4.1 The Vedanta case - 2016 EWHC 975 (TCC) (May 2016)
The case concerned 188 Zambian citizens suing for environmental damage caused to the river forming the basis of their livelihoods. The damage was allegedly caused by the activities of a copper mine owned by the company Konkola Copper Mines Plc (KCM), incorporated in Zambia, and a subsidiary company to the parent company, Vedanta Resources Plc (Vedanta), domiciled in the UK.
With regard to the claim against the parent company, the court started out by referring to art 4(1) of the Brussels I Regulation and stated that none of the exceptions in the Regulation applied to the case. The court then moved on to consider three arguments put forward by Vedanta in support of the view that the court did not have jurisdiction, and for that reason should either issue a declaration (1) Para 4. to this effect or else stay(2) Para 4. the proceedings.
Firstly(3) Para 64, it was argued that the case against Vedante should be stayed on forum non conveniens grounds. However, the judge saw no reason why the Owusu decision should not be applied and rejected staying/dismissing the case on this basis.
Secondly(4) Para 73 ff, Vedanta argued that bringing a claim against it was in fact abuse of EU law in the sense that the claim against Vedanta was allegedly only used as a “hook” to enable a claim against KCM before the English court. This argument was also rejected by the court which, by referring inter alia to the Chandler case, found that “on the face of the pleading” there was a “real issue” between the parties and, consequently, it could not be said that the sole purpose of the claim against Vedanta was to act as a hook for a claim against KCM.
Thirdly(5) Para 83 ff, Vedanta argued that the case should be stayed/dismissed on “case management” grounds, since according to Vedanta, the claim against it was not viable and that if there was no claim against KCM it would be safe to conclude that there would never be a trial of the claim against Vedanta. Although the court found that it did retain its case management options even after Owusu, it found that there was no basis for staying the procedure on the basis of case management needs.
Consequently, the judge concluded that there was no basis for staying/dismissing the case against Vedanta.
With regard to the claim against the subsidiary (KCM), the court started out by stating that the relevant rules were to be found in the UK national set of rules “Practice Direction 6B”, the relevant part of which provides:
3.1 The Claimant may serve a claim form out of the jurisdiction with the permission of the court under 6.36 where –
(3) A claim is made against a person (“the defendant”) on whom the claim form has been or will be served (otherwise than in reliance on this paragraph) and-
(a) there is between the claimant and the defendant a real issue which it is reasonable for the court to try; and
(b) the claimant wishes to serve the claim form on another person who is a necessary and proper party to that claim”.
The rule is usually referred to as the “necessary and proper party” gateway. It reflects the “hook” line of thought touched upon above, in the sense that in order for the claim against the subsidiary to have a basis it is a necessary precondition to show that there is a real issue between the claimant and the parent company. In other words, just as in the Dutch case, in order to establish jurisdiction for the claim against the subsidiary, it is necessary for the court to go into the merits of the case against the parent company.
In order to come to a conclusion with regard to the question whether there is a “real issue” between the parent company and the claimant, the court – here - quite thoroughly analysed relevant case law, consisting in particular of the Chandler decision and related cases. On this basis, it reached the conclusion that there was a real issue between the parties(6) Para 126. The court also found that it was reasonable for the court to try the issue (finding it difficult to define the content of this criterion)(7) Para 135 ff. Finally, the court reached the conclusion that the subsidiary was a necessary and proper party to the claim against Vedanta, finding that Vedanta and KCM were “broadly equivalent defendants”.(8) Para 146. The court also made reference to two tests that have been applied in previous case law: 1) “Supposing both parties had been within the jurisdiction would they have been proper parties to the action?” (para 138) and 2) “..a serious issue involving (the foreign defendant) which is connected to the matters in dispute in the proceedings, and it is desirable to add (the foreign defendant) so that the court can resolve that issue” (para 139).
On this basis, the court found that there was also jurisdiction for the claim against KCM. It is interesting to note, that with regard to the question of jurisdiction for the claim against the parent company, it was sufficient for the court to note that “on the face of it” there was a real issue between the parties and for that reason there was no basis for assuming abuse of EU law, whereas with regard to the question of jurisdiction for the claim against the subsidiary, the court went much deeper into the question of whether there was a real issue between the parties.
Entirely parallel questions were raised in the Shell (Nigeria) case, dealt with below. However here, the court reached a different result.