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.

A fair cop? Transnational torts and trouble at the mine.

 

Kalma v African Minerals Ltd and others [2018] EWHC 3506 (QB) is an interesting recent decision involving transnational tort claims against a UK company in respect of events at and around its mine in Sierra Leone. It is, I believe, the first of these type of claims brought by London solicitors, Leigh Day, to go to trial.

 

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, 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.

 

The claimants alleged that they were among the victims of these abuses and contend that, although the SLP perpetrated the worst of these excesses, the defendants were nevertheless liable to compensate them by the application of a broad range of distinct common law remedies to the facts of this case.

 

It was accepted that the law of Sierra Leone applied to the issues both of liability and quantum. In respect of liability, it was agreed that the law of Sierra Leone could be treated, for all practical purposes, as being identical to that of England and Wales. Turner J dismissed the claims having considered seven possible grounds on which the defendants might incur liability for the acts of the Sierra Leone police towards the claimants.

 

  1. EMPLOYEE VICARIOUS LIABILITY

 

It was alleged, for example, that one employee of the defendant directly and violently assaulted some of the claimants and that others encouraged members of the SLP to use excessive force. Two criteria are involved.

(i)    as regards the sort of relationship which must be found to exist between an individual and a defendant before the defendant can be found to be vicariously liable in tort for the conduct of that individual; That was clearly satisfied here as the individuals concerned were employees

(ii)    as regards concerns the scope of the conduct of such an individual in respect of which vicarious liability is to be imposed on the defendant.

 

Applying Muhamud v Wm Morrison Supermarkets plc [2016] AC 677 if any claimants could prove that they were the victims of torts perpetrated directly upon them by an employee or employees of the defendant then the means deployed, even if seriously criminal, remain sufficiently closely connected to their employment to give rise to vicarious liability on the part of the defendant. However on the facts the claimants had not made out that the employees against whom such allegations have been raised were, themselves, guilty of free-standing tortious conduct.

 

  1. NON-EMPLOYEE VICARIOUS LIABILITY

 

The claimants contended that the defendant was vicariously liable for the torts of the SLP. Various Claimants v Catholic Welfare Society [2013] 2 AC 1 established that the relevant test is whether or not the non-employment relationship is, upon analysis, one that is “akin to that between an employer and employee”. The most important factors tending to establish a relationship akin to that between employer and employee in this context arise in the following circumstances:

(i)             the tort will have been committed as a result of activity being undertaken by the tortfeasor on behalf of the defendant;

(ii)           the tortfeasor’s activity is likely to have been part of the business activity of the defendant; and

(iii)         the defendant, by engaging the tortfeasor to carry on the activity, will have created the risk of the tort committed by the tortfeasor.

 

This claim was unsustainable. Save for the six officers permanently stationed at the mine, in respect of whom there is no evidence of wrongdoing, the officers involved were performing duties which extended far beyond the narrow parameters of the business activity of the defendant. The defendant did not exercise any significant degree of control over the SLP. The communications between employees and the police did not amount to orders or direction but comprised, at their highest, encouragement to do a robust and thorough job.

 

  1. ACCESSORY LIABILITY

 

It was alleged that the SLP’s use of unlawful force on the protesters was part of a common plan between the defendant and the SLP the execution of which rendered the defendant liable for the entirety of the injuries and harm caused.  The principle of accessory liability was reviewed and clarified by the Supreme Court in Fish & Fish v Sea Shepherd UK [2015] AC 1229 in which Lord Toulson observed at paragraph 21:

“To establish accessory liability in tort it is not enough to show that D did acts which facilitated P’s commission of the tort. D will be jointly liable with P if they combined to do or secure the doing of acts which constituted a tort. This requires proof of two elements. D must have acted in a way which furthered the commission of the tort by P; and D must have done so in pursuance of a common design.”

 

The central issue was whether or not the defendant was at the material times assisting the police in their tortious conduct to a more than minimal degree in pursuance of a common design. Where the parties to an alleged common design include corporate bodies, the requisite design must be common to individuals whose acts and knowledge are legally attributable to such bodies by the application of the approach of Lord Hoffmann in the Privy Council decision of Meridian Global Funds Management Asia Limited v Securities Commission [1995] 2 AC 500.

