted to domestic law. This has been a controversial aspect of the Brexit process – escaping the supremacy of the CJEU and its decisions was one of the major fault lines that led to Brexit. The Brussels jurisdictional regime has not been converted (it could not have been – it is a regime that requires mutual recognition of laws) so there is no doubt that such CJEU findings will not be binding on UK courts. But in a UK regime, where European law still has relevance in many areas, that is not to say that there will be no ‘muscle memory’ effect – that the thinking of English judges has not been irrevocably changed by 50 years of operating in an EU legal context.

Will that effect embolden the court’s recognition of a claimant’s right of access to the court and a reluctance to grant stays in favour of foreign jurisdictions, or will the freedom from the Brussels regime, see English courts preferring to divert claims back to the claimants’ ‘home’ jurisdictions?

Convenience and appropriateness

Lord Goff in Spiliada explained ‘conveniens’ to be a reference more to appropriateness than convenience. Not just a question of, for example, where witnesses and experts are based, but also including matters such as the governing law applying in the case. But convenience and the practicalities of litigation still play a part. The commercial world though has changed a lot since the 70s and 80s, with many more law firms existing as part of international networks, and professionals jumping on aeroplanes, or latterly Zoom calls, as an everyday part of business life. How will this play into applications for stays, where a UK corporate is seeking to argue that practically, lawyers, witnesses and experts are located in another jurisdiction?

Of course, Covid has turbocharged this phenomenon, with courts in many jurisdictions handling submissions and some evidence remotely as a matter of course. Will this lead to the English courts entrenching into English law, the ‘defendants to be sued in their home state’ principle, on the basis that former issues of practicality and convenience are no longer very relevant in the ‘digital’ age? Of course, it should be noted, that notwithstanding Zoom hearings, most courts still feel the need to have witnesses of fact, physically in front of them rather than on a screen.

‘Substantial justice’

In Spiliada, Lord Goff considered advantages that a claimant may benefit from by suing in the English court, such as more generous damages levels, a more complete disclosure regime and a more advantageous limitation regime. The answer to a claimant submitting that they should not be denied those advantages buy the court granting a stay, was that so long as they could achieve ‘substantial justice’ in the alternative jurisdiction, that would be enough.[22]

Thanks to EU laws[23] which have been converted to ‘retained’ UK law, damages are nowadays assessed under the substantive law of the case (law of the contract or place of tort/damage) so that advantage generally no longer exists, but how will the courts weigh a claimant’s submission that some other procedural disadvantage in the foreign jurisdiction denies him or her ‘substantial justice’?

The aforementioned growth in international litigation in England, has clearly turned London into a global destination and legal centre of excellence for complex commercial, multi-party and fraud cases. To what extent will an African claimant (or group of claimants) be able to rely on this, and suggest that ‘substantial justice’ is not available to them at ‘home’?

In Connolly v RTZ Corporation and others, Lord Goff said that a claimant must take any candidate legal system ‘as he finds it’[24] and the jurisprudence is clear that whether it is a lack of legal aid or other funding for litigation or other limitations of a legal system, alone these things are not enough to render a jurisdiction’s justice less than ‘substantial’. Except in exceptional circumstances.

In both Vedanta and Connolly, such circumstances were found with regard to the inability of the claimants to obtain justice in Zambia and Namibia respectively, because of the impossibility of undertaking complex litigation without the availability of legal aid or other funding. Additionally in Vedanta, the illegality of conditional fee agreements in Zambia and lack of suitably experienced lawyers prepared to take on the complex case without any guarantee of payment was included within the reasoning in finding exceptional circumstances existed.

Taking justice as you find it, is one thing where a claimant can nevertheless prosecute a straightforward case with the assistance of a local lawyer, but quite another where hundreds, or thousands of poor claimants bring a case dependent on substantial volumes of medical, technical and scientific evidence.

Could it be that Lord Goff will be overruled and ‘substantial justice’ found to be not enough when considering available legal expertise and funding for litigation in claimants’ ‘home’ jurisdictions?

Conclusion

As sometimes is the case with the common law, it seems inevitable that we are entering a period during which these matters will be uncertain while we wait for definitive judgments from the UK’s Supreme Court. Such uncertainty is not helpful for international commercial interests, nor for the reputation of the English court system. It is therefore to be hoped that predictability and a clearly understood doctrine emerges in short order. But of course, the appeal courts can only react to cases brought before them and it is likely to be at least a couple of years before we have any answers.

English judges have on more than one occasion, decried the amount of time and expense that litigants expend on jurisdictional disputes, reasoning that (in most cases) whichever of the prospective courts tries the matter, justice is likely to be done.[25] I am not certain that litigants will be easily persuaded of the neutrality of the choice of jurisdiction, but it does seem to me, that we may be entering an era, reflecting the ever better connected and integrated world, in which shifting the presumption that a claimant can sue wherever he or she pleases, is going to be harder to do.

A UK defendant, fearing the inability to achieve a stay on an English action may have one other card to play. From the court’s perspective, matters might look very different indeed, if the facts and issues in the putative claim, were already before a court in a foreign jurisdiction –the risk of incompatible judgments is a major concern for all courts. By itself issuing a pre-emptive claim against the prospective claimant – perhaps for a declaration of non-liability – in the relevant foreign court, the English defendant may well be able to persuade the court that the later English claim is an abuse of process. One that should be struck out, or at the least stayed pending the conclusion of the foreign proceedings. Such potential ‘African Torpedoes’ will be subject of my next article.