Group litigation in environmental damage claims - growth and challenges
Group litigation (sometimes referred to as a 'class action') is increasing in this jurisdiction and is being brought in a range of sectors, including energy and natural resources. Large scale claims for compensation for environmental damage have been brought against UK based multinational energy and mining companies for the actions of their subsidiaries in foreign jurisdictions. Such claims are complex, high value and expensive to defend and are of increasing concern to multinational companies.
This article briefly explains some of the mechanisms claimants can use to commence environmental group litigation in the English courts, and considers how recent cases have shown the challenges claimants can face when seeking to use these mechanisms to bring claims arising out of environmental damage.
Expansion of group litigation
Group litigation refers to cases where multiple claimants with claims based on common issues seek a remedy against the same defendant. Pursuing these claims on a collective basis can often improve the economic viability of the individual claims, provide efficiencies in the litigation process and enable courts to more effectively manage claims by large numbers of claimants. From the perspective of the defendant, defending multiple claims on a collective basis can be more efficient and mitigate costs.
The expansion of group litigation into claims for environmental damage has been fuelled by a number of factors including, (i) the rise in entrepreneurial claimant firms, (ii) the English courts accepting jurisdiction to hear such claims against both the foreign subsidiary and the UK parent even though the claims are closely connected to the foreign jurisdiction (see for exampleVedanta Resources Plc and Konkola Copper Mines Plc v Lungowe and Others UKSC 20 andOkpabi v Royal Dutch Shell UKSC 3), and (iii) the growth in the third party funding market and the willingness of funders to back such claims, which they see as offering attractive returns
Mechanisms for bringing environmental group litigation in the English courts
Claimants seeking to commence group litigation in the English courts can use the basic procedures and the court's case management powers in the Civil Procedure Rules (CPR). For example, a number of claimants can commence a claim together using one claim form provided all the claims "can be conveniently disposed of in the same proceedings". Another option is for the court to consolidate proceedings which have been brought by different sets of claimants and manage them together.
There are also two formal collective action procedures under the CPR. Both procedures can present challenges to claimants seeking compensation for environmental damage.
The CPR provides that where a number of claimants have"the same interest in a claim", one or more of the claimants may bring a claim as a representative of the other claimants with the same interest (CPR 19.6). Members of the represented class are not joined to the claim and the claim can be brought without the express mandate of each member of the class. However, any judgment given is binding on all members of the represented class, although it can only be enforced by or against a person who is not a party to the claim with the permission of the court.
The requirement that all claimants have the same interest in a claim can be difficult to satisfy in group claims for environmental damage. The Court of Appeal's decision inJalla & Anor v Shell International Trading And Shipping Co Ltd & Anor (Appeal (2): Representative Action) EWCA Civ 1389 illustrates this difficulty. The claims concerned a spillage from an oilfield off the coast of Nigeria and the subsequent damage to land and water supplies when the oil reached the shoreline. Two claimants purported to bring the claim on behalf of over 28,000 individual claimants. The Court of Appeal refused permission for the claim to proceed as a representative action. It held that the claims required proof of actual damage to land in order to complete the individual causes of action, and the facts relating to each piece of land would be different and would need to be investigated. Similarly, arguments on alternative causation (for example other sources of oil pollution) and loss would have to be determined on an individual basis. The Court of Appeal noted that claims of this kind are more suited to a group litigation order, discussed below.
Representative actions are likely to remain difficult for claimants looking to bring claims arising out of environmental damage as claims of this nature often require the claimants to prove causation and loss on an individual basis.
Group litigation order (GLO)
A court may exercise its discretion to order a GLO to manage multiple claims "which give rise to common or related issues of fact or law" (CPR 19.10). (Contrast this with the stricter test of "same interest" discussed above.)
A GLO is an "opt in" procedure, i.e. every claimant has to take steps to join the proceedings. Under a GLO, a "group register" will be established on which the claims to be managed will be entered. The court will specify "the GLO issues" that will identify the claims to be managed under the GLO, and direct that claims giving rise to one or more of the GLO issues should be conducted in the management court and entered on the group register (effectively preventing claims proceeding outside the group). The court will usually include in the GLO a "cut-off" date for claimants to opt into the GLO proceedings.
