VEDANTA V.

LUNGOWE SYMPOSIUM: A NON CONVENIENS

REVIVAL–THE SUPREME COURT’S APPROACH TO JURISDICTION
IN VEDANTA
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.
Jurisdiction, Recast Brussels Regulation, Necessary or proper party, Proportionality
VEDANTA V. LUNGOWE SYMPOSIUM: A NON CONVENIENS
REVIVAL–THE SUPREME COURT’S APPROACH TO JURISDICTION
IN VEDANTA

24.04.19 | 1 Comment
[Gabrielle Holly is a business and human rights specialist and an experienced
commercial disputes practitioner with Omnia Strategy LLP, who acted for the
International Commission of Jurists and the CORE Coalition in this case. You can find
her on twitter at @Gabriellellell.]
With the rise in power of multinational groups and the intricacies of global supply
chains, the question of where a company should bear responsibility for its adverse
impacts is increasingly becoming as important as the questions of what it should bear
responsibility for and to whom.
In Vedanta Resources PLC and anor v Lungowe and ors, the Supreme Court found that
the claimant group of impecunious Zambian villagers could proceed with their claim in
England, notwithstanding that Zambia was overwhelmingly the proper place for the
claim to be tried (at [85]).
The Vedanta decision was concerned only with matters of jurisdiction. The defendants to
the underlying claim were Vedanta Resources Plc, the UK parent company, and Konkola
Copper Mines (KCM), the Zambian subsidiary. AlthoughVedanta could be served under
ordinary rules of service, service against KCM out of the jurisdiction required the
claimants to show that it was a “necessary and proper party” to the claim.
Satisfying that test required that: the claims against Vedanta involved a real issue to be
tried; that it would be reasonable for the courts of England and wales to try those claims;
that KCM was a necessary or proper party; that the claims against KCM had real
prospects of success; and crucially:
“that, either, England is the proper place to bring the combined claims,
or that there is a real risk that the claimants would not obtain substantial
justice in the alternative foreign jurisdiction, even if it would otherwise
have been the proper place or the convenient or natural forum” at [20].
Readers may be forgiven for thinking that this last criterion sounds suspiciously familiar
to the test used in the context of an application for a stay of English proceedings on the
basis of forum non conveniens that was applicable under English law prior to Owusu v
Jackson. Those suspicions are well founded, as the Supreme Court explicitly
acknowledged that this was the self-same test (at [88]).
The Supreme Court went on to say:
“The question whether there is a real risk that substantial justice will be
unobtainable is generally treated as separate and distinct from the
balancing of the connecting factors which lies at the heart of the issue as
to proper place, but that is more because it calls for a separate and
careful analysis of distinctly different evidence than because it is an
inherently different question. If there is a real risk of the denial of
substantial justice in a particular jurisdiction, then it seems to me obvious
that it is unlikely to be a forum in which the case can be tried most
suitably for the interests of the parties and the ends of justice” at [88].
Despite the apparent resurgence of the doctrine of forum non conveniens, it appears that
the Supreme Court has left the courts of England and Wales with a relatively wide
discretion to determine their own jurisdiction on substantial justice grounds.
In substance and effect, if not in name, this discussion of substantial justice is not
radically dissimilar to the doctrine of forum necessitatis. This doctrine has never been
expressly endorsed by English courts (and universal civil jurisdiction for torture has been
expressly rejected: Jones v Saudi Arabia and Belhaj v Straw). However, the increasing
number of states where the forum necessitatis is available with varying degrees of
qualification (see summary in Naït-Liman v Switzerland at [84]) shows that the sense of
such an approach may yet find favour.
The Supreme Court’s decision to allow the claim to proceed in England turned solely on
the affirmation of the trial judge’s finding that there was a real risk that substantial
justice would not be obtained by the claimants if the claim were to proceed in Zambia.