 

Here the defendant’s provision of vehicles and drivers to the SLP was sufficient to facilitate the tortious conduct of the SLP to an extent that was more than de minimis. However, it was not the case that the defendant intended the police to act tortiously at any stage. Those in authority in the defendant’s organisation were understandably concerned that the disruptions to their undertaking were potentially extremely damaging to their prospects of commercial success. However, at all relevant times the solutions they proposed were directed at conciliation and not at the deployment of unlawful means. In particular, it would have been perfectly possible for the SLP to deploy the defendants’ vehicles lawfully and it was no part of the defendant’s plans that they should do otherwise. Similarly, the provision of cash, food, accommodation and drink although alien to what would be expected in the UK were pragmatic incentives and not bribes to achieve tortious ends.

 

  1. PROCUREMENT LIABILITY

Procurement liability is a further manifestation of joint liability whereby a defendant might incur liability by procuring the commission of a tort by, for example, “inducement, incitement or persuasion” of the primary tortfeasor. If the torts, including battery and false arrest, perpetrated by the SLP were pursuant to “some direction, or procuring or direct request, or direct encouragement” from the defendant then the defendant would be liable as a joint tortfeasor for the loss and damage sustained as a result.

 

On the facts here, the defendant neither incited or procured the SLP to act tortiously. Its employees on the ground were anxious that the police should deal with the protesters robustly and not tolerate the construction and manning of unlawful roadblocks or any other form of unlawful protest. However, they had not exhorted them to unlawful behaviour including false arrest, battery or tortious damage to property.

 

  1. MALICIOUS PROSECUTION

 

The ingredients of the tort of malicious prosecution are set out in Clerk and Lindsell on Torts 22 nd Ed. (2018) at paragraph 16-12:

“In an action for malicious prosecution the claimant must show first that he was prosecuted by the defendant, that is to say, that the law was set in motion against him by the defendant on a criminal charge..; secondly, that the prosecution was determined in his favour; thirdly, that it was without reasonable and probable cause; fourthly, that it was malicious. The onus of proving every one of these is on the claimant. Evidence of malice of whatever degree cannot be invoked to dispense with or diminish the need to establish separately each of the first three elements of the tort.”

Following the incident in 2010, members of the local population were rounded up and later prosecuted for various criminal offences alleged to have been committed during the disturbances. The claimants in this case fell at the first hurdle as those who were prosecuted in the aftermath of the 2010 incident faced charges which were set in motion by the police.

 

  1. NEGLIGENCE

 

The claimants alleged the defendant owed them a duty of care in three ways.

 

(i)                   There was an obligation on the Defendants when operating in a country such as Sierra Leone to ensure clear protocols and procedures were adopted and implemented so as to ensure the use of public and private security forces did not lead to abuses of the rights of those affected by the Defendants’ operations;

(ii)                 Further or alternatively, there was an assumption of responsibility by the Defendants towards the Claimants via their commitments to abide by the international standards and in the course of their use and control of the Claimants’ land and their coordinated response to the protests;

(iii)               Alternatively, if and in so far as the Defendants were operating as a separate entities, in the case of the First Defendant, there was an assumption of responsibility towards the Claimants via its commitments to abide by the international standards and its full effective control over the subsidiaries in respect of operational risk management and health and safety, to advise and direct its subsidiaries to take steps to prevent human rights abuses by their servants, agents and/or the police did not lead to abuses of the rights of those affected by the Defendants’ operations.

Turner J found that no duty of care arose on any of these pleaded grounds.

 

The defendant at senior management level was aware both in 2010 and 2012 that there was a risk that the police might react to protest with disproportionate violence. The generic danger of the police causing injury and loss was not, however, one which was “created” by the defendant. The proclivities of the police were, unhappily, an institutional fact long before the arrival of the defendant and, although not mitigated by the defendant’s failures to follow the active steps advocated by the relevant international standards, were not thereby exacerbated.

