Vedanta Resources Plc and another -v- Lungowe and others [2019] UKSC 20

In this case the Supreme Court considered an appeal by Vedanta Resources Plc (Vedanta) and Konkola Copper Mines Plc (KCM) regarding the jurisdiction of the Courts to determine the claims made against them. As against Vedanta the claimants had relied on Article 4 of the Recast Brussels Regulation and as against KCM the claimants had relied on the ‘necessary or proper party’ gateway of the English procedural code.

Factual background

This litigation was commenced due to the alleged repeated discharge of toxic emissions from the Nchanga Copper mine (the Mine) in the Chingola district of Zambia. The claimants, who are the respondents in this appeal, are a group of 1,826 Zambian citizens living in four communities in the Chingola district. The claimants claim that their health and farming were damaged by the repeated discharge of toxic emissions from the Mine into watercourses, used for drinking and irrigation, from 2005 to date.

KCM is a public company incorporated in Zambia and is the immediate owner of the Mine. Vedanta is a company incorporated and domiciled in the UK and is the ultimate parent company of KCM.

In July 2015 the claimants issued a claim form against both KCM and Vedanta, making claims in common law negligence and breach of statutory duty (against KCM on the basis that it is the operator of the mine and against Vedanta by reason of the alleged very high level of control and direction exercised at all material times over the mining operations). Vedanta was served within the jurisdiction and KCM was served out of the jurisdiction pursuant to permission obtained on a without notice application on 19 August 2015.

In September and October 2015 Vedanta and KCM applied to challenge jurisdiction. The defendants’ applications were heard together in the High Court in April 2016 and were dismissed on 27 May 2016. The defendants appealed against that decision and their appeals, heard in the Court of Appeal in July 2017, were dismissed in October 2017. The defendants’ appeals in this hearing were heard in the Supreme Court in January 2019.

Legal issues

Article 4.1 of the Recast Brussels Regulation provides that ‘…persons domiciled in a member state shall, whatever their nationality, be sued in the courts of that member state.’

The ‘necessary or proper party’ gateway of the English procedural code is enshrined in Part 6 Practice Direction B para 3.1 This provides that a claimant may serve a claim form out of the jurisdiction where a claim is made against a person on whom the claim form has been or will be served and there is between the claimant and that defendant a real issue which it is reasonable for the court to try and the claimant wishes to serve the claim form on another person who is a necessary or proper party to that claim.

In considering the defendants’ appeals the judge was required to consider four issues.

Issue one - Abuse of EU law

The essence of the defendants’ case under this issue was that the claimants were using the claim against Vedanta purely as a vehicle for attracting English jurisdiction against their real target defendant, KCM, by means of the necessary or proper party gateway.

Lord Briggs (the judge) approached the legal analysis of this issue on the basis that (a) the claimants had pleaded a real triable issue against Vedanta; (b) the claimants genuinely desired to obtain judgment for damages against Vedanta; but (c) one of the principal reasons (although not the sole reason) why the claimants had sued Vedanta in England was so as to be able to sue KCM in England as well.

The judge dismissed this issue stating that, following the case of Owusu -v- Jackson (Case C-281/02) [2005] QB 801, Article 4.1 of the Recast Brussels Regulation lays down the primary rule regulation the jurisdiction of each member state to entertain claims against persons domiciled in that state and any exceptions to that rule are to be narrowly construed. The judge said that applying the abuse of EU law exception narrowly would limit the use of the exception to cases where the ability to sue a defendant otherwise than in the member state of its domicile was the sole purpose of the joinder of the anchor defendant (the defendant domiciled in the jurisdiction). This was not the case here.

Issue two - Real issue as against Vedanta

The defendants argued that the pleaded case and supporting evidence disclosed no real triable issue against Vedanta because Vedanta could not be shown to have done anything in relation to the operation of the Mine sufficient either to give rise to a common law duty of care in favour of the claimants or a statutory liability as a participant in breaches of Zambian environmental protection, mining and public legislation.

The judge said that, as per the case of Altimo Holdings and Investment Ltd -v- Kyrgyz Mobil Tel Ltd [2012] 1 WLR 1804, the single task of the first instance judge under this heading was to decide whether the claim against Vedanta could be disposed of summarily without the need for a trial. The judge said that the critical question was whether Vedanta sufficiently intervened in the management of the Mine to have incurred itself a common law duty of care to the claimants or a fault-based liability under the Zambian environmental, mining and public health legislation. The judge said that the level of intervention requisite to give rise to such a duty of care is a matter of Zambian law, but that the question whether that level of intervention occurred in the present case is a pure question of fact.  

The judge referred to the claimants pleadings whereby they made reference to materials published by Vedanta in which it asserted its responsibility for the establishment of appropriate group-wide environmental control and sustainability standards, for their implementation throughout the group by training and for their monitoring and enforcement. The judge said that he regarded those materials as sufficient on their own to show that it is well arguable that a sufficient level of intervention by Vedanta may be demonstrable at trial.

The judge went on to say that it did not matter whether he would have reached the same view as the first instance judge, all that mattered was that there was sufficient material upon which he properly reached his view and that his assessment was not vitiated by any error of law.

Issue three - Proper place

The judge disagreed with the first instance judge on this issue.

The judge reviewed the relevant case law and said that in cases where the court has found that the claimants will in any event continue against the anchor defendant in England, the avoidance of irreconcilable judgments has frequently been found to be decisive in favour of England as the proper place. However, the judge held that the judge was wrong in this case, having found that all the connecting factors pointed towards Zambia, to conclude that the risk of irreconcilable judgments arising from separate proceedings in different jurisdictions against each defendant was decisive in identifying England as the proper place. The judge said that he was troubled by the absence of any particular focus upon the fact that 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. The judge said that 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 was because the claimants had chosen to exercise that right to continue against Vedanta in England, not because Zambia was not an available forum for the pursuit of the claim against both defendants.

Issue four - Substantial justice

On this issue, the first instance judge held that the real risk that substantial injustice would be unavailable in Zambia had nothing to do with any lack of independence or competence in its judiciary or any lack of a fair civil procedure. Rather, he said it derived from two factors: first, the practicable impossibility of funding such group claims where the claimants were all in extreme poverty and secondly, the absence of sufficiently substantial and suitably experienced legal teams within Zambia to enable litigation of this size and complexity to be prosecuted effectively.

The defendants’ argument on this issue was that the judge had: i) failed to heed judicial warnings that funding issues will only in exceptional cases justify a lack of substantial justice, ii) failed to acknowledge that substantial justice required the claimants to take their forum as they found it and iii) failed to pay due regard to considerations of comity, and a requirement for cogent evidence.

The judge dismissed the defendants’ argument and said that the first instance judge had not misdirected himself in law in any of the respects contended for by the appellants.

Case comment

Following this case, claimants looking to sue foreign defendants in England through the ‘necessary or proper party’ gateway should be aware that if there are connecting factors pointing towards another jurisdiction, and the anchor defendant submits to that jurisdiction, the avoidance of irreconcilable judgments is unlikely to be found to be decisive in favour of England as the ‘proper place’.

At the beginning of his judgment, the judge made some strong remarks about proportionality. The judge said that the fact that it was necessary, yet again, to emphasis the requirement of proportionality in relation to jurisdiction appeals suggests that unless condign costs consequences are made to fall upon litigants who ignore these requirements, and maybe even their professional advisors, the court will find itself in the unenviable position of beating its head against a brick wall. It will be interesting to see whether cost consequences are introduced in the future for jurisdiction appeals.