Guest essay by Eric Worrall

The UK Supreme Court just ruled in favour of Zambian farmers, who argued their country’s courts are not up to the job of addressing an alleged environmental crime which was allegedly committed by the Zambian subsidiary of a UK company. This extraordinary ruling potentially paves the way for other plaintiffs to argue in a UK court that the US justice system is not up to the job of policing climate crimes.

Can UK fossil fuel companies now be held accountable for contributing to climate change overseas?

May 28, 2020 11.50pm AEST
Sam Varvastian
PhD researcher, Cardiff University

A ruling by the UK Supreme Court could have huge implications for British companies accused of environmental damage overseas. The April 2019 decision, in a case brought by a group of Zambian farmers against a London-based mining firm, establishes that UK parent companies can be held liable under UK law for the actions of their foreign subsidiaries. I analysed the implications of this case together with my colleague Felicity Kalunga, a PhD researcher at Cardiff University and a legal practitioner in Zambia, and our findings have just been published in Transnational Environmental Law.

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A catalyst for this could be the decision of the UK Supreme Court in the case mentioned above: Vedanta v. Lungowe. At first glance, the case has nothing to do with fossil fuels or climate change. The case was brought by a group of 1,826 Zambian farmers, including one Mr Lungowe, who claimed that a copper mine had been discharging toxic emissions into the local watercourses used for drinking and irrigation.

The mine was operated by a local subsidiary of Vedanta, a huge global mining company headquartered in the UK. And it was the parent company that the claimants sued, and the jurisdiction of the UK courts that they sought. The farmers were represented by a London law firm Leigh Day on a “no win, no fee” basis.

The claimants’ theory was that the UK company had control over the operations of its Zambian subsidiary, as proven by the materials published by the company itself. Pursuing litigation against the subsidiary in Zambia would be ineffective for various reasons, including the subsidiary’s uncertain financial position and the lack of lawyers there experienced in dealing with such a case.

After nearly four years of litigation, the UK Supreme Court confirmed: UK parent companies can be held liable in such cases and UK courts have jurisdiction to hear such claims. This allowed the farmers to proceed with their substantive claims heard in the UK.

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Read more: https://theconversation.com/can-uk-fossil-fuel-companies-now-be-held-accountable-for-contributing-to-climate-change-overseas-139007

The case which won the right of Zambian farmers to sue a UK firm for crimes allegedly committed in Zambia, without first obtaining an adverse judgement in a Zambian court, hinges on an EU law. From the press release provided by the UK Supreme Court:

… Article 4.1 of the Recast Brussels Regulation confers a right on any claimant (regardless of their domicile) to sue an English domiciled defendant in England irrespective of connecting factors to other jurisdictions [16]. Issue (1) presupposes that there is a real triable issue against Vedanta [17, 26]. Further, the judge’s finding that Vedanta was sued in England for the genuine purpose of obtaining damages, even though attracting English jurisdiction over KCM was a key contributing factor, is not open to challenge [27]. Any implied exception to the effect of article 4.1 must be construed narrowly [29-30]. The EU case law on abuse of law under article 8.1 (related defendants) is equally restrictive [31-34]. In that context, the test is whether the sole purpose of joining a defendant is to sue them other than in their Member State of domicile [35]. The EU case law also suggests that the abuse of law doctrine is limited to situations where EU law is invoked collusively to subvert other EU provisions [36]. In light of the decision in Owusu v Jackson (C-281/02) [2005] QB 801 (CJEU), arguments based on forum conveniens cannot justify derogating from the primary rule of jurisdiction in article 4.1 [36-40]. The concern about the wide effect of article 4.1 in this case is best addressed under the domestic law on the “necessary or proper party” gateway [40]. The claimants thus succeed on issue (1) [41].

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Even if the court concludes that a foreign jurisdiction is the apparently the proper place, the court may still permit service of English proceedings on the foreign defendant if cogent evidence shows that there is a real risk that substantial justice would not be obtainable in that foreign jurisdiction [88]. In this case, the judge identified “access to justice” issues in Zambia [89]. It is not in doubt that Zambia has independent judges, courts and civil procedure which would ensure a just trial of large environmental group claims like this one [89]. The issues are twofold. First, the practicable impossibility of funding such group claims where the claimants are all in extreme poverty, because they could not obtain legal aid and because conditional fee agreements (CFAs) are unlawful in Zambia [89-90]. Secondly, the absence within Zambia of sufficiently substantial and suitably experienced legal teams to enable effective litigation of this size and complexity, in particular against a well-resourced opponent like KCM [89]. The criticisms that the judge failed in his approach to the access to justice issue are not well-founded [92-98]. Overall, the defendants fail on issue (4), which means their success on issue (3) is academic [101-102].

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Read more: https://www.supremecourt.uk/cases/uksc-2017-0185.html

If I have understood correctly, this assumption of transnational authority under EU rules (which during the transition period still apply in the UK) potentially opens the way for the UK and other European jurisdictions to sue US subsidiaries of UK companies for alleged climate crimes committed in the USA, without first obtaining an adverse judgement from a US court.

It might even make it possible for UK courts to sue UK based subsidiaries of US domiciled companies for alleged climate crimes committed in the USA, without first obtaining an adverse judgement from a US courts, providing climate activists with a means to hurt US businesses for activities conducted in the USA under US law.

All the plaintiff needs to do to persuade UK courts to attempt to assume authority in a foreign case is to convince the court that “substantial justice would not be obtainable in a foreign jurisdiction”. So if a plaintiff convinces a UK court that substantive climate justice would not be obtainable under US law, the UK court could potentially attempt to pass judgements over events which occurred in the USA under US jurisdiction, and attempt to collect damages from UK based companies connected to the US defendant.

Clearly it is up to governments outside the EU to consider potential abuses of this EU rule and the UK supreme court ruling, and place some limits on this arrogant assumption of transnational authority over business activities conducted in other countries, before the EU goes back to its old tricks of trying to dictate climate policy to the entire world.