ARTICLE
27 March 2024

A New Approach To Jurisdictional Disputes: The High Court's Decision In Dhan Kumar Limbu & Others V Dyson Technology Limited And Others

TS
Travers Smith LLP

Contributor

It’s not just law at Travers Smith. Our clients’ business is our business. Independent and bound only by our clients’ ambitions, we are wherever they need us to be. We focus on key areas of work where we are genuinely market leading. If it’s hard – ask Travers Smith.
We will await any further guidance on the approach to jurisdiction that may be provided by the Court of Appeal, should the Claimants' application for permission to appeal be granted...
UK Corporate/Commercial Law
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  • Introduction
  • The claim in Limbu
  • Overview of the decision
  • A new approach to jurisdictional disputes
  • Lessons for defendants
  • Conclusion

Introduction

1.3 It was against that background that the High Court last year handed down its decision in Limbu & Ors v Dyson Technology Ltd & Ors [2023] EWHC 2592 (KB) ("Limbu"), in which it declined to exercise jurisdiction over claims made against members of the Dyson Group by 24 migrant workers from Nepal and Bangladesh (the "Claimants") concerning the alleged forced labour practices and similar human rights abuses of its Malaysian suppliers.

1.4 We consider below what this decision signals about the English Courts' willingness to accept jurisdiction in respect of disputes involving transnational torts claims against both English-domiciled and foreign defendants. We also consider what the decision signals about the likely approach of the English Courts to similar value chain liability cases in future.

What is a value chain?

A value chain means the activities related to the production of goods/provision of services by a company. This includes the development and distribution of the product or the service. It also includes the related activities of established upstream and downstream business relationships. Including downstream activities distinguishes the "value chain" from the more familiar concept of "supply chain" which is focused on upstream business relationships.

1.3 It was against that background that the High Court last year handed down its decision in Limbu & Ors v Dyson Technology Ltd & Ors [2023] EWHC 2592 (KB) ("Limbu"), in which it declined to exercise jurisdiction over claims made against members of the Dyson Group by 24 migrant workers from Nepal and Bangladesh (the "Claimants") concerning the alleged forced labour practices and similar human rights abuses of its Malaysian suppliers.

1.4 We consider below what this decision signals about the English Courts' willingness to accept jurisdiction in respect of disputes involving transnational torts claims against both English-domiciled and foreign defendants. We also consider what the decision signals about the likely approach of the English Courts to similar value chain liability cases in future.

The claim in Limbu

2.1 Limbu concerned claims by 24 Nepalese and Bangladeshi migrant workers employed at factory facilities in Malaysia that manufactured products and components for Dyson-branded products. The Claimants issued proceedings in England against three Defendants that were part of the Dyson group of companies ("Dyson"), referred to as D1, D2 and D3 in the judgment. D1 and D2 were domiciled in England; D3 was domiciled in Malaysia.

1.2 The Claimants alleged that they had been subjected to highly exploitative and abusive conditions while living and working in facilities operated by "ATA/J", Malaysian-domiciled suppliers to Dyson, including various serious breaches of Malaysian labour law, that they were forced to live in insanitary, overcrowded and degrading conditions, and that they were prevented from leaving their accommodation at will. Claimants that sought to expose the abusive working and living conditions were allegedly arrested and assaulted by Malaysian police.

2.3 Dyson did not itself own the relevant facilities or employ the Claimants, but was alleged to be liable for various torts and by way of unjust enrichment as a result of the high degree of control it exercised over the manufacturing operations and employment practices of ATA/J. In other words, Dyson was alleged to be liable for the activities of suppliers outside of its corporate group but within its broader "value chain".

2.4 The Claimants served the English-domiciled defendants (D1 and D2) in England and obtained permission to serve the Malaysian-domiciled defendant (D3) in Malaysia. All of the defendants challenged the jurisdiction of the English Court to hear the proceedings, on the basis that the proper forum was Malaysia.

Overview of the decision

3.1 Dyson's jurisdictional challenge was heard by Clive Sheldon KC (now Mr Justice Sheldon) sitting as a Deputy High Court Judge.

