High Court
By an order dated 16 June 2016, issued following judgment on 27 May 2016, Peter Coulson,[4] then a High Court judge, granted jurisdiction over the claims:[5] the case could not be fairly pursued in Zambia. Forum non conveniens, after the case of Owusu was irrelevant under the Brussels Regulation (EU) 1215/2012 article 4. He rejected the argument that there was an abuse of EU law. To show abuse, the sole object of litigation had to be to oust another court’s jurisdiction, or that the claim was fraudulent. There was legitimate concern that the parent company was the architect of the environmental pollution, and that the Zambian company had no ability to pay. The claim had a real prospect of success in holding the parent owed a duty of care: by establishing foreseeability, proximity and reasonableness under the three-fold test for the duty of care laid down in Caparo plc v Dickman. A claim in negligence could arise from the subsidiary’s operations, according to Chandler v Cape plc. Former employees were more likely to succeed, but residents have an arguable case, both in English and Zambian law, considering Erste Group Bank AG (London) v JSC (VMZ Red October).[6] Claims against both defendants (the parent and subsidiary company) were closely bound together. The Zambian company was a necessary and proper party to the claim against the parent company. England was an appropriate place to try the claims. Also, ‘if these claimants pursued KCM in Zambia, they would not obtain justice’. If it had been necessary, the court would have exercised discretion to allow service out of the jurisdiction on the Zambian company.
10. The claimants live in the four villages in the Chingola district noted in paragraph 1. They are situated to the northwest of the mine. The majority of them are subsistence farmers who rely on the land and the local waterways to sustain basic agrarian livelihoods. They live along the Mushishima and Kakosa streams and the Kafue River, into which those streams flow. Their income is likely to be below the average income in Zambia, which is one of the world's poorest countries. It is unlikely that many of them will have travelled outside this part of Zambia, known as the Copperbelt region.
11. Beyond those general matters, it is not possible to be more specific about the claimants because, beyond the list of names, dates of birth and areas of residence, and a number of short witness statements from a few of them dealing with general matters, no other information has been provided about the individual claimants. Specifically, there are no details about their injuries, their land, or their alleged losses.
12. The mine commenced operation in 1937, when it was wholly owned by the Anglo-American Corporation Group, at the time of the British Protectorate of Northern Rhodesia. That country was granted independence and became Zambia in 1964. In 1970 the mine was part-nationalised, with 51% owned by State-controlled companies.
13. Thirty years later, in April 2000, KCM was incorporated in Zambia as a public limited company for the purpose of privatising the mine. It was 65% owned by KCM Holdings SA (an Anglo-American subsidiary), and 35% by ZCCM-Investment Holdings Plc, a State-owned company ("ZCCM"). In 2002, Anglo-American Plc withdrew from KCM. In 2004, Vedanta Resources Holdings Limited ("VRHL"), a subsidiary of Vedanta (the first defendant), acquired a 51% interest in KCM, the remaining 49% being held by ZCCM. In February 2008 VRHL increased its shareholdings, via call options, to 79.42%. The remaining 20.58% is owned by the Zambian State through ZCCM.
14. KCM operates the mine pursuant to statutory authority in the form of a mining licence. Only a Zambian domiciled company can be the holder of a mining licence. In addition, KCM hold a number of discharge licences which, subject to various conditions, permit KCM to make certain discharges from the mine into local waterways.
15. Vedanta is an extremely wealthy holding company: there are references in the papers to it being worth around £37 billion. It has 19 employees, of which eight are directors, with the others in corporate or administrative support roles. By contrast, the Vedanta group employs 82,000 people worldwide through its subsidiary companies. Those are the operating companies, like KCM, involved in all kinds of mining and manufacture, as well as oil, gas and power generation.
The Nchanga Copper Mine
16. The Nchanga mine actually consists of two separate mines: an 11km open pit mine and a deep underground mine. The mine operates in demanding conditions given the high water table and the high annual rainfall. KCM also operate a third copper mine in Zambia which is not the subject of this litigation. KCM employ 16,000 people in Zambia, the vast majority of them at Nchanga. KCM is the largest private employer in Zambia.
17. The Google satellite images not only show the two parts of the Nchanga copper mine, but they also show the waterways in the area of the mine and in particular the Kafue River, into which the subsidiary waterways flow. It is this river and these waterways which are at the heart of the claimants' claim in these proceedings.
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31. The claim against Vedanta is set out in detail between paragraphs 78 and 94 of the Particulars of Claim. The primary way in which the case is put is in negligence. Paragraph 79 alleges that Vedanta's duty of care arose as a result of their assumption of responsibility "for ensuring that [KCM]'s mining operations do not cause harm to the environment or local communities, as evidenced by the very high level of control and direction that [Vedanta] exercise at all material times over the mining operations of [KCM] and its compliance with applicable health, safety and environmental standards."