 

Nor could it be said that the defendant created the danger simply by calling the police. In both 2010 and 2012, dangerous situations were already developing which called for an effective response. In particular, the defendant undoubtedly owed a duty of care to its own employees to take reasonable care for their safety. The only sense in which it could realistically be argued that the defendant created the danger is with respect to the provision of vehicles, food, and financial or other support to the police. But the defendant was providing no more than that which the Sierra Leonean state, itself, ought to have provided to maintain an efficient police force in the first place. Suitable vehicles, proper remuneration, food and water are prerequisites to the proper functioning of any force.

 

The defendant exercised no supervision or control over the SLP. Individual employees did not give directions to the police and the responses of the police to the incidents which they were called upon to deal with were operationally entirely of its own choosing.

 

The claimants were members of the general public who lived near the mine and were policed by officers who, for the most part, would not have been there but for the activities of the defendant. This fell far short of establishing that the defendant had assumed a responsibility for the actions of the police. The circumstances in which the police are to be held to have assumed responsibilities for the acts of third parties is heavily circumscribed. The circumstances in which a party ought reasonably to be found to have assumed a responsibility for the police could hardly be less so. A finding to the contrary would open up the defendant to almost unlimited liability to a broad swathe of potential claimants within a class almost impossible to define or circumscribe with any clarity.

 

 

  1. BREACH OF A NON-DELEGABLE DUTY

 

The claimants sought to amend their pleadings to allege that if the SLP were operating, not in a relationship akin to employment but as independent contractors to the defendant, then they were engaged in an extra-hazardous activity the negligent performance of which exposed the defendant to liability As a general rule, liability does not generally attach to a defendant in respect of the tortious conduct of his independent contractors, although there is an exception which concerns extra-hazardous activities. In Honeywill & Stein Ltd v Larkin Bros (London’s Commercial Photographers) Ltd [1934] 1 KB 191. The scope of this exception was severely restricted by the Court of Appeal in Biffa Waste Services Ltd v Maschinenfabrik Ernst Hese GmbH [2009] QB 725.

 

The claimants needed to prove (i) that the police officers who caused them injury, loss and damage were acting as independent contractors for the defendant and (ii) that the activities they were undertaking were exceptionally dangerous whatever precautions were taken.

 

They failed on both elements. First, with the possible exception of the officers stationed at the mine itself, the police were acting at any time as independent contractors of the defendant. The payments made to the police did not provide the defendant, either in form or substance, with any degree of significant control over what the police did or in what numbers. Similarly, the provision of vehicles, food and water was on an ad hoc basis and brought with it no corresponding contractual obligation on the part of the police to carry out its duties in a particular way which departed from those which they owed to the public at large to maintain the peace.

 

Second, although what many officers did was dangerous in both 2010 and 2012 the task in hand was not inherently and exceptionally dangerous if proper precautions had been taken. Honeywill liability arises where the work is extra-hazardous in itself not where the contractor’s performance makes it so.

 

Who is your neighbour? Corporate social responsibility and the tort of negligence.

In Das v. George Weston Limited, claims were made against a Canadian garment retailer, Loblaws, whose sub-suppliers, New Wave, had occupied premise in the Rana Plaza Building at the time of its collapse on  24 April 2013, and Bureau Veritas who had been employed to audit the corporate social responsibility code that Loblaws had inserted into its contracts with its suppliers and sub-suppliers. On April 23, 2013, cracks were discovered in three pillars of the structure of Rana Plaza. Local police evacuated the site and workers were sent home. Later that day, however, managers at New Wave ordered New Wave employees to return to work the following day. The next morning, April 24, 2013, New Wave advised workers that the building was safe and threatened to terminate their employment if they did not return to work.

