Jurisdiction of English Courts in Foreign Direct Liability Claims
This post has been written by Geert Van Calster, Professor of Private International Law, KU Leuven and member of the Belgian Bar. It is the third post in the EAPIL blog online symposium on Ekaterina Aristova, Tort Litigation against Transnational Corporations: The Challenge of Jurisdiction in English Courts (OUP 2024). The others contributions, by Ekaterina Aristova, Peter Muchlinski, Mukarrum Ahmed, Dalia Palombo and Ekaterina Aristova can be found here, here, here, here and here respectively. Readers are encouraged to participate in the discussion by commenting on the posts.
In Chapter 4 of Tort Litigation against Transnational Corporations, Dr Aristova discusses jurisdiction of the English courts in foreign direct liability claims. The focus in this Chapter is on the material rules (and their application), not on the substantive question whether as such it is warranted for English courts to exercise such jurisdiction: that question is considered in Chapter 6 in the volume.
The jurisdictional leg of foreign direct liability claims clearly is a crucial one: it is literally a knock-out point. Chapter 4 discusses the legal issues as they apply in the English courts in an accessible fashion. It justifiably reviews the pre- and post-Brexit situation in two separate sections.
Pre-Brexit, the application of the common law’s forum non conveniens mechanism as applied in England (like Dr Aristova, I return to the Australian application later) could only be applied to the parent company’s subsidiaries and other non-EU incorporated defendants. Against the EU defendants (seeing as the book focuses on England: England-incorporated defendants), forum non of any kind could not be applied following CJEU Owusu prior to the adoption of Brussels Ia. Under Brussels Ia, a type of forum non light can be applied under Articles 33 and 34 of that Regulation and the limited authority on that Article (most of it English indeed) is discussed briefly in the Chapter. It is certainly not wrong for the Chapter to state that ‘the exact operation of the discretion to stay proceedings to prevent injustice to the claimants in the foreign forum is yet to be seen and may require the CJEU’s guidance and clarification’. However, given the references to substantive justice in the authorities so far, and to ‘sound administration of justice’ in the statutory instruction, this is a point that I would have liked Dr Aristova herself giving instruction on.
As Dr Aristova documents, defendants’ attempts pre-Brexit to bring in via the backdoor what Owusu had closed the front door on (to use the expression of Purle J in Jong v HSBC [2014] EWHC 4165 (Ch)) either by case-management decisions or by reference to abuse of EU law, failed among others in Municipio De Mariana v BHP Group (UK) Ltd [2022] EWCA Civ 951.
Post-Brexit, forum non conveniens has returned with a vengeance for England-incorporated defendants and non-incorporated defendants alike. England-incorporated defendants can be sued as of right but the defendant can ask the court to stay the proceedings on the basis of forum non conveniens. In order successfully to seize an English court of a claim over a non-incorporated defendant, claimant must show firstly ‘a good arguable case’ that the claims fall within one of the gateways in the civil procedure rules – CPR, introduced by Statute; further a serious issue to be tried on the merits (this is designed to keep out frivolous suits); in case the claim makes use of an anchor defendant, the case against the anchor defendant, too, must be shown to have merit; and finally that England is the appropriate forum for trial and the court ought to exercise its discretion to permit service out of the jurisdiction: that is the forum non conveniens test.
Chapter 4 summarises the extensive case-law in admirable fashion, and Dr Aristova concludes at one stage ‘One can only hope that the transition from a harmonised and predictable Brussels I regime to a complex service based model will be smooth.’ I appreciate that court practice needs further settling, however, all in all, I am a touch more pessimistic when it comes to judging the post-Brexit outcome. In FS Cairo (Nile Plaza) LLC v Brownlie [2021] UKSC 45) the Supreme Court has widened the scope of potential gateways to establish jurisdiction in England, with ‘forum non’ considered to be the necessary gatekeeper. Despite the same Supreme Court’s instruction in Vedanta Resources Plc v Lungowe [2019] UKSC 20 that there should be no ‘mini-trial’ at the jurisdictional stage, deep-pocketed defendants do use the jurisdictional thresholds to force claimants into lengthy, and expensive argument on jurisdiction alone. Lord Briggs’ suggestion [40] in Vedanta that a defendant’s guarantees of submission to jurisdiction in the ‘host’ States (where the multinational corporation and /or its subsidiaries operate) ought to feature in the forum non assessment, in my view is a crucial get-out off jail free card and one which features among others in the Dyson litigation heard in the last week of November upon appeal. (Dr Aristova refers to the High Court case in footnote 292 (the case came late in the publishing process of the book) and reminds us justifiably of her critical reception of the judgment).
The Chapter’s suggestion at 4.81 that jurisdictional issues have not been a significant obstacle to foreign direct liability cases in England, refers in support to 2013 and 2014 sources (i.e. pre-Brexit) and again I think is optimistic. It may be correct on the final outcome of many of the heavily litigated cases where in the end and usually after having gone all the way to the Supreme Court, the English courts did eventually accept jurisdiction. Yet the efforts in getting to that result undoubtedly have had a freezing effect on other claims that might have been brought.
Dr Aristova confirms a suggestion she has made earlier elsewhere, namely to replace the English forum non test with the Australian model: (4.92) ‘The classic [English, GAVC] Spiliada inquiry of the most appropriate forum thus becomes a question of why England is the clearly inappropriate forum to try FDL claims.’ While indeed there are plenty of reasons why Australia is not the natural home of many FDL claims, its forum non test does not feature chiefly among them. I would also argue that the Australian test aligns with the sentiment of Brussels Ia’s Articles 33-34 test, with the latter’s strong presumption against a stay of the European proceedings.
In Chapter 6, the volume then turns more conceptually to the factors that in the view of the author ought to be considered when defining the legitimate scope of the English courts’ jurisdiction in FDL claims. This includes
– strategic reasons for forum shopping;
– procedural fairness to the corporate defendant (Dr Aristova is to be commended for developing a set of criteria (6.21) ff which in her view should guide this factor, such as the avoidance of parallel litigation in several fora and the advantage of consolidation, as well as the Brussels regime-type expectation of predictability);
– the impossibility in practice (different from: a call to embrace them) to avoid policy implications in the exercise, or rejection, of jurisdiction: despite the English and other courts’ attempts to avoid to do so. The discussion of this issue invites comparison with US developments both in classic, domicile-based jurisdiction and in the application of the Alien Tort Statute; and it links directly to developments such as the EU’s Corporate Sustainability Due Diligence Directive CS3D; and
– the flip side of the coin, namely the policy considerations of preferring jurisdictions for the host as opposed to the home state of the corporation. In this section, Dr Aristova convincingly engages ia with Third World Approaches to International Law (TWAIL) scholars, and proposes solutions closely connected to her proposal for reform to the English FNC test, in Chapter 4.
While Chapter 4 is extremely informative to the non-conflicts scholar yet harbours no surprises to those of us who are in the conflicts-know, Chapter 6 speaks to all constituencies when discussing the why (at a policy level) and how (in suggesting acceptable models for doing so) of home state regulation and adjudication of corporations’ activities abroad. It is a very strong chapter, in a very strong book, which practitioners and students of the law as well as policymakers would do well to read when they consider the wider implications of their litigation, studies and political views.