In this issue
Suffer little children
Targeted assassinations: Individual rights
Business and human rights update: the liability of holding companies for pollution by overseas subsidiaries
Ukraine initiates proceedings against Russia in the ICJ
Two DSI members appointed as Judges to the Kosovo Specialist Chambers
Investor-State Dispute Settlement under Investment Treaties and Free Trade Agreements: ad hoc Arbitration or Investment Court System?
Litigating to Liberate LGBT People
The Unique Jurisdiction of the African Court on Human and Peoples' Rights: Protection of Human Rights Beyond the African Charter
RIP, Sir Nigel Rodley
Business and human rights update: the liability of holding companies for pollution by overseas subsidiaries
Private International Law

By Tim Cooke-Hurle

Two recent judgments have turned on the jurisdiction of the court over claims against UK companies for alleged pollution caused by their overseas subsidiaries.

In both cases, the defendants argued that the English court lacked jurisdiction to try the claims. While jurisdiction was upheld by Coulson J in Lungowe and others v Vedanta Resources Plc and another [2016] EWHC 975 (TCC) (‘the Vedanta claims’), it was declined by Fraser J in the second case, Okpabi and others v Royal Dutch Shell plc and another [2017] EWHC 89 (TCC) (‘the RDS claims’).

This note considers a number of jurisdictional issues disputed by the claimants and the UK holding companies in these claims. Both cases proceed to appeal this year and have wide significance for both access to remedy and corporate conduct.

Vedanta: claims for pollution from copper mining in Zambia

The claimants in the Vedanta claims are 1,826 citizens of Zambia. Most farm near the large Nchanga copper mine, where they rely on local waterways for clean domestic water, to irrigate crops, to sustain livestock and as a source of fresh fish. The claimants commenced proceedings in the UK in 2015, alleging that pollution and environmental damage caused by the mine has caused them personal injury, damage to property, loss of income and loss of amenity and enjoyment of land, including from the discharge of harmful effluent from the mining operations into the waterways.

The first defendant (‘Vedanta’) – said to be worth around £37bn – is a UK domiciled holding company for a diverse group of base metal and mining companies, including the second defendant (‘KCM’), which is a public limited company incorporated in Zambia that owns and operates the mine. KCM employ 16,000 in Zambia, mostly at Nchanga, and is the largest private employer in Zambia.

The claimant’s primary case against Vedanta is that they were negligent under the applicable law of Zambia. It is alleged that a duty of care arose as Vedanta assumed responsibility to ensure that KCM’s mining operations do not harm the local environment and that there was a relationship of proximity between Vedanta and the claimants, due in part to Vedanta’s knowledge of KCM’s alleged environmental failings and the reliance placed by KCM on Vedanta’s superior expertise in respect of environmental protection.

Royal Dutch Shell: claims for oil pollution in Nigeria

The RDS claims are brought in relation to oil pollution in the Ogale community and Bille Kingdom in Nigeria. The claims are for as many as 42,500 individual claimants and concern oil pollution that has affected wide areas of land and water across the Niger Delta and considerable numbers of people reliant on that land and water.  

The first defendant, RDS, is the ultimate holding company of the worldwide Shell Group and is incorporated in the UK. The second defendant (‘SPDC’) is a subsidiary within the Shell Group. It is a Nigerian company responsible for Shell onshore operations in Nigeria and carries out those operations as part of a joint venture with the Nigerian state.

The claimants submit that both defendants are legally responsible for what are described as appalling instances and levels of oil pollution that have seriously affected huge areas of land and the health and livelihood of many thousands of people whose chances of redress rest substantially (or even entirely) on the ability to bring proceedings in this jurisdiction.

The court’s approach to jurisdiction where there is a UK domiciled holding company

The UK domiciled holding company:
Article 4 of the Recast Brussels Regulation provides that persons domiciled in a member state shall be sued in the courts of that member state. Owusu v Jackson [2005] QB 801 and later cases provide that, as a result, the Forum non conveniens principleis irrelevant when a defendant is domiciled in the UK (see, Vedanta at [42]-[44], [54]-[58], [65]-[72]; RDS at [63]-[69]). A legitimate claim against a UK domiciled holding company thus provides an ‘anchor defendant’ within the jurisdiction that may secure jurisdiction over other overseas parties.

The overseas subsidiary
: claimants seeking to serve out of the jurisdiction against subsidiaries of UK anchor defendants must satisfy the ‘necessary or proper party’ gateway. Permission may be granted where a claim is made against a defendant within the jurisdiction (here, the holding company) 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 (here, the subsidiary) who is a necessary and proper party to the claim. The court also retains an overall discretion and will not give permission unless satisfied that England and Wales is the proper place in which to bring the claim.