The court will often direct that one or more claims on the group register proceeds as a test case (while the rest are stayed) and appoint the solicitors for one of the parties as "lead solicitors". Judgment in a claim on the group register in relation to on one or more of the GLO issues binds all of the claimants on the group register (unless the court orders otherwise). Any non-GLO issues (such as individual levels of compensation) will be determined in each individual case.
One potential advantage of pursuing multi-party litigation under a GLO is that it can reduce the workload and cost of multiple individual claims because key litigation steps, including statements of case, disclosure of documents etc., are undertaken for the benefit of the group. It is common for the claimants' legal representatives to prepare a "group" particulars of claim which will usually set out general allegations relating to all of the claims. Specific facts relevant to each individual claim may be included in a schedule to the particulars, or sometimes claimants complete a questionnaire. Claimants will usually be keen to focus on common issues to put pressure on the defendants while limiting their costs. Conversely, defendants will often be keen to ensure individual issues are investigated by the claimants so that they can assess the extent of their liability.
Although the GLO procedure allows for group particulars of claim, as the recent case management decision in theOkpabi v Royal Dutch Shelllitigation illustrates1, claimant representatives in environmental damage claims are still be required to conduct a significant amount of work (and incur substantial costs) investigating individual issues at the early stages of litigation. The claims inOkpabirelate to environmental pollution caused by oil spills from oil pipelines and associated infrastructure in the Niger Delta. One of the case management issues before the judge was the amount of information required to be included in the claimants' particulars of claim. The proceedings were pleaded as "global claims" identifying various oil spills and describing damage suffered but they did not plead any causal nexus between each oil spill and the specific damage suffered by individual claimants. The parties agreed that a schedule of information should be served in respect of each of the 2,300 claimants as part of their entry on the group register under the GLO, but there was a dispute as to the extent of the information that should be supplied at that stage.
The claimants argued that the information they had gathered to date in respect of all the claims (details of identity, ownership and occupation of property and sources of income) was sufficient. They would provide more detailed information in respect of a pool of selected claimants and the selected claimants would be representative of the broader group. Determination of the dates of relevant oil spills and their impacts would be done on the basis of disclosure of documents, expert evidence (such as satellite images of the area) and the evidence of the lead claimants. If the claimants were required to provide these additional details at this stage it would be disproportionate and expensive, particularly as there were numerous sources of oil spills in the area, the claims spanned a long period and most claimants would be relying on their memory rather than records. The judge rejected this approach stating that the GLO did not release the claimants from their obligation to provide details of the facts relied on by individual claimants to establish a cause of action. Further, the potential pool of test cases from which the lead claimants would be selected could only be identified as representative of the group when considered against the factual circumstances of all the claims. The claimants were ordered to provide additional details for each claimant, including details of the particular spill for which they sought compensation and where and when the damage was suffered.
In light of the number of claimants, their location and the logistical difficulties in contacting them this would be an expensive and time consuming process. The judge acknowledged this but stated that it was necessary to ensure that the material issues in dispute could be identified and determined in the trial of the lead claimants. She commented that the use of questionnaires would make the exercise focused and manageable, and local resources could be utilised to improve efficiency.
In summary, while GLOs will generally be the more appropriate collective action procedure in these types of environmental damage claims and can offer efficiencies, they still remain complex and of high cost, increasing the risk to all parties.
The initial challenges faced by claimants in bringing group environmental claims include overcoming procedural obstacles (such as establishing the jurisdiction of the English courts and the appropriate process for managing group claims) and securing funding. Some of these obstacles are reducing; the English courts have accepted jurisdiction to hear these kinds of claims and there has been a sharp increase in third party funding, together with the establishment of a plaintiff bar similar to the position in the US. This has increased the risk to multinational companies. However, these claims remain complex and expensive to bring, and even where there are large numbers of claimants and complicated facts, the court will still apply the usual rules and require each claim to be properly pleaded.
If settlement is not reached, some of these group litigation claims will soon reach the merits stage. The judgments will raise interesting issues relating to parent company liability, duty of care, causation and assessment of damages.
Multinational companies seeking to mitigate the risk of such claims should consider the jurisdictions in which they operate, and should assess their implementation of corporate governance and HSE protocols and policies to reduce the potential for such claims to arise and for the UK based parent company to be found to owe a duty of care.
1 Alame and others v Royal Dutch Shell Plc and another EWHC 989 (TCC)
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