Vedanta Resources PLC and another v Lungowe and others

Article 4 of the Recast Brussels Regulation confers mandatory jurisdiction over a domiciled defendant. Any implied abuse exception must be construed narrowly. A genuine claim is not abusive merely because an important additional purpose is to establish jurisdiction over a foreign co-defendant.

A parent company’s duty concerning a subsidiary’s operations depends on ordinary negligence principles, not a special parent-company doctrine. Liability may arise from actual management, advice, implementation of group policies or a publicly assumed supervisory responsibility.

For service on the foreign defendant, the risk of irreconcilable judgments remains relevant but is not decisive where the claimant can sue both defendants abroad. Nevertheless, service may be permitted where cogent evidence shows a real risk that substantial justice will be unavailable in the otherwise proper foreign forum.

Some 1,826 Zambian residents alleged that toxic discharges from the Nchanga Copper Mine had harmed their health, land and livelihoods. They brought negligence and statutory duty claims against KCM, the Zambian operator, and its United Kingdom-domiciled parent, Vedanta. Jurisdiction over Vedanta was founded on article 4 of the Recast Brussels Regulation; service on KCM depended on the necessary or proper party gateway in the Civil Procedure Rules 1998.

Coulson J dismissed both defendants’ jurisdiction challenges in [2016] EWHC 975 (TCC). The Court of Appeal dismissed their appeals in [2017] EWCA Civ 1528; [2018] 1 WLR 3575.

The Supreme Court considered whether reliance on article 4 was abusive, whether there was a real issue against Vedanta, whether England was the proper place for the claims against KCM, and whether the claimants faced a real risk of being denied substantial justice in Zambia.

1. The appeals were dismissed unanimously. Lord Briggs delivered the judgment, with which Lady Hale, Lord Wilson, Lord Hodge and Lady Black agreed. Although Zambia was the proper place for the litigation, cogent evidence established a real risk that the claimants could not obtain substantial justice there.

2. Article 4 of the Recast Brussels Regulation conferred mandatory jurisdiction over Vedanta. Following Owusu v Jackson Case C-281/02, the claim could not be stayed on forum non conveniens grounds. Any implied abuse exception required a narrow construction. The proceedings were not abusive because the claimants genuinely sought damages from Vedanta, even though obtaining jurisdiction over KCM was an important additional purpose. No reference to the Court of Justice was required.

3. The real-issue inquiry replicated the summary judgment test. It required proportionate examination without a mini-trial, particularly where relevant internal documents had not yet been disclosed. There was no special tort doctrine governing parent-company responsibility. Ordinary negligence principles applied, and share ownership merely gave a parent an opportunity to intervene.

   A duty might arise where the parent managed or advised upon the subsidiary’s operations, actively implemented group policies, or publicly assumed responsibility for supervision and control. Vedanta’s published materials arguably showed responsibility for environmental standards, training, monitoring and enforcement. The judge was therefore entitled to find a triable issue.

4. The necessary or proper party gateway required a real issue against the anchor defendant, a reasonable basis for trying it, a foreign defendant who was a necessary or proper party, a viable claim against that defendant, and either England as the proper place or a real risk that substantial justice would be unavailable abroad.

5. Under rule 6.37(3) of the Civil Procedure Rules 1998, the proper place inquiry concerned the litigation as a whole. Zambia had overwhelmingly stronger connections: the mine, alleged wrongdoing, harm, claimants, most witnesses, applicable law and regulatory material were there. Because Vedanta had offered to submit to Zambia, the claimants could sue both defendants there. Their entitlement to sue Vedanta in England did not make the resulting risk of inconsistent judgments a decisive factor. The contrary reasoning in OJSC VTB Bank v Parline Ltd [2013] EWHC 3538 (Comm) was wrong.

6. Service on KCM was nevertheless justified. The substantial-justice exception requires cogent evidence and applies only exceptionally where foreign litigation funding is unavailable. The judge permissibly found that the claimants’ extreme poverty, the absence of legal aid and lawful conditional fees, and the shortage of suitably resourced and experienced legal teams created a real risk that litigation of the necessary scale and complexity could not be conducted effectively in Zambia.

• United Kingdom Supreme Court: In [2019] UKSC 20, unanimously dismissed both defendants’ appeals. It disagreed with the lower courts on proper place but upheld jurisdiction because of the real risk that substantial justice would be unavailable in Zambia.
• Court of Appeal: In [2017] EWCA Civ 1528; [2018] 1 WLR 3575, dismissed the defendants’ appeals and affirmed the jurisdictional decision.
• High Court, Technology and Construction Court: Coulson J dismissed both defendants’ jurisdiction challenges in [2016] EWHC 975 (TCC).