Classification societies are commercial — OK?

There is an easy side, and also a more wide-ranging and difficult one, to the CJEU’s decision last week in RINA SpA, Case 614/18, ECLI:EU:C:2020:349 on a point concerning the Brussels I Regulation.

Something over 14 years ago, a Red Sea ro-ro ferry, the Al Salam Boccaccio 98, sank with horrendous loss of life on a voyage between Duba in Saudi Arabia and Safaga in Egypt. She was registered in Panama and classed with Italian classification society RINA SpA.

A number of passengers sued RINA in its home state, Italy, for negligently certifying the vessel fit to sail, relying on what is now Art.4 of Brussels I Recast (the case actually concerned the previous 2001 jurisdiction regulation). RINA however had a trick up its sleeve. It pleaded sovereign immunity, on the basis that although it had been chosen and paid by the owners of the vessel, it had been acting on behalf of the Panamanian government. For that reason it argued that the Italian court had no jurisdiction over it in this respect, and that the Brussels Regulation was beside the point since this was not a civil or commercial matter. The Tribunale di Genova, faced with interesting issues of EU and public international law, understandably made a reference to the CJEU on the matter; was the claim covered by the Regulation?

The court, following the Advocate-General, had no doubt that RINA’s plea was misconceived. Even if the society had been acting for the Panamanian authorities in certifying the vessel so that those authorities in turn could, as the organs of the state of registration, give her the necessary clean bill of health, this was a matter governed by private law principles. According to the generally accepted rules of public international law, there was no way this could be construed as an act iure imperii; it was therefore covered by the Regulation.

It follows that in so far as it is sought to make a classification society liable for damage, loss or injury (a matter on which European and other legal systems differ considerably, and which we have no intention of going into here), lawyers can at least sleep easy on this point: as regards jurisdiction, it is simply a matter of looking up the relevant provisions of Brussels I Recast. It is a fair inference that the same also goes for other certification bodies (something likely to be relevant for international product liability cases) and probably state licensing bodies such as the CAA in so far as they are sued under private law provisions.

So much for the easy bit. Now for the harder one. Does this mean that state immunity law has now been quietly Europeanised as a matter of principle? This issue is not dealt with as such, and was explicitly left open by the Advocate-General in Para [106] of his opinion. The original Jurisdiction Regulation said nothing about it either; and although the Recast version adds a further few words to Art.1.1 saying explicitly that it does not apply to acts done iure imperii, this takes us little further.

The answer seems to be that we do have de facto Europeanisation, but only partly. RINA, read closely, says merely that in so far as Brussels I applies to an EU-based defendant, it is not open to a member state to apply a more generous home-grown version of state immunity and decline jurisdiction. It does not state the converse; namely, that if EU law regards a matter as covered by state immunity then an EU domestic court must not take jurisdiction at all. Why the case ended up in the CJEU in the first place is apparent only from a careful look at the facts: Italy indeed does as a matter of domestic law apply a very generous doctrine of state immunity, and it was this that the claimant sought, successfully, to sideline.

So for the moment – and, assuming Lugano or something similar to Brussels I applies after the transition period – English lawyers can breathe easy on this point too. There’s life yet in their well-thumbed copies of the State Immunity Act 1978.

PASSENGERS SUE CRUISE LINES FOR NEGLIGENCE OVER COVID-19 OUTBREAK

Ever since January 2020, it became evident that COVID-19 will place significant hurdles on cruise ship operators. The quarantine of approximately 2,500 passengers on board Diamond Princess off the coast of Japan that led to 700 confirmed cases of coronavirus was the first hard knock on the cruise industry. However, this was not enough to urge cruise ship operators to temporarily suspend their activities to minimise new transmissions on cruise vessels, or at the very least, to implement policies to prevent similar outbreaks.

Cruise ship operators continued their business as usual for more than a month. It was only mid-March, when some of the major cruise ship operators announced the voluntary suspension of scheduled cruises amid the severity of the public health crisis. Arguably, this delayed response on the part of cruise ship operators led to more passengers being exposed to COVID-19 with several passengers testing positive on cruise vessels around the world.

It now comes as no surprise that several claims have been brought against cruise ship operators over their response to COVID-19 outbreak. In early April, former passengers of the cruise ship Grand Princess filed lawsuits against the ship’s operators in federal courts of the US, claiming negligence on the part of the company in failing to ensure the health and safety of its passengers. The claims ask for compensatory and punitive damages for lost earnings, medical expenses and mental distress.

