Court declines jurisdiction over claims against UK company for alleged harms by third party supplier

In the recent decision of Limbu & Ors v Dyson Technology Ltd & Ors [2023] EWHC 2592 (KB), the English High Court declined to exercise jurisdiction over claims against Dyson related to the alleged forced labour practices of a Malaysian supplier.

Background

The claimants were migrant workers in a Malaysian factory, ATA, which manufactured Dyson branded products. They alleged that while working for ATA they were subjected to forced labour and exploitative working and living conditions. The action was brought against three companies in the Dyson group, two of which are English (D1 and D2) and one Malaysian (D3).

The claimants alleged that the defendants owed them a duty of care on the basis that they had exerted a high degree of control over manufacturing operations and working conditions at ATA’s factory, and promulgated various mandatory policies, codes of conduct and standards concerning the working and living conditions of workers in the group’s supply chain.

The claimants argued that the defendants were: (i) liable for negligence; (ii) jointly liable (with ATA and the Malaysian police, who were not parties to the English proceedings) for the torts of false imprisonment, intimidation, assault, and battery; and (iii) liable to make restitution of their alleged unjust enrichment at the expense of the claimants.

All three of the Dyson defendants challenged the jurisdiction of the English courts to hear the claims, arguing that the Malaysian courts would be the proper forum.

Decision

The jurisdictional challenge was successful. The Court stayed the proceedings against D1 and D2 and set aside the order granting permission to serve the claim form out of jurisdiction with regards to D3.

Before Brexit, the Brussels I Regulation determined that English courts have jurisdiction over English defendants. The Limbu case illustrates how, post-Brexit, English defendants are again able to rely on the principle of forum non conveniens to challenge the jurisdiction of the English courts. In assessing the appropriate jurisdiction, the judge applied the two-part test set out in the Spiliada case, namely: first, 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, and second, to determine whether there were special circumstances such that justice required the trial to take place in England.

In relation to the first limb, the Court considered various factors connecting the claims to England and Malaysia respectively. It considered the location of the parties and the witnesses, the availability of a common language, the location of documents, and the risk of multiple proceedings giving rise to potentially irreconcilable judgments. The Court concluded that the “centre of gravity” of the case was in Malaysia, as this was where the primary underlying treatment took place. Moreover, it noted that the applicable law would be Malaysian law. It held that under these circumstances there were good policy reasons for letting Malaysian judges consider novel points of Malaysian law within the context of their jurisprudence.

In moving to the second limb of the Spiliada test, the Court considered whether substantial justice could be served in Malaysia. There were competing arguments as to the availability of funding and access to legal representatives if the claims were brought in Malaysia. However, the judge found that there was no real risk that the claimants would not be able to obtain legal representation and the necessary NGO funding to pursue their claims in Malaysia on a partial contingency fee basis.

The Court relied on a range of detailed undertakings given by the defendants in support of their argument that the matter should be brought before Malaysian courts. These included that they would submit to the jurisdiction of the Malaysian courts if they were sued there, would pay the reasonable costs necessary to enable the claimants to give evidence in the Malaysian proceedings and would pay for the claimants’ share of the interpretation fees and joint expert fees.

Supply chain liability for English domiciled companies?

This case forms part of a growing number of claims brought against UK companies for alleged human rights harms caused by third parties in the corporate group or value chain, such as subsidiaries or suppliers.

The Supreme Court has previously found that an English parent company may owe a duty of care to those harmed by its foreign subsidiary. Such a duty of care may be established by virtue of the parent company’s publicly made human rights commitments, statements and policies, as well as its knowledge of and control in overseeing - or failing to oversee - the relevant activities. Examples include the Supreme Court decisions of Vedanta v Lungowe [2019] UKSC 20 and Okpabi v Royal Dutch Shell Plc [2021] UKSC 3.

While these existing precedents concerned a parent company’s duty of care for the harms allegedly caused by its subsidiary, in Limbu the alleged harms were caused by a supplier. The claimants nevertheless relied on similar arguments as those set out in Vedanta regarding the establishment of a duty of care by a UK-based company. However, as this was a jurisdiction challenge, the decision did not address the merits of such claims.

Unjust enrichment claim

In addition, the Limbu case also included a claim based on the allegation that the defendants had been unjustly enriched at the expense of the claimants. This is a novel claim which did not feature in previous precedents like Vedanta. However, it is increasingly relied upon by claimants as an alternative cause of action to negligence for alleged supply chain human rights issues.

Key takeaways

As in Limbu, claims for alleged human rights harms caused by third parties are often either dismissed at a preliminary stage – such as on the basis of jurisdictional challenges - or settled before obtaining a decision on the merits. There is accordingly little existing legal precedent which indicates the key factors which would determine liability in similar scenarios. The outcome of a case will also depend on the particular facts, and the application of the law of the jurisdiction where the tort occurred, which adds to the uncertainty.

The English court in the Limbu case was satisfied that substantial justice could be done in the jurisdiction where the alleged torts took place, a decision in which the undertakings from the defendants appeared to play a key role. However, in past cases such as Vedanta, difficulties in accessing legal representation and funding in the local jurisdiction were determinative in English courts accepting jurisdiction. Similar considerations may apply in relation to future claims for supply chain liability.

Recently, legislative developments in various jurisdictions around mandatory human rights and environmental due diligence are increasingly introducing statutory duties requiring human rights and environmental due diligence in corporate value chains. Where these new duties are accompanied by statutory remedies, they would establish a cause of action on which claimants could rely, without the need to show that a duty of care has arisen for the purposes of a tort claim.