Further encouragement from the English courts to pursue international disputes there

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Dechert LLPThe recent decision of the English Supreme Court in Vedanta Resources PLC v Lungowe and others provides a further example of the willingness of the English courts to assume jurisdiction over cases which have very little connection with England.

Between 2017 and 2018, 70% of litigants in cases brought before the English Commercial Court were not domiciled in the United Kingdom.1 In many cases, there will be no dispute between the parties as to whether the English courts provide the proper forum for the resolution of the dispute. Indeed, often the parties will have entered into a pre-existing arbitration agreement which either precludes or at any rate reduces the scope for any dispute about whether the English court has jurisdiction.

Where there is a dispute, though, the trend in recent years reveals a willingness in suitable cases to extend the arm of the English courts to cases where there was little or no connection between the parties, the underlying dispute and England. A recent decision of the English Supreme Court in Vedanta Resources PLC v Lungowe and others provides a further example of that trend.

Before looking at the trend and specifically that decision, a brief reminder of what a claimant wishing to bring its action in the English court must establish in the many cases where it will need permission to serve the proceedings out of the jurisdiction of the English court.

The requirements where permission to serve the proceedings out of the jurisdiction of the English court is needed

First, a Claimant will need to establish that the claim passes through one of the recognised jurisdictional gateways. Those gateways include demonstrating that the claim is:

  • made in respect of a contract which was made within the jurisdiction of the English court; or
  • made in tort where damage was either sustained within the jurisdiction or results from an act committed within the jurisdiction; or
  • for an interim remedy in support of foreign proceedings or an arbitration.

Secondly, it will need to establish that the claim has a reasonable prospect of success.

Thirdly, it will need to establish that England is clearly or distinctly the appropriate forum for the resolution of the claim. This entails identifying in which forum the case could most suitably be tried “for the interests of all the parties and for the ends of justice.” It is the way in which the court has interpreted this third requirement which provides encouragement.

The continuation of a trend

An example of the trend towards welcoming non-English parties to litigate in England was the case of Cherney v Deripaska (on which we have reported previously). The court concluded that Russia, rather than England, was the natural forum for the dispute having regard to factors such as the subject matter of the dispute and where all the relevant events were said to have occurred (which, apart from the signing of the contract on which Mr Cherney relied, took place largely in Russia). Nevertheless the court was persuaded that Mr Cherney could not be expected to litigate in Russia because of evidence that he would not be prepared to travel there and that he would be unable to obtain a fair trial there. In those circumstances, the court concluded that the case should proceed in England in the interests of all the parties and the ends of justice.

A similar outcome was reached in AK Investment CJSC v Krygyz Mobil Tel Ltd. Proceedings had been commenced in the Isle of Man by a Kyrgyz judgment to enforce a Kyrgyz judgment against three Isle of Man companies. The Isle of Man companies counterclaimed and sought and obtained permission to add 13 additional defendants to the counterclaim and serve them outside the jurisdiction. Six of them challenged that decision. The Privy Council concluded that Kyrgyzstan was the natural forum for the dispute but that the practical reality was that if the Isle of Man companies were left to proceed there, they would be unable to pursue any of their claims. They were therefore allowed to proceed in the Isle of Man because that was the only way in which substantial justice could be achieved.

Although there have been cases which have gone in the other direction, with the English court declining jurisdiction, the decision of the Supreme Court in Vedanta shows once again the willingness of the English courts to assume jurisdiction over disputes even though the natural forum for the dispute would not be England where justice requires it.

The Vedanta decision

The Vedanta case was a group tort claim for negligence and breach of statutory duty which were said to have resulted in toxic emissions from a mine in Zambia. The claimants comprised nearly 2000 Zambian citizens who claimed that their health and farming activities had been damaged by the discharge of toxic matter from the mine. The two defendants were the owner of the mine, a Zambian company, and its parent company, an English company. All of the relevant events took place in Zambia and there was little to connect the claim with England beyond the fact that the mine operator’s parent company was English. Unsurprisingly the Supreme Court concluded that Zambia would plainly be the proper forum for the litigation but that conclusion was qualified by the requirement that substantial justice should be available to the parties in Zambia.

Whilst it was not in doubt that Zambia had independent courts which would ensure a fair trial of the claim, there was a practical impossibility of the claimants funding the claim: all of them were in extreme poverty and would not be able to retain lawyers as they could not neither obtain legal aid nor access to alternative funding arrangements (those being unlawful in Zambia). In addition, there was an absence in Zambia of suitable legal teams to enable litigation of the size and complexity envisaged to be pursued there, especially given that it would be proceeding against a well-resourced defendant. In those circumstances the Supreme Court agreed that the action should proceed in England, again because such was in the interests of all the parties and the ends of justice.

Conclusion

Decisions of the English court on whether it is or is not the appropriate forum for the resolution of a dispute will always be fact specific. What cases such as those mentioned in this update demonstrate is that where the facts drive the court to the conclusion that England is, for whatever reason, the most suitable forum in the interests of the parties and justice, it will not shirk from taking a case which has very little connection with England. 

Footnote

1) Commercial Court Annual Report 2017 – 2018.

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