The Grand Princess departed on February 21 for a cruise from San Francisco to Hawaii. Before sailing to Hawaii, the ship made a 10-day round-trip to Mexico, and 62 passengers and more than 1,000 crewmembers continued on the voyage to Hawaii. On February 25, a man, who had been on the Mexico trip, died of the coronavirus. At this point, some members of the ship’s crew had already shown COVID-19 related symptoms. The Grand Princess turned back to the US mainland and skipped a planned stop in Mexico. On 5 March, passengers were quarantined in their cabins. However, COVID-19 had already been spreading on the ship, and 103 would ultimately test positive, with two passengers and one crew member now dead. On 9 March, passengers were moved into quarantine ashore.

The claims allege that the cruise ship operators were negligent in failing to inform Hawaii passengers that several passengers on the Mexico trip had shown COVID-19 related symptoms, failing to disinfect the ship thoroughly after the Mexico trip, and failing to screen passengers and crew before departing for Hawaii. In this respect, the claims mention that on the Grand Princess, the ship’s crew only asked passengers boarding the ship to ‘fill out a piece of paper confirming they were not sick’. The claims further allege that the cruise ship operators were negligent during the cruise in failing to inform passengers about the former passenger’s death and failing to quarantine passengers in their cabins on February 25.

Like in all personal injury claims, the liability of cruise ship operators for a passenger’s illness, injury or death will turn upon two legal questions. The first is whether the company was in any way negligent. In this respect, the claimants will have to prove that the ship operators did not exercise reasonable skill and care to ensure the health and safety of their passengers. On the facts, this may be possible, especially if it is proven that the company knew that several passengers on the Mexico trip had contracted COVID-19 and failed to disinfect the ship or at least to warn passengers boarding the ship in San Francisco.

The second is whether the company’s negligence caused the passenger’s illness. That is more problematic because it is hard to trace the exact moment when a person is infected with COVID-19. According to the official guidance of the WHO, the incubation period of COVID-19 (i.e. the time between catching the virus and beginning to have symptoms of the disease) ranges from 1 to 14 days, most commonly around 5 days. It is, thus, possible that some passengers had already been infected with COVID-19 when boarding the Grand Princess on February 21. Nevertheless, an argument may revolve around the fact that the company allowed 1,000 potentially infected people to share confined space with approximately 2,000 potentially uninfected passengers.

Assuming that both these questions will be answered in favour of the claimants, then a further question will arise as to whether the passengers of Grand Princess were in any way negligent in contracting COVID-19. If so, the company will be able to benefit from the defence of contributory negligence.

It is, thus, interesting now to see whether these claims will actually reach the courts or whether they will be settled in private.

Climate change and tort. The jurisdictional battlefield in the US.

This blog recently featured a New Zealand decision in a strike out application in a climate change tort suit. Similar claims have also been a feature of litigation in the State courts in the US in the last few years. Why not in the federal courts? The reason goes back to two previous decisions: the decision of the Supreme Court in American Electric Power Co. v. Connecticut, 131 S. Ct. 2527 (2011) (AEP),  and that of the Ninth Circuit in Native Village of Kivalina v. ExxonMobil Corp., 696 F.3d 849 (9th Cir. 2012), that such actions, at least when they relate to domestic GHG emissions caused by the defendant, are pre-empted by the Clean Air Act.

So, various municipalities have decided to sue in the State courts, claiming damages for what they estimate they will have to spend to mitigate the effects of climate change in future years. The oil majors who have been on the receiving end of these suits have sought removal of the cases to the Federal courts, where they will be dismissed. So far, the position on this is mixed.

The claims by the Cities of New York and Oakland saw their State law claims transferred to the Federal courts because of the interstate nature of the claims. Once there, Oakland sought, unsuccessfully, to distinguish Kivalina and AEP on the grounds that those decisions involved emissions directly from activities of the defendants, rather than by virtue of their sales of fossil fuels to third parties who then burn it and cause GHG emissions. This was not enough to distinguish the cases, and a further attempt, based on the effect of worldwide sales outside the reach of the Environmental Protection Agency and the Clean Air Act, also failed, running into the presumption against extraterritoriality. A further reason for dismissing the claims was that they implicated the interests of foreign and domestic governments and that the balancing of interests involved in the analysis of unreasonable interference in a public nuisance suit was best left to governments. New York has appealed the decision, as has Oakland.

By contrast, Baltimore’s tort claims in the State Court of Maryland have managed to stay there. The claims were not based on federal common law and the Clean Air Act did not show congressional intent for it to provide the exclusive cause of action, and indeed the Act contains a savings clause specifically preserving other causes of action. The Defendants then unsuccessfully applied to the Supreme Court for a stay, pending the hearing of their appeal.

