Contact: Stephen James; Clarkslegal LLP (Reading, England)
The English High Court is a popular and well respected venue for the resolution of international disputes. From a claimant’s perspective, it allows the possibility of various funding models and the ability to recover costs from the losing party.
This has led to a series of recent attempts to litigate claims in the High Court that, on their face, have nothing at all to do with England. The claimants’ strategy in such cases is to issue proceedings against a UK domiciled holding company as an “anchor” defendant and then seek permission to join to the claim an overseas domiciled subsidiary, which is much more closely linked to alleged wrongdoing.
Over the past 12 months the High Court has been asked on three occasions to consider whether such a claim should be allowed to go ahead. The most recent example is AAA and Others -v- Unilever PLC and Unilever Tea Kenya Limited.
Unilever PLC (PLC) is a UK domiciled holding company with very many subsidiaries, including Unilever Tea Kenya Limited (Unilever Tea), a Kenyan company. The claimants alleged that they were victims of very serious acts of violence committed by third parties following the Kenyan presidential election in 2007. The claimants contended that both PLC and Unilever Tea breached an alleged duty of care to protect them from such criminal acts.
The claimants were entitled to issue proceedings against PLC in England as of right because it is domiciled in the UK. They obtained permission to serve English proceedings on Unilever Tea, which in turn applied to set aside service.
The court noted the two other recent applications of this nature in claims where proceedings had been issued in London against a UK parent and overseas based subsidiary, and where the alleged harmful act took place overseas. Lungowe -v- Vedanta Resources PLC concerned a claim that arose in Zambia and Okpabi -v- Royal Dutch Shell concerned a Nigerian claim. The English litigation was allowed to proceed in Lungowe but not in Okpabi.
Although the courts reached different conclusions, the same approach was taken in all three cases:
Is there a real issue between the claimants and the UK holding company?
If so, does the claim against the local subsidiary have real prospects of success?
Is it reasonable for the English court to try that issue?
Is the local subsidiary a necessary or proper party to the claim against the holding company?
Are the courts of England and Wales the proper forum for the claim?
The claim against PLC fell at the first hurdle. The court held that a claim to impose on PLC a duty to anticipate and protect the claimants against a breakdown of law and order is bound to fail. The court went on to say that even the claim against Unilever Tea had no prospect of success.
Although the court was not required to reach a decision on these points, it did note that had the claim against PLC at least a reasonable prospect of success, both it and the claim against Unilever Tea would have been allowed to continue in England. The court would have taken into account the risk that the claimants could not obtain substantial justice in Kenya.
Permission to appeal has been granted in relation to all three cases so it seems that this is not the final word on the matter.