The issues for determination, as expanded by Fraser J in RDS, therefore include whether there are legitimate claims in law against the anchor defendant, whether this jurisdiction is the appropriate forum to bring such claims (taking into account whether there was an abuse of EU law), whether there is a real prospect of success in claims against the overseas subsidiary, whether the ‘necessary or proper party’ gateway is met, whether England is the most appropriate forum for the trial of the claims in the interest of the parties and for the ends of justice, and, whether there is a real risk that the claimants would not obtain substantial justice if required to litigate overseas (See, RDS at [20], Vedanta at [97]).

The Defendants’ applications on jurisdiction

The Defendants in both cases argued that the court lacked the jurisdiction to try the claims.

Vedanta argued that Owusu v Jackson did not apply on the facts and/or was founded on illogical reasoning such that a reference to the ECJ was required (see, Vedanta at [51]). Alternatively, they argued that the claimant’s reliance on Article 4 was an abuse of EU law, on the basis that the claimants were using the claim as a device to secure that litigation against KCM might proceed in the UK when there was no real issue between them and the Claimants.

The defendants in the RDS claims took the position that the claims had nothing to do with this jurisdiction and should proceed in Nigeria. They also advanced the argument that the claimant’s reliance on Article 4 was an abuse of EU law (although the court did resolve that issue due to its decision on the merits of the claim against RDS).

The decisions

In Vedanta, Coulson J was satisfied that there was a real issue to be tried between the Claimants and Vedanta [60]. There was no basis on which the court could stay the claim against Vedanta on forum non conveniens grounds, as he was bound by Owusu and other authorities [65]-[71].

Nor had Vedanta shown an abuse of EU law. Coulson J found that as the claim raises real issues to be tried it cannot therefore be dismissed as a device to secure jurisdiction over KCM. In that regard, he found evidence that the claimants wished to pursue Vedanta because they were seen as the architects of the environmental pollution. He found some force in the argument that, since it is Vedanta who are making millions of pounds out of the mine, it is Vedanta who should be called to account [73]-[78]. Further, he found that it would be wrong to ignore a risk that KCM may be liquidated to avoid paying the claimants [79]. Evidence strongly suggests that KCM ‘may not be good for the money, so a claim against the much wealthier parent company is justified on practical grounds too’ [81]. Vedanta’s application for a reference to the ECJ was denied, as the results of Owusu ‘could not be clearer’ [89]-[92].

Coulson then J went on to find that KCM was also a ‘necessary and proper party’ and that England was the proper place in which to bring the claim against KCM [97]-[198].

In the RDS claims, Fraser J also followed Owusu, noting that there was no scope for the application of the doctrine of forum non conveniens to the claim against RDS, as it is domiciled in the jurisdiction [68].

Fraser J found, however, that the claimants had failed to demonstrate that there was a ‘real issue’ between the claimants and RDS.  Applying the three-fold test for duty of care required by Caparo Industries plc v Dickman [1990] 2 AC 605 and later cases, Fraser J found that it was not reasonably arguable that there was a duty of care owed by RDS to the claimants for the acts of its subsidiary. First, the test of proximity between RDS and the claimants was not satisfied. Features taken into account included: RDS does not hold shares in SPDC, but instead holds shares in another company that holds shares in SPDC; RDS does not conduct any operations; RDS is not permitted to conduct operations in Nigeria and does not hold the relevant licence; there is a joint venture engaged in operations in Nigeria and RDS is not a member [114]. Second, for several reasons, including that RDS did not have superior or specialist knowledge compared to its subsidiary SPDC, Fraser J did not consider that it was fair, just and reasonable to impose a duty of care on RDS [115]. SPDC’s challenge to jurisdiction was, therefore, also successful; in the absence of a viable claim against RDS, there was no anchor defendant to provide jurisdiction [122].


Subject to the outcome of any appeal, the claimants in the Vedanta claims will, therefore, enjoy access to remedy in the UK that is now inaccessible to the RDS claimants.

As for the precedent set by these cases, it is notable that in RDS Fraser J declined ‘slavishly to follow’ the decision in Vedanta, considering instead that the correct approach is to apply existing principle to the facts of the Nigerian claims concerning the two Shell companies. He found that Coulson J’s conclusion on one particular corporate structure in Zambia did not direct him as to the conclusions to be drawn in respect of the different Shell corporate structure in Nigeria [44]-[48].

The present situation in the RDS claims contrasts starkly with the outcome of similar earlier litigation brought by the same claimant solicitors, Leigh Day. In The Bodo Community and others v SPDC, claims arising from pollution of creeks and waterways were made for over 15,000 residents of the Bodo region of the Niger Delta.  In those claims, althoughclaim forms were issued against both RDS and SPDC, the claims proceeded against SPDC alone – in contrast to the position in RDS –  because of an agreement that SPDC would voluntarily submit to this jurisdiction. The Bodo claims were settled prior to trial in January 2015, for a total of £55 million plus costs.

Tim Cooke-Hurle advises on a range of business and human rights issues, click here to view his profile. 

Newsletter Marketing Powered by Newsweaver