On 6 March 2020 the Fourth Circuit declined to transfer the claims to the Federal Courts. They decided that the appeal was limited under 28 U.S.C. § 1447(d) to an appeal based on the Federal Officer Removal statute, one of the eight grounds for transfer argued by the Defendants in the District Court. The Statute,  U.S.C. § 1442, authorizes the removal of cases commenced in state court against “any officer (or any person acting under that officer) of the United States or of any agency thereof, in an official or individual capacity, for or relating to any act under color of such office…”  The Defendants argued that the statute applied because the City “bases liability on activities undertaken at the direction of the federal government”, pointing to three contractual relationships between certain Defendants and the federal government: (1) fuel supply agreements between one Defendant (Citgo) and the Navy Exchange Service Command (“NEXCOM”) from 1988 to 2012; (2) oil and gas leases administered by the Secretary of the Interior under the OCSLA; and (3) a 1944 unit agreement between the predecessor of another Defendant (Chevron) and the U.S. Navy for the joint operation of a strategic petroleum reserve in California known as the Elk Hills Reserve.

The Fourth Circuit held that none of these relationships could justify removal, either because they failed to satisfy the acting-under prong or because they were insufficiently related to Baltimore’s claims for purposes of the nexus prong.

On 31 March 2020 the Defendants submitted a petition for certiorari to the US Supreme Court. on the question whether 28 U.S.C. § 1447(d) permits a court of appeals to review any issue encompassed in a district court’s order remanding a removed case to state court where the removing defendant premised removal in part on the federal-officer removal statute, 28 U.S.C. § 1442, or the civil-rights removal statute, 28 U.S.C. § 1443.

In another suit, by San Mateo, the Defendants have appealed against the District Court’s decision not to transfer the suit from the California State Court. The appeal was consolidated with Oakland’s appeal. On 5 February 2020 the Ninth Circuit heard oral argument. They were later informed of subsequent developments in the Baltimore case.

A further success for the municipalities was in the Rhode Island suit, now subject to an appeal to the First Circuit.

It is, therefore, possible that at least one of these tort suits will see the light of trial in the next year or so. When that happens, expect some interesting arguments on causation and damages.

Two new cases on vicarious liability from the UK Supreme Court on Wednesday, 1 April.

 

Two Supreme Court decisions this week which seem to mark a retreat in the process of expanding the scope of vicarious liability seen since 2012 in the “Christian Brothers” case.

  1. Barclays Bank plc (Appellant) v Various Claimants (Respondents)

[2020] UKSC 13

 

Claims were made against Barclays in respect of claims of sexual assault  by Dr Bates during unchaperoned medical examinations in a consulting room in his home. Barclays required job applicants to pass a pre-employment medical examination as part of its recruitment and employment procedures. Dr Bates was a self-employed medical practitioner whose work included conducting medical assessments and examinations of prospective Barclays employees.

The Supreme Court has reversed the finding of the first instance judge, upheld by the Court of Appeal, that Barclays was vicariously liable for Dr Bates’ alleged assaults.

There are two requirements for a finding of vicarious liability. First, there must be a relationship between the two persons which makes it proper for the law to make one pay for the fault of the other. Second, there must be a sufficient connection between that relationship and the wrongdoing of the person who committed the tort. The case concerned the first element. A person can be held vicariously liable for the acts of someone who is not their employee, provided the relationship between them is sufficiently akin or analogous to employment. However, the classic distinction between employment (and relationships that are akin or analogous to employment) on the one hand, and the relationship with an independent contractor on the other hand, remains.

In in Various Claimants v Catholic Child Welfare Society [2012] UKSC 56 (the “Christian Brothers “case) Lord Phillips referred to five factors that may help to identify a relationship which is sufficiently analogous to employment to make it fair, just and reasonable to impose vicarious liability. However, where it is clear that the person who committed the tort is carrying on his own independent business, it is not necessary to consider the five incidents

The key question is whether the person who committed the tort is carrying on business on his own account, or whether he is in a relationship akin to employment with the defendant. This was not the case here. Dr Bates was not at any time an employee or anything close to an employee of Barclays, but was in business on his own account as a medical practitioner, with a portfolio of patients and clients. He did work for Barclays, which made the arrangements for the medical examinations and chose the questions to which it wanted answers, but much the same would be true of window cleaners or auditors. Dr Bates was not paid a retainer, which might have obliged him to accept a certain number of referrals from Barclays. He was paid a fee for each report and was free to refuse to conduct an offered examination. He would have carried his own medical liability insurance