3.2 The parties were agreed that, following the end of the Brexit transition period, challenges to the jurisdiction of the English Court should be determined in accordance with the common law principles set out in Spiliada Maritime Corporation v Cansulex Ltd [1987] 1 AC 460 ("Spiliada"). The question for the court was accordingly "to identify the forum in which the case can be suitably tried for the interests of all the parties and for the ends of justice."1 That question is approached in two stages, namely:

3.2.1 With respect to "service in" cases, the burden of proof rests on the defendant to show that England is not the natural or appropriate forum and that there is another available forum which is clearly and distinctly more appropriate (Stage 1).

3.2.2 If so, then the burden shifts to the claimant to show that there are "special circumstances" such that justice requires the trial to take place in England (Stage 2).2

3.3 With respect to "service out" cases, the burden of proof is on the claimant at Stage 1 to show that England is the appropriate forum for the trial of the action. If the claimant is not able to establish that England is the appropriate forum, then Stage 2 applies.3

3.4 On the first stage, the Court concluded that the "centre of gravity" of the case was plainly Malaysia, and that therefore England was not the "natural or appropriate" forum for the claims.4 Although neither forum was practically convenient for all parties, the Court had particular regard to the fact that the alleged harm occurred in Malaysian and that Malaysian law would apply to the dispute.5 For the same reasons, the court also concluded that Malaysia was another available forum that was clearly and distinctly more appropriate.

3.5 On the second stage, the Court concluded that there were no "special circumstances" such that justice required the claims to proceed in England. It had particular regard to the fact that Dyson had provided undertakings to the Court regarding the way that it would approach any related proceedings brought against it in Malaysia, including undertakings to: (a) not seek security for costs or an adverse costs order against the Claimants, if and to the extent that such costs would not be recoverable under the English Qualified One-Way Costs Shifting regime; (b) pay the Claimants' reasonable costs necessary to enable them to give evidence in any Malaysian proceedings; and (c) in the case of D1 and D2, submit to the jurisdiction of the Malaysian courts.

3.6 In those circumstances, the Court concluded that there were no realistic impediments to the Claimants' ability to pursue their claims in Malaysia, and accordingly no "special circumstances" such that justice required the claims to proceed in England. Accordingly, the court stayed the proceedings as against the English-domiciled defendants, and set aside service as against the Malaysian-domiciled defendant (D3).

3.7 The Claimants have applied for permission to appeal the decision; no decision on permission had been made as at the time of publication of this article.

A new approach to jurisdictional disputes

4.1 The decision in Limbu has clarified how the English Courts will approach the question of jurisdiction when considering transnational torts claims in future, particularly those involving an English-domiciled "anchor defendant" as well as a subsidiary domiciled in a foreign jurisdiction.

4.2 Prior to Brexit,6 such challenges were determined in accordance with the Brussels (Recast) Regulation (the "Brussels Regulation"), which limited the ability of the English Courts to refuse jurisdiction in respect of English-domiciled defendants. In particular, Article 4.1 of the Brussels Regulation conferred a right on any claimant (regardless of their domicile) to sue an English-domiciled defendant in England irrespective of connecting factors to other jurisdictions.7 That restriction on the exercise of its traditional jurisprudence meant that the English Court, as noted by Lord Briggs inVedanta Resources plc and Anor v Lungowe and Others[2019] UKSC 20, had "one hand tied behind its back" when determining such disputes.

4.3 The decision in Limbu confirms that, following Brexit, the Courts are free to determine such questions in accordance with the common law Spiliada principles described at paragraphs 3.2to3.3 above.This is the first significant decision in the ESG space in which the High Court has applied those principles in declining jurisdiction over a defendant.

4.4 There is little doubt that the Court would have established jurisdiction over D1 and D2 had the application been decided in accordance with the Brussels Regulation, given that those defendants were English-domiciled. However, it is interesting to reflect whether in those circumstances the Court would have reached a different decision in respect of D3, the Malaysian-domiciled defendant. The Supreme Court in Vedanta made clear that the English Courts were obliged under the Brussels Regulation to accept jurisdiction in respect of an English-domiciled defendant, but were not obliged to accept jurisdiction in respect of a foreign-domiciled defendant where England was not the "appropriate place" to bring that claim, and there were no special circumstances requiring the claim against the foreign defendant to be heard in England. In particular, the Supreme Court noted that the risk of parallel proceedings in separate jurisdictions, and of irreconcilable judgments, was not itself determinative of the question of jurisdiction where the claimant had a choice of available jurisdictions, and had elected to bring the claim in England.