The Supreme Court made plain that their finding in relation to substantial justice had
nothing to do with any lack of independence or competence in the Zambian judiciary,
nor any lack of a fair civil procedure suitable for handling large group claims. Indeed,
the Vedanta judgment was unsubtle in its finding that Zambia was overwhelmingly the
proper place for the claim to be heard, stating:
“If substantial justice was available to the parties in Zambia as it is in
England, it would offend the common sense of all reasonable observers to
think that the proper place for this litigation to be conducted was
England” at [87].
Rather, the question of substantial justice it turned on the practical impossibility of
funding the claim in circumstances where the claimants were in extreme poverty, and the
absence of suitably experienced and resourced legal teams to effectively prosecute
litigation of the size and complexity of the instant claim.
The Supreme Court went to some lengths to emphasise that lack of funding should only
ground a finding that access to substantial justice was at risk in exceptional
circumstances (at [93]). That may be so, but reliance on a costs point may well be the
more palatable approach, neatly avoiding the necessity of critiquing the legal and judicial
systems of another jurisdiction in order to find that access to substantial justice is at risk.
English courts have generally been reluctant to enter into that kind of critique. Where
they have done so, they have been careful to confine criticism to a narrow set of facts in
the instant case, rather than make general criticisms, as in Deripaska v Cherney or
restricting it to circumstances where there has been a near total breakdown of the civil
administration, as in Alberta v Katanga Mining Ltd.
This should give prospective claimants some pause. The Supreme Court has affirmed
that costs and funding are an exceptional ground, and it is clear that there is a general
reluctance to debate the adequacy of another jurisdiction for reasons of comity. Those
bringing future claims should ensure that a sufficiently robust argument can be mounted
to show either that their claim has some connecting factors to the jurisdiction of England
and Wales, or make their case that their prospects for obtaining substantial justice are at
risk in a manner palatable to the court.
Case Comment: Vedanta Resources Plc & Anor v Lungowe & Ors [2019] UKSC 20

29MONDAYApr 2019
THE EDITOR , CMS CASE COMMENTS
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Paul Sheridan, Jan Burgess and Laura Swithinbank, who work within the
Environment and Health and Safety teams at CMS, comment on the decision
handed down in the matter of Vedanta Resources Plc & Anor v Lungowe &
Ors [2019] UKSC 20.
On 10 April 2019, the UK Supreme Court gave judgment in a procedural dispute over
whether litigation relating to pollution in Zambia could be tried in the English Courts.
The judgment is significant for multinational UK parent companies with operating
companies in the most underdeveloped countries. The two corporate defendants are
Konkola Copper Mines plc (“KCM”) and Vedanta Resources Plc (“Vedanta”). This issue
of jurisdiction only arises because Vedanta is a company incorporated in England and is
the parent company of KCM which operates, and is incorporated, in Zambia.
Whilst this judgment is purely about jurisdiction, commercially it is nonetheless
potentially very significant in terms of assessment of liability and (if the claimants
succeed) quantum of damages. The dispute before the Supreme Court was about whether
this pollution litigation (if it goes all the way to trial) could be tried in the courts of
England, or be restricted to the courts of Zambia.
Background
The claimants are a group of very poor rural Zambian citizens (currently numbering
1,826) living in the Chingola district of Zambia. They allege that from 2005 there have
been repeated discharges of toxic materials from the Nchanga Copper Mine into local
watercourses. They say that they rely on these watercourses as their only source of
drinking water (for themselves and for their livestock) and for irrigation. They say that
these discharges have harmed their health and their farming activities.
The copper mine is owned and operated by KCM. Vedanta is the ultimate parent
company of KCM. Vedanta does not own 100% of KCM. The Zambian government has
a significant minority stake. However, “materials published by Vedanta state that its
ultimate control of KCM is not thereby to be regarded as any less than it would be if
wholly owned”.
The Zambian citizens’ claims are pleaded in common law negligence and breach of
statutory duty; against KCM, as owner and operator of the mine, and against Vedanta, by
reason of the “very high level of control and direction [that it] exercised over the
operations of KCM, including its compliance with applicable health, safety and
environmental standards”.