 

  1. WM Morrison Supermarkets plc (Appellant) v Various Claimants (Respondents) [2020] UKSC 12

 

This case involved the second limb of the vicarious liability test, the need for a sufficient connection between that relationship and the wrongdoing of the person who committed the tort. The claim involved a disgruntled employee, one Skelton, had received a verbal warning after disciplinary proceedings for minor misconduct and bore a grievance against his employer thereafter. In November 2013, he undertook the task of transmitting payroll data for the Supermarket’s entire workforce to its external auditors, as he had done the previous year. In doing this he made and kept a personal copy of the data which he then uploaded in a file to a publicly accessible filesharing website, as well as distributing the file anonymously to three UK newspapers, purporting to be a concerned member of the public who had found it online. Some of the affected employees then sued the Supermarket for breach of statutory duty under the Data Protection Act 1998, misuse of private information, and breach of confidence, both personally and on the basis of vicarious liability for its employee’s acts.

At first instance, and in the Court of Appeal, it was held that the Supermarket was vicariously liable as Skelton had acted in the course of his employment. The Supreme Court overturned the decision.

What had to be established was first, what functions or “field of activities” the employer had entrusted to the employee, and then whether there was sufficient connection between the position in which he was employed and his wrongful conduct to make it right for the employer to be held liable.

In this case, the online disclosure of the data was not part of Skelton’s “field of activities”, as it was not an act which he was authorised to do. The satisfaction of the factors referred to by Lord Phillips in the Christian Brothers case was only relevant to the first question, the relationship between wrongdoer and defendant was sufficiently akin to employment for vicarious liability to subsist, and not with whether  the employee’s wrongdoing was so closely connected with their employment that vicarious liability ought to be imposed. What was highly material was whether Skelton was acting on his employer’s business or for purely personal reasons.

Skelton’s case bears many similarities with Mohamud [2016] AC 677, where a customer at a petrol station had an angry confrontation with the petrol station attendant, who wrongly suspected him of trying to make off without payment. The customer was enraged at how the attendant had spoken to him and after paying he flagged down a passing police car and complained about the attendant’s conduct. The customer and the police returned to the petrol station where the officer listened to both men and indicated that he did not think that it was a police matter. The customer said that he would report the attendant to his employer and as the officer was on the point of leaving, the attendant punched the customer in the face. The Supreme Court found that the petrol station was vicariously liable for the assault by its attendant.

In the instant case, Lord commented on the fact that the function of the attendant in Mohamud was to deal with his employer’s customers and the assault was the culmination of a sequence of events which began when the attendant was acting for the benefit of his employer. In contrast, Skelton was not engaged in furthering his employer’s business when he committed the wrongdoing in question, but, rather, was pursuing a personal vendetta against them. Although authorised to transmit the payroll data to the auditors, his wrongful disclosure of the data was not so closely connected with that task that it could fairly and properly be regarded as made by Skelton while acting in the ordinary course of his employment. The fact that his employment gave him the opportunity to commit the wrongful act was not sufficient to warrant the imposition of vicarious liability. An employer would not normally be vicariously liable where the employee was not engaged in furthering his employer’s business, but rather was pursuing a personal vendetta.

 

A new climate change tort in New Zealand?

The month of March brings a second exotic possible tort claim to the table in the common law world. Following the Canadian Supreme Court’s decision in Nevsun v Arraya not to strike out a claim against a company for violating customary international law, we now have a novel tort raising its head in the Southern hemisphere.

Smith v Fontera Co-Operative Group Ltd and Ors  [2020] NZHC 419 saw the recognition of a possible new tort in connection with causing harm through emission of greenhouse gases. A claim was brought against various defendants who are either involved in an industry which releases greenhouse gases into the atmosphere, or who supply products which release greenhouse gases when they are burned. The plaintiff was  Mr Smith who claims customary interests in lands and other resources situated in or around Mahinepua in Northland. The statement of claim raised three causes of action, all in tort – public nuisance, negligence, and breach of an inchoate duty. Mr Smith did not claim damages but declarations that each of the defendants had unlawfully caused or contributed to the public nuisance alleged or breached duties said to be owed to him. He also sought injunctions requiring each defendant to produce, or cause, zero net emissions from its activities by 2030.

The defendants applied to strike out the claims on the grounds that the pleadings disclosed no reasonably arguable cause of action.

