Australia: The Deepwater Horizon oil spill: rules for the international litigator

In brief - Australian laws more favourable to litigation "forum shoppers"

The question of where an action can be brought against a company is relevant in an era of global networking and communication, as more and more prospectuses, investor statements and product disclosure statements are distributed globally by electronic means and shares are traded on stock exchanges around the world.

Explosion gives rise to shareholder class actions around the world

On 20 April 2010, a gas leak on the Deepwater Horizon oil rig caused a catastrophic explosion and killed eleven people. Two days later, oil was discovered to be gushing from the well beneath Deepwater Horizon, causing the loss of an estimated 4.9 million barrels of oil. The disaster gave rise to shareholder actions around the world against the rig's prospector, BP.

BP had offered securities by way of American Depositary Shares (ADSs) on the New York Stock Exchange (NYSE), the Toronto Stock Exchange (TSX) and European exchanges.

Deepwater Horizon had been built by a South Korean manufacturing magnate. Ownership of the rig was held by a Swiss-based company, with contracting services provided by a United States oil consultancy. Oil derived from the rig came from within the Gulf of Mexico, and the unfortunate prospector of the oil at the time was BP Plc, based in the United Kingdom. It is not difficult to conceive how the incident which occurred on 20 April 2010 could have massive multinational effect.

BP argues that Canadian investors who did not buy shares on the TSX could not bring a claim in Canada

Kaynes v BP, 2013 ONSC 5802, a case in the Superior Court of Justice in Ontario, involved Canadian shareholders who purchased ADSs on the TSX, NYSE and European exchanges and suffered financial loss.

BP conceded that Canadians who purchased ADSs via the TSX could bring an action in Ontario. However, it said that Canadians who purchased from any other exchange (ie. NYSE, Frankfurt and London Stock Exchanges) could not bring a claim in Canada. BP argued that those investors would be beyond jurisdictional or "inappropriate forum" limitations.

Did a Canadian court have jurisdiction to hear the case?

The shareholders in Kaynes argued that BP had misrepresented safety and operations protocols in investor documents. The case posed two important international law questions. These were:

  • whether a Canadian court had jurisdiction to hear the case; and
  • whether the matter should be dismissed based on forum non conveniens (i.e. that a Canadian court was not an appropriate place to hear the dispute).

Difference between Canadian and Australian laws on jurisdiction

In Australia (and Canada), if a defendant is present in the country (say if BP had Australian offices), then the courts of that country would have prima facie jurisdiction to hear the dispute.

In Kaynes, BP argued that it did not trade in Ontario, so the shareholders had to prove that there was a "real and substantial connection" between the province and the claim. There is also a presumption that a court can hear the matter, unless the evidence shows otherwise.

In Canada, in order to prove that there is a "real and substantial connection", a plaintiff is required to prove one of the following four presumptions:

  • that the defendant is domiciled or resident in the jurisdiction
  • that the defendant carries on business in the jurisdiction
  • that the tort was committed in Ontario
  • that a contract connected with the dispute was made in Ontario

The plaintiffs in Kaynes brought an action of misrepresentation. Justice Conway held that the statutory action of misrepresentation was a "statutory tort" and therefore, the place of the tort (in this case, Canada) was the place in which the misrepresented information was received and relied upon.

Australia has a similar test. Where, for instance, negligent advice was received and acted upon in NSW, the tort is committed in NSW.

However, the crucial difference in Australia is "where the misrepresentation is received", not where it is acted upon. Simply put, if it was acted upon in NSW but received in Victoria, then Victoria would have jurisdiction.

Jurisdiction for claims where plaintiff and defendant are on opposite sides of the globe

With the development of global networking and communication, more and more investor statements, prospectuses and Product Disclosure Statements are distributed electronically and received globally.

Under Australian law, the place where an internet transmission is received is the place where the tort is given to occur. However, there is international debate about how best to develop an attitude towards torts committed and received by online means.

This issue continues to be important for any plaintiff in the modern, global world of litigation, particularly where a local plaintiff in NSW might suffer damage from a foreign company based on the other side of the globe.

Forum non conveniens - other appropriate forum vs. clearly inappropriate forum

Jurisdiction is only the first hurdle for a plaintiff in international litigation. The second is the "inappropriate place" or forum non conveniens argument. In Kaynes, BP submitted that in spite of prima facie jurisdiction, the court should not exercise its jurisdiction.

The rule in Canada is that BP was required to show not that Ontario was inappropriate, but that another court (for instance, in the USA) was more appropriate.

Justice Conway did not agree that another court was more appropriate, because, among other reasons:

  • Canada was a convenient and cost-effective location for the 1,500 Canadian shareholders to commence proceedings
  • the misrepresentation allegedly made by BP was a breach of Canadian law
  • it was desirable for the Canadian shareholders to avoid multiple, fractious proceedings (leaving aside the fact that representative actions already existed in the UK and USA)

Importantly, the test is different in Australia. The rule here is not whether there is another more appropriate place to hear the case, but whether the Australian court is clearly inappropriate.

The Australian test is broader, potentially allowing for a wider range of international litigation to be heard here. Appreciably, the current Australian approach to the forum non conveniens test has been academically criticised and has not been adopted in other common law countries.

Australian court unlikely to reject proceedings for forum non conveniens

Kaynes provides a pointed comparison to Australia. Current Australian law allows Australians to commence proceedings in Australia for wrongs committed overseas.

Further, an Australian court is unlikely to reject the proceedings for forum non conveniens because its tests are arguably more favourable to the "forum shopper" who brings proceedings in Australia.

The Kaynes case is a lesson for companies and litigators alike. Before taking steps to issue shares, invest or purchase stocks, all should remember that a seemingly small event like a gas leak can have immense and long-lasting global ramifications.

An earlier version of this article originally appeared in Insurance & Risk Professional.

James Stanton
Key Contact:
Kemsley Brennan
Insurance and reinsurance
CBP Lawyers

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.