The claimants chose to make their claims, against both corporate defendants, in the
English courts. At least by the time of this appeal it was “common ground that the claims
against KCM have a real prospect of success”. In terms of Vedanta a major issue was
whether the claims disclosed a real triable issue. As this was a dispute over jurisdiction,
the courts at this stage perform a kind of screening process. They do not look at the
evidence in the detail that would apply at trial (the courts are not determining liability at
this stage), but rather look at the case in sufficient depth to determine if there is a real
issue to try and in what jurisdiction.
The claimants were keen that the matter be tried in England against both defendants. At
least at face value, there appeared to be some obstacles to this. Most indicators firmly
suggested that the Zambian courts were the proper place to try the case against KCM
(but see further below). Also Vedanta had indicated that it would submit to the
jurisdiction of the Zambian courts.
Clearly in an endeavour to have the cases heard in English courts, the fact of Vedanta
being a defendant was very important for the claimants but not the only factor. As a
finding of fact, the judge in the first appeal found that although the prospect of attracting
jurisdiction against KCM was a substantial reason why the claimants sued Vedanta in
England, it was not their only reason.
From the outset, KCM and Vedanta challenged very rigorously the jurisdiction of the
English courts to hear these claims. The proceedings were issued in 2015. The two
defendants’ first challenge against jurisdiction was heard by Mr Justice Coulson in the
High Court in 2016. Having lost on all grounds, the defendants appealed to the court of
Appeal, where in 2017 again they lost on all grounds. In this appeal to the Supreme
Court, they again lost.
Parent company liability
The judgment of the Supreme Court is 38 pages and is extremely interesting for lawyers
with an interest in jurisdiction disputes. However, for the purposes of this article we
restrict ourselves to aspects relating to potential UK parent company liability for an
overseas operating subsidiary.
A critical question to determine was whether Vedanta sufficiently intervened in the
management of the mine to have incurred a common law duty of care to the claimants, or
a fault-based liability under Zambian environmental, mining and public health legislation
in connection with the discharges of toxic materials.
KCM and Vedanta argued that the claimants’ case would involve a novel and
controversial extension of the boundaries of the tort of negligence which in turn required
a detailed investigation of the claimants’ case, which neither the High Court nor the
Court of Appeal had carried out. The Supreme Court rejected both parts of this argument.
In terms of the allegation that the claimants were effectively seeking an extension of the
tort of negligence, the Supreme Court held that parent company liability in relation to the
activities of their subsidiaries is not of itself a distinct category of liability in common
law negligence;
“Direct or indirect ownership by one company of all or a majority of the shares of
another company (which is the irreducible essence of a parent/subsidiary relationship)
may enable the parent to take control of the management of the operations of the
business or of the land owned by the subsidiary, but it does not impose any duty on the
parent to do so. ..Everything depends on the extent to which, and the way in which, the
parent availed itself of the opportunity to take over, intervene in, control, supervise or
advise the management of the relevant operations (including land use) of the subsidiary.
All that the existence of a parent subsidiary relationship demonstrates is that the parent
had such an opportunity”.
In terms of a proper assessment by the lower courts, the Supreme Court, dismissed the
defendants’ contention:
“I regard the published materials in which Vedanta may fairly be said to have asserted its
own assumption of responsibility for the maintenance of proper standards of
environmental control, over the activities of its subsidiaries, and in particular the
operations at the Mine, and not merely to have laid down but also implemented those
standards, by training, monitoring and enforcement, as sufficient on their own to show
that it is well arguable that a sufficient level of intervention by Vedanta in the conduct of
operations as the Mine may be demonstrable at trial, after full disclosure of the relevant
internal documents of Vedanta and KCM and of communications passing between
them”.
KCM and Vedanta also sought to extract from previous case law a general principle that
a parent could never incur a duty of care in respect of the activities of a subsidiary simply
by putting in place group-wide policies and guidelines and expecting the management of
each subsidiary to comply with them. The Supreme Court again dismissed this, and was
reluctant to support laying down any principles such as this. Instead such policies and
guidelines have to be looked at in all the circumstances. For instance the court made the
point that:
“Group guidelines about minimising the environmental impact of inherently dangerous
activities, such as mining, may be shown to contain systemic errors which, when
implemented as of course by a particular subsidiary, then cause harm to third parties”.