Wylie J struck out the public nuisance claim. The damage claimed was indirect and consequential. The interference with the rights of the public pleaded by Mr Smith was interference with public health, safety, comfort, convenience and peace. If the pleading could be made out, the defendants’ interference with those rights had no direct connection with the pleaded damage to Mr Smith’s interests in the land in question. Furthermore there was no unlawful conduct in the activities of any of the defendants.

The negligence claim went the same way. The damage claimed by Mr Smith could not be said to be a reasonably foreseeable consequence of the defendants’ acts or omissions. The defendants’ collective emissions were miniscule in the context of the global greenhouse gas emissions which are causing climate change and it is the global greenhouse gas emissions which are pleaded as being likely to cause damage to Mr Smith. Causation was also a problem. The proportion of the damage pleaded that is caused by climate change effects contributed to by each defendant, or even the extent to which anthropogenic interference with the climate system has caused, or will cause, the damage pleaded was impossible to measure.

Proximity was a further problem as there was no relationship between the parties from which it could be established. The claim opened up the spectre of indeterminate liability for the defendants. The claimed duty would be owed anybody who can claim damage as a result of the widespread effects of climate change. Everyone is a polluter, and therefore a tortfeasor, and everyone is a victim (and therefore a possible plaintiff).

However, Wylie J was reluctant to conclude that the recognition of a new tortious duty which makes corporates responsible to the public for their emissions, was untenable, noting “it may be that a novel claim such as that filed by Mr Smith could result in the further evolution of the law of tort. It may, for example, be that the special damage rule in public nuisance could be modified; it may be that climate change science will lead to an increased ability to model the possible effects of emissions. These are issues which can only properly be explored at trial. I am not prepared to strike out the third cause of action and foreclose on the possibility of the law of tort recognising a new duty which might assist Mr Smith.”

Wylie J concluded by noting a problem with the remedy sought, that of injunction which would be extraordinarily difficult and would require continued judicial supervision up to 2030, and maybe beyond.

 

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A new tort in the common law world. Corporations in Canada can be liable for aiding and abetting violations of customary international law.

 

Eritrea is a new country, having only been in existence since 1993. It is also a very poor country, ranking 164th out of the world’s 194 states. 80% of its population are engaged in subsistence agriculture. Eritrea’s major source of foreign currency is its Bisha mine at Asmara. Construction began in 2008 and by 2013 gold exports amounted to US$143m, almost all derived from the Bisha mine. The mine is owned by the Bisha Mining Share Company (BMSC) in which a Bermudan subsidiary of a Canadian mining company, Nevsun, holds a 60% share.

However, all that glitters is not gold. Eritrea has a national service programme requiring its adult citizens to serve in the military for 18 months. In 2002 this was extended to an indefinite period of service. Conscripts in the national service programme (NSP) have provided the labour for the Bisha mine. Three Eritrean refugees, Gize Yebeyo Araya, Kesete Tekle Fshazion, and Mihretab Yemane Tekle, brought an action against Nevsun in the courts of British Columbia. They allege that they were conscripted into the NSP and then forced to provide labour to two for profit construction companies, Segen and Mereb, the latter allegedly owned by members of the Eritrean military. They allege that Nevsun and/or its Eritrean subsidiary, BMSC, engaged Segen and Mereb for the construction of the Bisha Mine.

As well as framing their claims under domestic tort law, the plaintiffs also brought the action against Nevsun for violations of customary international law (CIL) as incorporated into the law of Canada, for: the use of forced labour; torture; slavery; cruel, inhuman or degrading treatment; and crimes against humanity. Nevsun mounted a jurisdictional challenge to the claims on three grounds: forum non conveniens; Act of State; denial of the existence of a cause of action based on CIL.

At first instance, Abrioux J dismissed the application to stay proceedings on grounds of forum non conveniens finding that Nevsun had not established that Eritrea was the more appropriate forum. He also dismissed the Act of State application and decided that the CIL claims were not bound to fail and should proceed to trial. The case then proceeded to the Court of Appeal of British Colombia  which upheld the decision on forum non conveniens, decided that in the light of the UK Supreme Court’s decision in Belhaj v Straw [2017] UKSC 3; [2017] A.C. 964. the Act of State doctrine would not bar the claims against Nevsun and that there was enough plausibility to the existence of a cause of action base on CIL to allow those claims to proceed.

In January 2019 the Canadian Supreme Court heard Nevsun’s appeal on the Act of  State and CILissues. It has now decided (1) 7-2 that the Act of State doctrine does not form part of the law of Canada and (2) 5-4 that a cause of action based on CIL exists. The trial judge will now have to decide whether Nevsun breached customary international law and—if it did—how it should be held responsible.

