Claimants suing multinational enterprises for business-related human rights abuses have recently had a good run in England. The Supreme Court cleared the jurisdictional hurdles for the claimants in Vedanta and Okpabi. This was followed by the Court of Appeal judgment in Begum and the High Court judgment in Josiya, which opened the door for value chain litigation. In Fundão dam, the Court of Appeal allowed a claim brought by over 200,000 Brazilians in the aftermath of the collapse of a dam in Brazil to proceed (meanwhile, the number of claimants has grown to 700,000, who are seeking £36bn in damages). And in Bravo, the High Court held that the law of a civil law country (Colombia) did not preclude the possibility of liability on the part of a parent company registered in England for the activities of its Colombian subsidiary. Although in Jallah (here and here), the courts held that a claim following an oil spill off the Nigerian coast was time-barred.
Business and human rights cases have even made their way to Scotland. The Court of Session (Outer House) allowed a claim brought by over 1,000 Kenyan tea pickers against a company registered in Scotland to proceed in Campbell v James Finlay (Kenya) Ltd.
Many other business and human rights cases, some of them quite innovative, are currently pending in English courts. All of this has cemented London’s reputation as a (and probably the) global centre for business and human rights litigation.
Ever since Brexit, however, there has been a sense that this type of litigation is running on borrowed time. The UK’s withdrawal from the Brussels system has expanded the use of forum non conveniens and, consequently, has significantly raised the risk of claims failing on jurisdictional grounds.
Limbu v Dyson Technology Ltd, in which the High Court (Deputy High Court Judge Sheldon KC) handed down its judgment on 19 October 2023, is the first post-Brexit case where this risk has materialised.
Facts
Dyson is a multinational enterprise specialising in designing and manufacturing premium household appliances. Its founder and chairman, Sir James Dyson, was a prominent Brexiteer. That is why he caused quite a stir when he announced in early 2019 that his company would move its headquarters to Singapore, although he stated that this move was ‘not linked to the departure from EU’. Dyson’s operational headquarters is now in Singapore, but its registered headquarters is still in England. Dyson has an elaborate value chain. Many of its suppliers are based in East Asia.
Two of Dyson’s suppliers are the Malaysian companies ATA Industrial (M) Sdn Bhd and Jabco Filter System Sdn Bhd. The claimants, who are migrant workers from Bangladesh and Nepal, were employed by the suppliers in their Malaysian factories. They allege that they were victims of various human rights abuses, including violations of labour standards by the suppliers and violations of human rights directly committed by the Malaysian police in which the suppliers were complicit. The claimants commenced proceedings against three companies that are part of the Dyson group, two of which are domiciled in England and one in Malaysia. No proceedings were commenced against the suppliers and the Malaysian police.
The claim was brought in negligence and unjust enrichment. Negligence is a well-known legal basis for remedying business-related human rights violations. The claim in this case builds on Begum and Josiya. The defendants’ duty of care is claimed to have originated from their control over the manufacturing operations and the working conditions at the suppliers’ factories, and out of their public declarations – in mandatory policies and standards – regarding upholding human rights in their value chain. Unjust enrichment is a relatively novel legal basis in this context. The essence of the unjust enrichment claim is that the defendants obtained an unjust benefit as a result of claimants’ circumstances. The claim was brought on 27 May 2022, which is well after the Brexit transition period ended on 31 December 2020. The Brussels I bis Regulation, therefore, did not apply.
The question before the court was one of jurisdiction. The court had jurisdiction over the English companies on the basis of their presence in England. The English companies, however, asked the court to stay the proceedings on the basis of forum non conveniens. The claimants sought permission to serve the claim form on the Malaysian company out of the jurisdiction. The defendants had not made an application to strike out the claim, nor had they made an application for summary judgment. The court, therefore, assumed that the claim was arguable and had a reasonable prospect of success. The claimants relied on the necessary and proper party jurisdictional gateway in relation to the Malaysian company. But was England the proper place in which to bring the claim? The Malaysian company sought to set aside the service of the claim form on the basis that England was not the forum conveniens.
The defendants made a number of undertakings to the court as to how they would conduct the proceedings if their application succeeded and the claim was brought in Malaysia. In essence, they undertook to submit to the jurisdiction of the Malaysian courts, to assist the claimants with some of the disbursements and costs, to agree to remote attendance at a hearing and the trial in Malaysia, and not to challenge the lawfulness of any success fee arrangement between the claimants and their Malaysian lawyers.
Judgment
The jurisdictional question was about forum non conveniens. Referring to Spiliada, the court said that the question had to be addressed in two stages. First, was England or Malaysia the natural forum for the litigation? Second, if Malaysia was the natural forum, where there any special circumstances by reason of which justice requires the trial to take place in England? In other words, was there a real risk, based on cogent evidence, that substantial justice would not be obtainable in Malaysia?
The court held that Malaysia was indeed the natural forum. The following factors in particular pointed to this conclusion: Malaysian law applied and the case raised novel points of law; and Malaysia was the centre of gravity of the case due to the harm and the underlying mistreatment occurring there. Interestingly, the availability of remote hearings and communication technology meant that the location of parties and witnesses was not regarded by the court as a particularly important factor.
The court then proceeded to Stage 2. It held that there was no reason for the trial to occur in England. The court found no cogent evidence that: migrant workers had no access to justice in Malaysia; there were no suitably qualified lawyers with necessary expertise who could team up in Malaysia; the proceedings in Malaysia would take too long; the disbursements to be paid by the claimants in Malaysia would be significant; the claimants could not find representation in Malaysia; the defendants or their lawyers would act outside the law, unethically or unprofessionally in Malaysia; it was inappropriate to rely on the defendants’ undertakings; the gaps in funding in Malaysia could not be filled by NGOs; and that partial contingency fee arrangements were unlawful or impracticable. In other words, there was no cogent evidence that the claimants would not obtain substantial justice in Malaysia.
Comment
Dyson is significant because it illustrates the effects of Brexit on business and human rights litigation in England. The combination of general jurisdiction under Brussels I bis and the CJEU’s judgment in Owusu no longer offers a safe jurisdictional haven for victims of business-related human rights abuses. It is clear from Dyson and the cases cited above that the natural forum is almost always going to be in the country where abuses and direct damage occur. There are cases, like Vedanta, where it is possible to prove that substantial justice cannot be obtained in the natural foreign forum. But, as Dyson shows, achieving this is difficult. Many alleged human rights abusers will benefit from this and, thus, collect a handsome ‘Brexit dividend’.
Nevertheless, Dyson has a silver lining. The court assumed that the claim was arguable and had a reasonable prospect of success because the defendants had not made an application to strike out the claim, nor had they made an application for summary judgment (see [18]). The judge reiterated, at [141], that it was reasonable to assume that the claimants had good prospects of success in their claims and would obtain substantial damages if successful. Furthermore, the claimants are likely to appeal and it is not inconceivable that the Court of Appeal might disagree with the judge on the forum non conveniens issue.
Good that Sir Dyson, a leading Brexiteer, eventually collected some form of dividend on Brexit, after he first fled the country. It was probably not the kind of benefit he was seeking in the first place.