4.5 Accordingly, it is likely that jurisdiction in respect of D3 would have been refused even had the Court approached the jurisdictional question in accordance with the pre-Brexit approach set out in Vedanta, given the conclusion in Limbu that England was not the appropriate forum, and that there were no special circumstances requiring the claim to be heard by the English Courts. In that sense, the approach to jurisdictional issues signalled in Limbu may not have significantly changed the likely outcome in respect of claims brought in England against foreign defendants.

Lessons for defendants

5.1 The claim against Dyson did not succeed in this instance. However, the case holds some useful lessons regarding how such claims may be brought in future, and how defendants should respond in order to protect their businesses.

5.2 The Court in Limbu strongly indicated that jurisdiction in respect of transnational tort claims brought in England would no longer be accepted where there is another, more appropriate forum in which substantive justice can be achieved. As a result, we would expect claimant law firms bringing international tort claims in future to focus more firmly on claims involving jurisdictions in which it would be more difficult for defendants to establish that justice could be achieved. Although the Court did not consider Malaysia to be such a forum (subject to the provision of appropriate undertakings by Dyson), it is not difficult to imagine circumstances involving such a jurisdiction. The English Courts may be willing to accept claims involving such jurisdictions even where England is not the natural or appropriate forum, and there is another more appropriate forum in which the claims could be heard.

5.3 Limbu has also emphasised the continued importance in the context of transnational torts claims of appropriate undertakings from the defendant to satisfy the Court that justice may be achieved if the claims were heard in their natural forum. The undertakings provided by Dyson were a significant factor on which the Court relied in concluding that Malaysia was such a forum. Defendants to transnational tort claims in other contexts will need to give careful thought to the appropriate form of any undertakings that may be required in their circumstances.

5.4 Although no value chain liability claim has yet proceeded to full trial, the English Courts have previously shown flexibility in declining to strike them out at an early stage, instead allowing them to proceed to be determined on their substantive merits.8 We previously examined the development of such value chain liability claims before the English Courts in this article.

5.5 It is not difficult to imagine a claim similar to Limbu, but with a stronger jurisdictional basis, proceeding beyond the preliminary stages and eventually reaching trial. Companies domiciled in England will therefore need to be wary of the potential litigation risk they face as a result of alleged harms connected with their value chains. We have previously considered the steps that companies may take in order to mitigate that risk inthis article.

Conclusion

6.1 The decision in Limbu provides useful clarity on the approach that English Courts will take to establishing jurisdiction over defendants in transnational torts claims, including those involving "value chain" liability claims. The court made clear that jurisdiction in such cases will be established only where England is the natural or appropriate forum to hear the claims, or where there are other "special circumstances" that require the claim to be heard by the English Courts. We would therefore expect to see claimant law firms to focus more firmly on claims connected to jurisdictions in which it would be more difficult for defendants to establish that access to justice could be achieved. We will await any further guidance on the approach to jurisdiction that may be provided by the Court of Appeal, should the Claimants' application for permission to appeal be granted.

6.2 The decision is further confirmation of the potential litigation risks faced by English-domiciled companies as a result of alleged harms connected with their value chains, and another example of the boundaries of corporate liability being tested. We would expect to see similar such attempts to test the boundaries of corporate liability in future. #

Footnotes

1. Spiliada, p480G.

2. Limbu, paragraph 28.

3. Limbu, paragraph 29; CPR 6.37(3).

4. Limbu, paragraph 122.

5. Limbu, paragraphs 84 to 121.

6. Specifically, the repeal of the Brussels Regulation at 11 pm (UK) on 31 December 2020 by operation of the Civil Jurisdiction and Judgments (Amendment) (EU Exit) Regulations 2019.

7. Vedanta, paragraph 16.

8. Eg see Josiya & Ors v British American Tobacco plc & Ors [2021] EWHC 1743 (QB); Hamida Begum v Maran (UK) Limited [2021] EWCA Civ 326.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

ARTICLE
27 March 2024

A New Approach To Jurisdictional Disputes: The High Court's Decision In Dhan Kumar Limbu & Others V Dyson Technology Limited And Others

UK Corporate/Commercial Law

Contributor

It’s not just law at Travers Smith. Our clients’ business is our business. Independent and bound only by our clients’ ambitions, we are wherever they need us to be. We focus on key areas of work where we are genuinely market leading. If it’s hard – ask Travers Smith.
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