So is Canada the new frontier for claims against transnational corporations of the sort that we have seen in the US under the Alien Tort Statute? And if Canada, why not the UK? Maybe, but some unanswered questions remain. The claim is against the parent corporation, but the mine was operated by a subsidiary? How is the parent corporation implicated in the alleged aiding and abetting of the Eritrean State’s violations of CIL? What is the mens rea of this new tort – knowing assistance or purposive assistance? What is the applicable statute of limitations for such a tort?

In the meantime, a useful corrective to the excitement that this decision will inevitably provoke may be found by looking at the 2009 decision of Judge Shira Schiendlin in the South African Apartheid claims brought under the Alien Tort Statute in New York.  The basis of the claim was aiding and abetting  by foreign corporations of violations of CIL by the apartheid regime in South Africa in the 1980s. The mens rea of the tort was knowing assistance. Companies who had supplied military vehicles to the regime which were used to suppress civilian protests, and companies who had supplied IT systems which were then used in the denationalisation of South African citizens could potentially be liable, but not banks who had provided finance to the South African government. Merely doing business in the apartheid state was not enough to constitute aiding and abetting. To supply a violator of the law of nations with funds, even funds that could not have been obtained but for those loans, was not sufficiently connected to the primary violation.

Sounds a bit like the relationship of Nevsun and the Bermudan subsidiary to the Bisha mine project.

 

[1] Araya v Nevsun Resources Ltd  2016 BCSC 1856

[2] Araya v. Nevsun Resources Ltd., 2017 BCCA 401

English multi-national not liable for conduct of Sierra Leone police.

 

Kalma & Ors v African Minerals Ltd & Ors is a case reported in this blog last March https://iistl.blog/2019/03/06/a-fair-cop-transnational-torts-and-trouble-at-the-mine/.

The claims arose out of violent police suppression of protests in 2010 and 2012 by a local community in Sierra Leone against a mine created and operated by the defendant, African Minerals Ltd (“AML”), a UK company, and its two Sierra Leonean subsidiaries. The protests prompted a significant overreaction from some members of the Sierra Leone Police (“SLP”) whose response to disruptive protests and threats against the personnel, property and business of AML soon degenerated into violent chaos during the course of which many villagers were variously beaten, shot, gassed, robbed, sexually assaulted, squalidly incarcerated and, in one case, killed. After an extensive review of the law of tort on vicarious liability, joint tortfeasors, direct liability for breach of a non-delegable duty Turner J found that AML were not liable in tort.

The Court of Appeal have now upheld the decision of Turner J, [2020] EWCA Civ 144. Coulson LJ, who gave the principal judgment, found as follows.

 

  1. The judge found that there was no relevant intention on the part of the respondents. The common design case therefore failed on both its required ingredients: assistance and intention.

 

  1. A new case was raised based on ‘inferred intention’. The appellants argued that could foresee that the SLP might use excessive force and that, by providing them with money, vehicles, and accommodation, they intended that the protests should be quashed, if need be by the use of unlawful force. In this way, he sought to infer the necessary intent, presumably as a way round the judge’s express findings that there was no actual intent on the part of the respondents. In addition, the appellants also suggested that the judge’s findings confused intent with desire: they argued that, although the respondents may not have wanted violence to be used, their intent could still be conditional (“to quash protest if need be by violent means”). The new case was held to be unsustainable. It took what were, on the judge’s findings, neutral acts of assistance to the SLP – the provision of money, vehicles and accommodation – and uses the foreseeability that (regardless of that assistance) the SLP might over-react to the unrest, in order to disregard the judge’s findings as to actual intent and found an entire case based on inferred, conditional intent. The new case was also based on foreseeability but on its own this was never enough to create a legal liability. To establish tortious liability for common design, there needs to be something more than the foreseeability that, in certain circumstances, a tort might be committed by a third party.

 

  1. As regards the creation of a duty of care by AML, this was a case where the underlying complaint was an omission: that the respondents had failed to protect the claimants from the harm caused by the SLP. Here the conclusion must be that the respondents were not carrying out any relevant activity, and the damage was not caused by anything which the respondents did. The case did not fall within the creation of danger exception. The respondents could not be said to have created the danger or assumed any liability simply because they had called in the SLP. The provision of money, vehicles and accommodation to the SLP did not create a danger, and, without them, the situation might have been even worse.