32. Then, at paragraph 80, there is an express plea of a relationship of proximity between Vedanta and the claimants. It is said that, in those circumstances, the imposition of a duty of care is fair, just and reasonable in the light of four specific factors. These are that i) the businesses of Vedanta and KCM are in a relevant respect the same; ii) that Vedanta knew or ought reasonably to have known that KCM's operations were unsafe and were discharging harmful effluent into the waterways; iii) that Vedanta had superior expertise, knowledge and resources; and iv) that Vedanta knew or ought to have known that KCM would rely on that superior expertise knowledge and resources in respect of health, safety and environmental protection.
33. These four indicia of proximity are taken directly from the judgment of Arden LJ in Chandler v Cape [2012] EWCA Civ 525; [2012] WLR 3111. It is Vedanta's case that, on a proper analysis, the tortious claim advanced by reference to Chandler v Cape is either unarguable or is so weak that the court should take that into account when exercising its discretion against allowing the claimants to serve out of the jurisdiction.
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49. As noted above, the claimants' case on the Vedanta applications is very straightforward. They say that Article 4 of the Recast Brussels Regulation provides a clear and unqualified right to sue a United Kingdom domiciled company in the United Kingdom. They say that Article 4 allows for no discretion or qualification to that simple proposition. They rely on the decision of the European Court of Justice in Owusu v Jackson, which makes it plain that the doctrine of forum non conveniens has no part to play under Article 4, and that the Brussels Convention precludes a court of a contracting State from declining the jurisdiction conferred on it by Article 4 on the ground that a court of a non-contracting State would be a more appropriate forum.
50. The claimants go on to rely upon a raft of subsequent United Kingdom authorities in which the Owusu effect has been followed and applied. They point to the fact that, in the one area where this principle was doubted, namely where there were pending proceedings in another Member State, any uncertainty has been resolved by subsequent Regulations. They also reject out of hand the suggestion that, in some way, the fact that a forum non conveniens argument is not available to Vedanta is an abuse of EU law. Accordingly, they say, the court is simply not entitled to stay these proceedings. In addition they argue that, even if the court was tempted to, it would be wrong in principle to impose a stay for case management reasons, because that would be achieving by the back door that which Owusu expressly prohibits at the front.
51. Vedanta submit that Owusu is a case on its particular and straightforward facts, and can have no applicability to the very different facts that apply here. In any event they point to the reasoning in Owusu, which they say is plainly and obviously flawed and should not be followed. They seek at the very least a reference to the European Court of Justice. In the alternative, they argue that Article 4, which is expressly said to provide protection to defendants like them, is being abused by the claimants, because they are using the existence of the claim against Vedanta as a device in order to ensure that the real claim, against KCM, is litigated in the United Kingdom rather than in Zambia.
52. In addition, Vedanta refer to and rely upon KCM's submissions that there is either no real issue between Vedanta and the claimants or, if there is, the claim against Vedanta is so weak that this should be reflected in the exercise of the court's discretion in allowing KCM's application. In those circumstances, Vedanta say that, if the court is persuaded by either of those submissions, then that would also justify a stay of the claim against Vedanta. In that context, it is perhaps important to note that, because Vedanta have not submitted to the jurisdiction, they have not made any application to strike out the claim against them.
8. THE LAW 53. Article 4 of the Recast Brussels Regulation provides that:
"'Subject to the Regulation, persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State.'"
This is the successor to the earlier Article 2 and is the same terms. It is common ground that none of the exceptions within the Regulation apply to the claimants' claim against Vedanta.
54. Owusu v Jackson is authority for the proposition that forum non conveniens arguments are irrelevant to the claim against Vedanta, given the terms of what is now Article 4. As a result of this answer to the first question posed by the Court of Appeal in that case, the ECJ declined to answer the second question, which asked whether the prohibition applied "in all circumstances or only in some and if so which?" The ECJ noted at paragraph 37 that it was common ground that no exception on the basis of the forum non conveniens doctrine was provided for by the authors of the Brussels Convention, and that respect for the principle of legal certainty was one of the objectives of the Convention and "would not be fully guaranteed if the court having jurisdiction under the Convention had to be allowed to apply the forum non conveniens doctrine" (paragraph 38).
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77. ... on the face of the pleading, there is a real issue to be tried between the claimants and Vedanta and that, whilst establishing their claims may not be straightforward, they are quite entitled to try and bring themselves within the class of liability recognised in Caparo v Dickman and Chandler v Cape. I cannot see how a claim that raises a real issue can also be labelled a device.