That same morning, as a result of a power outage, the large back-up generators on the upper floors of Rana Plaza began to operate, causing substantial vibration. Around 9 a.m., Rana Plaza collapsed, killing 1,130 people and injuring 2,520 others. Those injured or killed included employees of New Wave, employees of other garment businesses operating out of Rana Plaza, and other people who happened to be in or around the building at the time of the collapse. The claimants were workers in and relatives of workers who had been killed or injured in the collapse . the action not only on behalf of employees of New Wave and their survivors, but on behalf of all persons who were in Rana Plaza at the time of the collapse and survived, the estates of all persons who died as a result of the collapse, and the family members and dependents of those who died or were injured. Claims were brought in 2015 shortly before the second anniversary of the collapse.

In 2017 Perell J dismissed the action 2017 ONSC 4129. The claims for death and personal injury were a time barred, save for claimants born after 22 April 1996, under the law of Bangladesh which was the governing law, as the lex loci delecti. There was no plausible case for liability in tort on either party under either the law of Bangladesh (effectively English tort law) and that of Ontario.

Shortly before Christmas 2018 the Court of Appeals in Ontario upheld the decision,  2018 ONCA 1053 (CanLII).

With respect to Loblaws’ liability, the Court found that it was plain and obvious that a negligence claim against Loblaws would fail under Bangladeshi law. The facts did not amount to the type of relationship or control over New Wave’s operations by Loblaws that has been found in English law to be sufficient to establish proximity or assumption of responsibility, and to thereby impose a duty of care to protect against harm by third parties. Loblaws was not directly involved in the management of New Wave, nor in the process of manufacturing the products. Loblaws did not have control over where the manufacturing operation took place. Loblaws’ only means of controlling New Wave was through cancellation of its product orders from Pearl Global for non-compliance with the CSR Standards. Nor was there any pleaded history of Loblaws using that lever to enforce any change in New Wave’s operations. The social audits required by Loblaws the limited social audits did not and were not intended to cover any structural issues in the New Wave factories and there was therefore no basis for any reliance on Loblaws or Bureau Veritas with respect to the structure of the Rana Plaza premises.

Similarly, the Court held that the judge correctly held that it was plain and obvious that the appellants’ pleaded claim in negligence against Bureau Veritas would fail under Bangladeshi law.

The vicarious liability claim also failed. It had not been pleaded that New Wave was acting as agent for, or on behalf of, Loblaws in conducting its operations. The exceptional circumstances in which an enterprise can be vicariously liable for the misdeeds of independent contractors were not present here. Loblaws was a retailer not a garment manufacturer and was not an enterprise engaged in a hazardous or inherently dangerous industry. It had no control over how its supplier and the sub-supplier carried on their manufacturing business or treated their employees.

Two other interesting cases on corporate liability for the acts of third parties were heard last month before the Supreme Court in Canada and the UK.

The former is the appeal in Araya v Nevsun Resources Ltd, 2017 BCCA 401, a claim against a Canadian company in respect of alleged slavery at a mine in Eritrea operated by the Eritrean government under a joint venture with it. The two issues under appeal were (a) whether the claim was barred by the Act of State doctrine and (b) whether there was a cause of action against the company for participating in a violation of customary international law.

The latter is the Vedanta Resources Plc v Lungowe noted here https://iistl.blog/2018/07/10/no-direct-liability-in-tort-for-uk-parent-company-third-anchor-defendant-decision-in-the-court-of-appeal/

This involved claims against the UK parent company and its Zambian subsidiary for environmental damage and personal injury in respect of the operation of a copper mine in Zambia. There were five issues: (i)  The proper approach to the “real issue”/”proper party” test under Practice Direction 6B para. 3.1, where a claimant seeks to sue a foreign subsidiary and a UK-domiciled parent company.

(ii) The proper approach to the exercise of discretion under CPR r.6.37(3) in mass tort claims, particularly the weight to be given to the prospect of parallel foreign proceedings as against the prejudice caused to a foreign defendant in defending mass tort claims in England and Wales.

(iii) The proper approach when determining whether there is a real risk that a claimant cannot obtain substantial justice in a foreign jurisdiction.

(iv)  The proper application of EU law principles and cases to claims brought against an English domiciled parent company, where the non-EU claimant sues both an EU-domiciled parent company and its non-EU subsidiary company.

(v) Whether to refer point (4) above to the EU Court of Justice.