 

  1. There was no freestanding duty of care owed by AML. Applying the three stage criteria set out in Caparo there was no proximity. this was a case in which a large commercial concern called in the police of the host country to restore law and order in degenerating circumstances of lawlessness and unrest. The police overreacted but sadly that is not uncommon in cases of this sort. There are no unique factors here which would justify a finding of proximity. The relationship with the police was not a close one, but one based on necessity. Nor would it be fair, just or reasonable to impose a duty of care. The judge had expressly found that the respondents’ employees were not involved in the unlawful acts and did not encourage or incite those unlawful acts. The assistance they provided was reasonable and proportionate in all the circumstances and did not cause the alleged or any loss.

 

  1. The position was not changed by reference to the Voluntary Principles on Security and Human Rights produced by the United Nations which were general in nature and primarily concerned with the need for liaison with the local community and the like. Coulson LJ concluded [151]:

“More significantly, there is nothing in the Voluntary Principles which make companies operating abroad generally liable for the unlawful acts of the police forces of the host countries in which they are operating: on the contrary, the Voluntary Principles are drafted on the basis that, whilst companies operating abroad may properly help to facilitate the law and order expected to be provided by host countries, it is the governments of those countries (and not the companies) who have “the primary responsibility to promote and protect human rights.”

Parent company duties of care. Hearing date set for Okpabi appeal to Supreme Court.

I have been informed by Leigh Day, acting on behalf of the appellants, that their appeal will be heard by the UK Supreme Court on 23 June 2020

These observations of Lord Briggs in Lungowe v Vedanta [61] may prove to be significant in the forthcoming appeal.

“[I]t seems to me that the parent may incur the relevant responsibility [for the
tort of a subsidiary] to third parties if, in published materials, it 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.”

Tort and implied contract in Singapore. The case of the ‘Bum Chin’.

 

In Wilmar Trading Pte Ltd v Heroic Warrior Inc (The “Bum Chin”) [2019] SGHC 143, Singapore High Court, an FOB buyer, Wilmar, nominated the ‘Bum Chin’ for shipping palm oil from Indonesia to Jeddah and Adabiyah.  An incident on the vessel caused physical damage to the vessel and loss of and damage to the cargo. Wilmar arranged for a substitute vessel to transport the palm oil purchased under the sale contracts and claimed damages from the registered owner on the grounds of contract and negligence. The registered owner counter claimed asserting that Wilmar was responsible for the damage sustained by the vessel because the loading terminal, as Wilmar’s agent, had improperly loaded the cargo.

Was there a contract between the parties? Wilmar relied on Pyrene v Scindia [1954] 1 Lloyd’s Rep 321, where there was found to be a  contract of carriage between the shipowner and the cargo interest. But Belinda Ang Saw Ean J found that here there was no such contract as the bills to be issued would have been charterers’ bills and the defendant was not the contractual carrier. Turning to tort, although Wilmar had no proprietary interest to found a cause of action in negligence since NTUC Foodfare Co-operative Ltd v SIA Engineering Co Ltd [2018] 2 SLR 588, pure economic loss was claimable under Singapore law and the question was whether the defendant owed a duty of care. The judge found that this was the case. The shipowner as performing carrier would have reasonably foreseen that its negligence would cause economic loss to a buyer of cargo who bore the risk of damage to or loss of the cargo. The requirement of legal proximity was also satisfied. The countervailing policy consideration of indeterminacy did not arise because the plaintiff as FOB buyer bore the risk of loss or damage to the cargo. In the absence of a contract of carriage, the defendant owed the plaintiff a duty to take reasonable care of the cargo loaded on board.

The counterclaim was dismissed on the basis that, absent a contract of carriage between the parties, Wilmar, who was not responsible for the actions in loading of the FOB seller in agency or otherwise, owed no duty of care to the defendant. On the evidence Wilmar’s loss was caused by the shipowner’s negligence as structural weaknesses were a cause of the failure of the tank which had caused leakage and contamination of the cargo.

From Borstal boys to Parent Companies. Tort liability for the acts of third parties.

 

2017 saw three ‘anchor defendant’ cases before the High Court involving tort claims against a UK parent corporation in respect of the activities of its overseas subsidiary. The claimants sought leave to serve the subsidiary out of the jurisdiction under the ‘necessary and proper party’ gateway for service out of the jurisdiction in paragraph 3.1 of Practice Direction 6B in the Civil Procedure Rules (“CPR”). In two cases, AAA v Unilever and Okpabi v Shell, leave was refused but was granted in the third case, Vedanta Resources PLC and another v Lungowe. The key issue was whether there was a triable issue against the UK parent corporation. Lungowe involved alleged pollution from toxic emissions from a copper mine in Zambia owned by a Zambian company, KCM, whose ultimate parent company is Vedanta Resources Ltd which is incorporated and domiciled in the UK.

