Lungowe & Ors v Vedanta Resources Plc & Anor

Article 4 of the Recast Brussels Regulation confers mandatory jurisdiction over an English-domiciled defendant. The English court cannot decline that jurisdiction because a non-member-state court is a more appropriate forum.

For service out on the necessary or proper party gateway, a claimant must show a real issue against the anchor defendant, that it is reasonable to try that issue in England, and that England is the proper place for the foreign defendant’s claim. A parent company may owe a direct duty to persons affected by its subsidiary’s operations where it has assumed responsibility for a relevant policy or controlled the relevant operations. The usual parent-subsidiary relationship is insufficient without further circumstances.

Where connected English proceedings must continue, avoiding duplicate litigation and inconsistent findings may make England the proper forum. Cogent evidence of a real risk that substantial justice cannot be obtained in the natural foreign forum provides an independent basis for that result.

The claimants were Zambian residents living near the Nchanga copper mine. They alleged that toxic discharges from the mine caused personal injury, property damage, loss of income and environmental harm. KCM, a Zambian company, owned and operated the mine. Vedanta, an English-domiciled holding company, was alleged to have assumed responsibility for, or exercised control over, relevant health, safety and environmental matters.

The claim against Vedanta was served in England. Permission was granted to serve KCM in Zambia. Coulson J dismissed both defendants’ jurisdictional challenges by an order dated 16 June 2016, following judgment on 27 May 2016.

Vedanta and KCM appealed. The central issues were whether the English court had mandatory jurisdiction over Vedanta, whether there was a real and reasonable issue against it, whether KCM was a necessary or proper party, whether England was the proper place for the connected claims, and whether the claimants could obtain substantial justice in Zambia.

1. Appeals dismissed. Simon LJ, with whom Asplin and Jackson LJJ agreed, held that there was no proper basis to reopen the judge’s evaluative conclusions.

2. Under article 4 of the Recast Brussels Regulation, the English court was bound to exercise jurisdiction over Vedanta as an English-domiciled defendant. Case C-281/02 established that a court could not decline that mandatory jurisdiction on forum non conveniens grounds in favour of Zambia. No abuse of EU law was shown: such a contention required sufficient evidence that the claimant had distorted the jurisdictional rule’s true purpose.

3. The claimants satisfied the necessary or proper party gateway. The court accepted that a real issue normally meant a properly arguable case or serious question to be tried. A jurisdictional question of law should be decided where the facts were clear, but not summarily determined where facts remained unclear or the legal issue was exceptionally difficult and doubtful.

4. The claim against Vedanta was properly arguable. Applying the foreseeability, proximity and reasonableness analysis in [1990] 2 AC 605, a parent might owe a direct duty to persons affected by a subsidiary’s operations where it had assumed direct responsibility for a material health and safety policy or controlled the relevant operations. The indicia in [2012] EWCA Civ 525 were illustrative, not exhaustive. On the pleaded case and available evidence, it was not appropriate to conduct a mini-trial before disclosure.

5. It was reasonable to try the Vedanta claim in England. It was not merely a device for joining KCM: the claimants wished to pursue Vedanta as a defendant able to satisfy a judgment. KCM was a necessary and proper party because both claims arose from the same alleged pollution and substantially the same facts.

6. Although Zambia would plainly have been the natural forum if the KCM claim stood alone, England was the proper place once the mandatory English proceedings against Vedanta were considered. Separate proceedings would duplicate evidence, documents and witnesses, and risk inconsistent decisions.

7. Alternatively, the judge was entitled to find on cogent evidence that the claimants would almost certainly lack access to substantial justice in Zambia. Their poverty, the unavailability of conditional fee agreements and legal aid, the absence of realistic funding and suitably resourced representation, and the practical history of comparable environmental claims supported that conclusion. The appellate court would not reweigh that evaluative assessment absent a significant error of principle or a plainly wrong result.

• Court of Appeal (Civil Division): Vedanta’s and KCM’s appeals were dismissed. The court upheld the refusal of their jurisdictional challenges.
• High Court, Queen’s Bench Division, Technology and Construction Court: Coulson J, by order dated 16 June 2016 following judgment dated 27 May 2016, dismissed the defendants’ jurisdictional challenges and left permission to serve KCM in Zambia in place.