Has the forum shop opened for business?

The doctrine of forum non conveniens is a common law doctrine which allows a court to dismiss or stay an action where there is a more appropriate and "proper" alternative forum available, in which the claim can and should be brought. It is often invoked where the defendants or events took place in another jurisdiction, or where parallel proceedings have already been commenced in another jurisdiction. While we are concerned with English court proceedings, variations of this doctrine do also exist in many other jurisdictions.

It has traditionally been a robust rule preventing so called 'forum shopping' by claimants, i.e., seeking to have claims heard in jurisdictions which are perceived to be more favourable to one party, whether or not the forum is truly appropriate. From the claimant's perspective, this may be to take advantage of faster procedures, higher limitations on liability, or wider damages regimes, and vice versa from the defendant's perspective.

Recently, the English courts have shown more flexibility in their application of the doctrine where the interests of justice require it, than had previously been the case. This is particularly relevant in cases where multinational corporations have adopted a structure which makes use of foreign subsidiaries in a bid to insulate its parent company from environmental liability or in the case of other tortious wrongdoing.

Fundão dam disaster

In November 2015, the Fundão dam in Brazil collapsed releasing around 40 million cubic metres of tailings from ore mining and toxic waste into the surrounding lands and Atlantic Ocean. This resulted in multiple deaths, destruction of villages, serious pollution and business interruption. It has been described as Brazil's worst environmental disaster.

The dam was owned by a Brazilian company, which was itself under joint ownership of BHP Brazil and Vale SA. Thousands of claimants sought compensation in the Brazilian court including over 500 small businesses and 200,000 individuals. The defendant companies set up a fund in Brazil for the purpose of implementing remedial actions and providing compensation. Unsatisfied with the redress available to them in Brazil and concerned that certain defendants could not be adequately pursued there, the claimants commenced legal actions in other jurisdictions, including in England.

English proceedings – strike out at first instance

Proceedings were brought in England against the ultimate owners of BHP Brazil; BHP Group plc (a UK entity) and BHP Group Ltd (an Australian entity) on the basis that the claimants viewed the entities as operating together as a single economic entity in all the circumstances. The defendants obtained a strike out in 2020 on the basis that the proceedings were an abuse of process and would be "irredeemably unmanageable", arguing also that, if at all, they should be sued in Brazil.

The defendants had also raised various arguments, including the doctrine of forum non conveniens. The judge concluded that even had he not decided to strike out the claims, they would have been stayed on this basis given the risk of "irreconcilable" differences arising between the Brazilian and English proceedings.

In considering the application of forum non conveniens to BHP Ltd, Turner J had applied the two-part test as established by Lord Goff in Spiliada Maritime Corporation v Cansulex Limited [1987] 1 AC 460 (the "Spiliada").

• First, the defendant needs to establish that there is an available court in another jurisdiction which is "clearly or distinctly" more appropriate; this will be the "natural" forum. Significant factors here include: the place of the tort/breach; the applicable law; accessibility, for example, location and language barriers with respect to the parties; and the expertise of the relevant courts. If it is established that the foreign forum is the natural one, the court will grant a stay or dismiss the claim.
• This is subject to the second part of the test, under which the claimant may establish that there are circumstances where justice requires otherwise. In applying this, the court may consider a wide range of factors.

In his decision, Turner J had taken the view that it was not sufficient to show that "proceedings in Brazil would merely be less advantageous" than in England. His view was based on a strict interpretation of forum non conveniens with the aim of deterring forum shopping where there was some form of available redress in Brazil.

English proceedings – Court of Appeal

The Court of Appeal ("CA") judgment was based on several factors:

• The two-part Spiliada test (above) should be applied by the Court when assessing appropriate forum, but the courts retain discretion, and should also consider factors such as the possibility of conflicting judgments, and prospects for recognition/enforcement in the relevant potential jurisdictions.
• The fact that a claim may seem 'unmanageable' does not constitute an abuse of court process. In this case, however, the case was not unmanageable. The CA judgment emphasised that the claimants' "well-structured, coherent and entirely digestible" statements of case had assisted in reaching this favourable outcome. Claimants wishing to bring complex, international claims should bear this in mind – time spent on good drafting and organisation is seldom wasted.
• Where there exists a realistic prospect of a real and legitimate advantage resulting from hearing a claim in England, this is likely to outweigh concerns over expenses and resources. The CA noted that the process the claimants would have to follow in Brazil would result in proliferation of time, effort and expense in addition to risk of inconsistent judgments and inadequate remedies (by contrast to the position if proceeding in England).
• The potential remedies on offer in Brazil were not so obviously adequate to render actions in England pointless. The CA confirmed that the proper question is whether there is a "real risk" that substantial justice will not be done. In this case, the existence of an available avenue for redress in Brazil was not certain and considerable delay was expected. It was noted that English proceedings could provide a "real and legitimate advantage" for the claimants.

In summary, the CA considered the defendant's arguments and concluded that they had not sufficiently developed their evidence to prove the first limb of the Spiliada test and therefore failed at the first hurdle. Commentary on the second limb of the test was therefore not determinative of the outcome.

The claimants appeal was successful and an eight-week trial has been fixed to hear the substantive claims in April 2024.

Comments

There have been previous similar procedural decisions in which the English Supreme Court has allowed claims against corporations whose subsidiaries have caused environmental damage in other jurisdictions.

• In Lungowe v Vedanta (Lungowe & Ors v Vendanta Resources Plc and Konkola Copper Mines Plc ([2017] EWCA Civ 1528)) the CA allowed a class-action to be brought by Zambian residents, which involved allegations of environmental damage from toxic emissions from the Nchanga Copper Mine in Zambia. In that case, the mine owner was a Zambian company ultimately owned by the UK domiciled Vendanta. The CA ruled, among other things, that the claimants would be unable to obtain justice in the Zambian courts. That was subsequently confirmed by the Supreme Court. (Vedanta Resources Plc v Lungowe [2019] UKSC 20)
• Similarly, in Okapi v. Royal Dutch Shell (Okpabi v Royal Dutch Shell & Anor [2021] UKSC 3) the Supreme Court allowed a class action to be brought by individuals in Nigeria, which involved allegations of environmental damage from pipelines affecting the water sources used by local communities (overturning the CA decision). In that case, the relevant pipeline operator was a joint venture between a Nigerian company and SPDC, which was a Nigerian subsidiary of the UK domiciled Royal Dutch Shell.

These cases both concerned an alleged common law duty of care owed by a UK domiciled company in respect of the conduct of a foreign subsidiary, and applications to serve English proceedings out of the jurisdiction on the basis that the foreign subsidiaries were 'necessary and proper parties' (Pursuant to the jurisdictional gateway in para 3.1(3) of Practice Direction 6B). In both cases, the Supreme Court noted the need for proportionality in connection with jurisdictional applications. The courts should not pre-emptively dismiss claims on the basis of a 'mini trial' where not all evidence could be weighed.

However, neither case involved existing foreign proceedings. The BHP decision therefore takes the trend one step forward, given the pre-existing proceedings in Brazil, together with an established compensation fund. The CA was plainly conscious of this issue, noting that the defendants were not in fact parties to the Brazilian proceedings (for the most part), and that the English proceedings would not be oppressive or unmanageable in all the circumstances.

The question of appropriate forum in such cases is understandably weighed in the claimants' favour, given the serious harm done and low prospects of redress in their local jurisdiction. The bar will plainly be higher in other cases, where the loss is commercial profit rather than individual livelihood. As such, these cases should not be read as opening up the English courts for forum shopping in more general commercial claims.