High Court refuses to stay proceedings against UK parent company on grounds of forum non conveniens
In Lungowe and others v Vedanta Resources plc and another the High Court considered whether, in the light of the decision of the Court of Justice of the European Union (ECJ) in Owusu v Jackson, it was able to stay a claim against an English domiciled company on forum non conveniens grounds.
The question of whether the UK parent company owed a duty of care to Zambian residents, who had allegedly been injured by the actions of its Zambian subsidiary, was also considered.
Forum non conveniens
The English common law doctrine of forum non conveniens (Latin for "inconvenient forum") allows a court to stay a civil claim, despite having jurisdiction over the dispute, on the grounds that there is a more appropriate or convenient forum in which to hear the case. In deciding whether to stay proceedings the court must consider, amongst other things, the availability and location of witnesses, the governing law of the dispute and the places where the parties reside and/or carry on their business.
Owusu v Jackson
There had been some debate about the scope of the doctrine, following the decision of the ECJ in Owusu v Jackson back in 2005. In that case, the ECJ held that where the English court had jurisdiction under Article 2 of the Brussels Convention, (which provides that persons domiciled in a Contracting State shall, whatever their nationality, be sued in the courts of that State), it could not decline jurisdiction on the basis of forum non conveniens, even if that other country was a non-EU State. The decision in Owusu applies equally where the English court has jurisdiction under Article 4 of the Recast Brussels Regulation, which has since replaced the Brussels Convention.
Lungowe v Vedanta
The claimants, who were all Zambian residents, had allegedly suffered property damage and personal injury from pollution caused by the Nchanga copper mine, which was owned and operated by Zambian company KCM. Vedanta, an English domiciled company, was the holding company of a group of companies which included KCM.
The claimants brought proceedings against KCM and Vedanta in the English courts and the court granted the claimants permission to serve the claim on KCM out of the jurisdiction pursuant to Practice Direction 6B.3.1(3) on the grounds that KCM was a necessary and proper party to the claim against Vedanta.
Both defendants challenged the English court's jurisdiction on grounds of forum non conveniens.
Coulson J dismissed Vedanta's challenge, finding that the court was bound by the decision in Owusu and, consequently, was prevented from considering the doctrine of forum non conveniens because Vedanta was domiciled in the UK. The Judge did acknowledge that the reasoning of the ECJ in Owusu was "suspect" and noted that, in cases such as this, it was in fact the defendant who did not want to be sued in the courts of his domicile. Nonetheless, the Judge held that the English courts did have jurisdiction over the claim.
KCM argued that Zambia, not England, was the proper forum for the dispute because, amongst other things, both the Claimants and KCM were based in Zambia, the copper mine in question was in Zambia, the damage sustained was in Zambia and the substantive law of the dispute would be Zambian law. Coulson J held that, were it not for the claim against Vedanta, the proper forum would almost certainly be Zambia. In the light of the claim against the UK parent company, however, England was the proper forum. The Judge was particularly concerned, given the Claimant's position that a claim against Vedanta would be brought in England in any event, to avoid multiple proceedings in multiple jurisdictions.
The judgment is interesting on several levels. With regard to jurisdictional questions, it is clear that the English courts will not stay proceedings against a UK domiciled defendant on grounds of forum non conveniens, even where all other factors would point to another jurisdiction. It also appears that a foreign subsidiary whose parent company is domiciled in the UK could find itself subject to the jurisdiction of the English courts, notwithstanding that another venue would clearly be more appropriate, where a claim has also been brought against the UK entity.
In the context of the jurisdictional challenges, the court also considered whether there was a "real issue" to be tried between the claimants and Vedanta. The claimants alleged negligence against Vedanta on the grounds that the company owed a duty of care to the villagers in the vicinity of the copper mine. Whilst the court was reluctant to conduct a "mini trial" on the issue, it found that there was a real issue to be tried between the parties. Referring to the 2012 case Chandler v Cape Plc, the court noted that a claim in negligence against a parent company may well arise from the actions of its subsidiary.
The case will be of significant interest to both UK-domiciled parent companies and their foreign subsidiaries.