Also where group-wide policies do not of themselves give rise to such a duty of care to
third parties, they may do so “if the parent does not merely proclaim them, but takes
active steps, by training, supervision and enforcement, to see that they are
implemented” or from another perspective,
“if in published materials, it [the parent] holds itself out as exercising that degree of
supervision and control of its subsidiaries, even if it does not in fact do so. In such
circumstances its very omission may constitute the abdication of a responsibility which it
has publicly undertaken”.
KCM: jurisdiction and substantial justice
This was the only legal issue which the Supreme Court found difficult. The Supreme
Court came to the same conclusion as the lower courts (the English Courts have
jurisdiction to try the case against KCM), but its legal reasoning in doing so differed
from that of the lower courts. The reasoning of the Supreme Court contains factors which
parent companies might wish to bear in mind.
Having determined that there was a real triable issue against Vedanta to be heard in the
English courts, and as most of the indicators pointed to Zambian courts being the proper
place to hear the case against KCM, there would exist a real prospect of irreconcilable
judgments if the case against KCM is heard in Zambia. The UK courts generally abhor
the risk of irreconcilable judgments. The High Court and Court of Appeal ruled that this
risk of irreconcilable judgments was enough reasoning in itself to accept jurisdiction in
England of the claims against KCM.
The Supreme Court overruled the lower courts on this point. The UK courts could no
longer legally use this risk as reason for accepting jurisdiction. Moreover, as Vedanta
had indicated that it would accept the jurisdiction of the Zambian courts but nonetheless
the claimants insisted that the claims against Vedanta be tried in England, the claimants
had brought the risk of irreconcilable judgments upon themselves. Having overruled the
legal reasoning of the lower courts, the Supreme Court examined whether there was a
risk of denial of substantial justice if the case against KCM remained to be tried in
Zambia. This concept of substantial justice was part of assessment of the proper place
rule:
“Even if the court concludes (as I would have in the present case) that a foreign
jurisdiction is the proper place in which the case should be tried, the court may
nonetheless permit (or refuse to set aside) service of English proceedings on the foreign
defendant if satisfied, by cogent evidence, that there is real risk that substantial justice
will not be obtainable in that foreign jurisdiction”.
In this regard, no criticism was made of the independence or competence of the Zambian
judiciary, nor of the civil law procedures in Zambia. However, the Supreme Court
(agreeing with the High Court) found that nonetheless the claimants would not obtain
substantial justice in Zambia. This was for two reasons. One reason was that the
claimants did not have access to funds for the litigation and were too poor to provide the
funding themselves. Another reason was that the claimants were not likely to retain a
Zambian legal team with the expertise, experience and resources to undertake the
litigation. Thus the Supreme Court ruled that the case against KCM could continue in the
English courts.
Comment
In an increasingly globalised world, and at a time when global environment and human
rights related litigation is increasing at an unprecedented rate, it might be easy to think
that UK parent companies might be better off refraining from adopting group-wide
policies or asserting any control over subsidiaries abroad, or indeed from influencing
other third parties such as its overseas supply chains. That would not be sensible reading
of this case. This case is essentially about risk management. It provides a sound reminder
that good risk management is an active process that will provide the parent company and
subsidiaries (and their insurers) with security not only against financial risk, but also
brand, investment and regulatory (etc.) risk.
For UK parent companies with subsidiaries in the poorest of countries which are active
in operations that may give rise to environment, health & safety or human rights claims,
and are concerned that such claims may be brought in the UK, the capabilities of the
foreign domestic legal sector to handle such claims is a factor worth considering in risk
management terms. Indeed in assessing this risk, a factor worth considering is how long
such claims have existed. If the claims have merit, and have been made over extended
periods of time without legal redress, this may be an indicator that the foreign domestic
legal sector does not have the required capabilities.