78. In addition, there is some evidence that the claimants wish to pursue Vedanta because they are seen as the real architects of the environmental pollution in this part of Zambia. The argument is that, since it is Vedanta who are making millions of pounds out of the mine, it is Vedanta who should be called to account. I acknowledge that this argument has some force, and provides a further reason why I cannot label the claim against Vedanta as a device.
79. There is a related (and possibly more important) point about corporate structure. Even though Vedanta, following the order of Akenhead J, have agreed to submit to the courts of Zambia, they are not technically bound by any judgment of those courts. Thus I would be wrong to ignore the possibility that, if the litigation was conducted in Zambia, Vedanta/KCM could seek to strike it out, or if they lost at trial, Vedanta might put KCM into liquidation in order to avoid paying out to the claimants. The history of the U&M case (paragraphs 18-24 above) demonstrates that these are possibilities which cannot be ignored.
80. Finally, there is the separate question of KCM's financial position, to which I have already referred at paragraphs 21-24 above. There are no relevant accounts. And the evidence in the public domain, summarised in Mr Day's fifth witness statement at paragraphs 121-126, indicates that KCM were in 2014 running at a significant loss. This evidence includes ministerial statements about the threat of insolvency, bankruptcy or receivership facing KCM and the existence of at least one debt of $30million which went unpaid.
81. Furthermore if there were any doubt about it, the findings of Eder J in Konkola Copper Mines Plc v U&M Mining Zambia Ltd [2014] EWHC 2146 (Comm); [2015] 1 CLC 314, firmly support the suggestion that there is a risk that KCM may not be able to honour their debts as they fall due. Whilst I accept at once that Mr Day's evidence about KCM's financial position was not at the forefront of the claimants' original application to serve out, and has been proffered late in the day, it would be wrong for the court simply to ignore it. The evidence strongly suggests that KCM may not be good for the money, so a claim against the much wealthier parent company is justified on practical grounds too.
82. Accordingly, it cannot be said that the sole purpose of the claim against Vedanta is to act as a hook for the claim against KCM. That may very well be one of its principal purposes, but I cannot ignore the fact that there is a real issue between the claimants and Vedanta and there are legitimate concerns about Vedanta's conduct and KCM's financial position. Neither can it be said that the claim is somehow a fraudulent use of Vedanta's domicile. For those reasons, therefore, I do not stay these proceedings on the basis that the claim against Vedanta is an abuse of EU law.
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176. The general evidence in that case about South Africa contrasts starkly with the evidence here about Zambia, which is one of the world's poorest countries. CFAs are not lawful there. And on any view the legal system in Zambia is not well developed: indeed, in 2012 Zambia was the subject of a report by the Bureau for Institutional Reform and Democracy which highlighted the dearth of lawyers in Zambia, and the consequences for its citizens.
177. In my view, the following factors, when taken together, amount to cogent evidence that, if these claimants pursued KCM in Zambia, they would not obtain justice.
178. First, the claimants have been described as being considerably below the average income earners in Zambia. Given that Zambia is one of the world's poorest countries, where the vast majority live at subsistence levels, I can conclude that the vast majority of the claimants would not be able to afford any legal representation.
179. Secondly, in consequence of the claimants' poverty, the only way in which they could ordinarily bring these claims is by way of a CFA. But it is common ground that CFAs are not available in Zambia; indeed they are unlawful.
180. Thirdly, I find that there is no realistic prospect of legal aid for these claims. The evidence of Mr Anderson Ngulube, the Director of the Legal Aid Board of Zambia, makes this plain. The defendants, who originally suggested that legal aid would be available, backtracked, and the highest they could put it at the hearing was that there was the possibility that the claimants could obtain exceptional funding. But that evidence (from Mr Abraham Mwansa SC) emerged late and was not the subject of any detailed explanation. In any event all Mr Mwansa SC was saying was that an application could be made. He could not say what the outcome of any application for exceptional funding might be.
181. Mr Ngulube, who should know, said that even exceptional funding would only amount to around $352 per case (which is nowhere near enough here). He is emphatic in his view that the Legal Aid Board would not have the capacity or funding to commence an action in a large environmental claim on behalf of 1,800 claimants. Accordingly, I conclude that, on the evidence, there is no prospect of legal aid.
182. Fourthly, in the absence of both CFAs and legal aid, the only remaining theoretical funding possibility that would allow these claimants to bring these claims in Zambia is for the lawyers to take on the claimants as their clients on the payment of a small up-front fee; to pay for all of the disbursements, including expert evidence, out of their own pockets; and then to recover their costs when the claims were successful.