The Supreme Court, [2019] UKSC 20, in which Lord Briggs gave the lead judgment, has upheld the findings at first instance and in the Court of Appeal that there was a triable issue as regards Vedanta on the basis of a plausible case that its involvement in the activities of KCM gave rise to a duty of care to those affected by those activities.

There were four issues before the Supreme Court on which the claimants succeeded on 1,2, and 4 but not on 3.

(1) whether it is an abuse of EU law to rely on article 4 of the Recast Brussels Regulation for jurisdiction over Vedanta as anchor defendant so as to make KCM a “necessary or proper party”.

The EU case law suggests that the abuse of law doctrine is limited to situations where EU law is invoked collusively to subvert other EU provisions. In light of the decision in Owusu v Jackson (C-281/02) [2005] QB 801 (CJEU), arguments based on forum conveniens cannot justify derogating from the primary rule of jurisdiction in article 4.1 The concern about the wide effect of article 4.1 in this case is best addressed under the domestic law on the “necessary or proper party” gateway.

(2) whether the claimants’ pleaded case and supporting evidence disclose no real triable issue against Vedanta

The assertion that the negligence claim against Vedanta raises a novel and controversial legal issue was misplaced, as the liability of parent companies in relation to the activities of their subsidiaries is not, in itself, a distinct category of negligence unsuited to summary determination. The relevant principles for determining whether A owes a duty of care to C in respect of the harmful activities of B are not novel and can be traced back to the decision of the House of Lords in Dorset Yacht Co Ltd v Home Office [1970] AC 1004, the case involving Home Office responsibility for damage caused by absconding borstal boys when they boarded a yacht and collided with the plaintiff’s yacht. The duty  would arise from a sufficiently high level of supervision and control of the activities  at the mine with sufficient knowledge of the propensity of those activities to cause toxic escapes into the surrounding watercourses. This was a question for Zambian law, which it was agreed followed English tort law, but the question what that level actually was is a pure question of fact. On the facts, there was sufficient material identified by the judge in support of the view that the claimants’ case was arguable and the judge made no error of law in assessing this issue, so his decision on the negligence claim must stand.

The Judge had identified the following evidence as establishing that there was an arguable case that Vedanta owed a duty of care. There was part of the published material, namely a report entitled “Embedding Sustainability” which stressed that the oversight of all Vedanta’s subsidiaries rested with the board of Vedanta itself, and which made particular reference to problems with discharges into water and to the particular problems arising at the Mine. There was the management services agreement between Vedanta and KCM , and a witness statement of Mr Kakengela.

Lord Briggs stated[61]:

“For my part, if conducting the analysis afresh, I might have been less persuaded than were either the judge or the Court of Appeal by the management services agreement between the appellants, or by the evidence of Mr Kakengela. But 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 Page 23 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 at 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.”

(3) whether England is the proper place in which to bring the claims;

The domestic law ‘proper place’ test requires a search is for a single jurisdiction in which the claims against all defendants may most suitably be tried. The courts have treated the risk of irreconcilable judgments as a decisive factor in favour of England as the proper place for the claim against the non-EU defendant as well. The judge in this case applied that approach but that was a legal error in circumstances where Vedanta had by the time of the hearing offered to submit to the Zambian jurisdiction, so that the whole case could be tried there. The risk of irreconcilable judgments would be the result of the claimants’ choice to exercise their article 4 right, rather than because Zambia is not an available forum for all the claims. The risk of irreconcilable judgments was still a relevant factor but was no longer a trump card such that the judge made an error of principle in regarding it as decisive. Looking at the relevant connecting factors in the round, Zambia would plainly have been the proper place for this litigation as a whole, provided substantial justice was available to the parties in Zambia

(4) if Zambia would otherwise be the proper place, whether there was a real risk that the claimants would not obtain access to substantial justice in the Zambian jurisdiction.

Even if the court concludes that a foreign jurisdiction is the apparently the proper place, the court may still permit service of English proceedings on the foreign defendant if cogent evidence shows that there is a real risk that substantial justice would not be obtainable in that foreign jurisdiction. In this case, the judge identified two “access to justice” issues in Zambia First, the practicable impossibility of funding such group claims where the claimants are all in extreme poverty, because they could not obtain legal aid and because conditional fee agreements (CFAs) are unlawful in Zambia. Secondly, the absence within Zambia of sufficiently substantial and suitably experienced legal teams to enable effective litigation of this size and complexity, in particular against a well-resourced opponent like KCM.

The claims will now proceed against the parent company and its Zambian subsidiary in the English High Court.