Parent company liability hurdles and "class actions": what comes next?


Since the Supreme Court's rulings in Vedanta Resources Plc v Lungowe [2019] UKSC 20 ("Vedanta") and HRH Emere Okpabi v Royal Dutch Shell [2021] UKSC 3 ("Okpabi"), much has been written about the potential impact these decisions may have on UK-domiciled businesses with foreign operations and, in particular, how they will assist claimants who wish to initiate large-scale group litigation. 

While it is clear that the decisions have provided foreign-domiciled claimants with more flexibility when seeking to bring transnational tort claims in England, they do not mean that succeeding on such claims will be straightforward.

There are two primary reasons for this:

  • Vedanta and Okpabi were both decisions on interim procedural applications concerning jurisdiction, rather than the trial of substantive issues (see Figure 1 for more detail on this point); and

  • multi-party claims can present significant (and sometimes insurmountable) procedural and logistical hurdles, which may prove to severely limit the scope of parent company liability group litigation in practice, and at the very least, result in significant delay in reaching a substantive trial of the issues

In this article, we highlight the procedural and logistical difficulties associated with group litigation in the context of parent company liability claims in the context of two cases where large groups of claimants have had significant difficulty in getting their claims to trial (Alame & Others v Royal Dutch Shell Plc & Another [2022] EWHC 989 (TCC) ("Alame") and Jalla & Another v Shell International Trading & Another [2021] EWCA Civ 1389 ("Jalla")).  We suggest that while it may appear that Vedanta and Okpabi have liberalised parent company liability claims, claimants are still faced with significant procedural and logistical challenges. 

Figure 1: The Limitations of a Procedural Application vs a Substantive Trial

As noted, Vedanta and Okpabi are both interim procedural applications.  Both claims concerned whether the English courts had the jurisdiction to hear the claims before them (on the grounds that the foreign domiciled defendants were "necessary and proper parties" to the claims, which required the English courts to consider whether the claims against the English domiciled co-defendants gave rise to a "real triable issue"). These, importantly, were not trials of the substantive issues in dispute. 

For more on this, we provided an extensive overview on the Vedanta and Okpabi decisions in our Dispute Resolution Yearbook 2021

Alame v Royal Dutch Shell Plc [2022] EWHC 989 (TCC)

Alame illustrates the challenges claimants still face when bringing Group Litigation under the GLO regime. At the outset it should be noted that the claims brought by the Okpabi claimants are being case-managed alongside the Alame claims and are, despite the change in the name, essentially the same proceedings.  For convenience, in this article we refer to the entire group of claims as the Alame 

The Claimants in Alame are a mixture of individuals and communities living near the Niger delta in Nigeria. They allege that the Defendants (a UK-domiciled parent company of the Shell group and a Nigerian-domiciled pipeline operator) failed to prevent, mitigate or remediate contamination from oil spills from Shell group oil infrastructure which the Claimants allege caused significant damage to their land and income.  The Claimants issued claims (in two tranches) in 2015, which were then subsequently stayed pending the progression of the Okpabi jurisdictional challenge through the tiers of the English court system.  As of April 2021, after six years and only following the decision of the Supreme Court, the parties have accepted that the English courts have jurisdiction to determine the claims and in December 2021 the Claimants applied for a GLO under CPR r 19.11 (for more on GLOs and other types of group litigation procedures in England, see Figure 2). 

Figure 2: Group Litigation Orders and Representative Actions in England

England does not have a US-style "class action" system.  Instead, multi-party actions can be brought under either (i) the court's general case management powers, (ii) a GLO under CPR r 19.11 (which provides for a limited order for the joint case management of a group of claims which give rise to common or related issues of fact or law) or (iii) a representative action under CPR r 19.6 ("Representative Action") (where, if more than one person has the "same interest" in a claim, (a) the claim may be begun or (b) the court may order that the claim be continued, by or against one or more of the persons who have the same interest as a representative(s) of the person(s)).

For more on the latest developments of England's group litigation regime, see our recent article in the Dispute Resolution Yearbook 2022

In Alame, the Defendants agreed in principle that a segment of the claims should be managed via a GLO, but contended that a GLO was premature as the common issues had not yet been agreed or ordered.   The Defendants argued that the Claimants needed to provide details of the particular oil spill that caused harm to each individual claimant (e.g. the date of the spill) in order to determine whether the spill in question was from a Shell pipeline, or another source, particularly because there had been a number of sources of spills in the area.  The Defendants contended that the "spill-by-spill" particularisation was required because of the widespread oil pollution in the Niger delta: for the Claimants to succeed they would need to demonstrate that the alleged harm was caused by the Defendants, as opposed to another pipeline operator or another third-party.  This would be a crucial part of any case the Defendants had to answer as the Claimants would need to prove the causative link between the alleged acts/omissions by the Defendants and any harm suffered by the Claimants.  Accordingly, without an appropriate level of particularisation, the Court would not be in a position to determine what the common issues were and, therefore, make a GLO. 

The Claimants argued that such particularisation would be disproportionate and, in any event, not feasible until after disclosure and expert evidence. They further argued that the level of particularisation required need only be enough for the Defendants to understand the nature of the case they were to meet: the Defendants did not need the additional particularisation sought to meet this standard and were simply creating an unnecessary hurdle for the Claimants in order to increase their costs. 

The Court found for the Defendants, ordering the Claimants to provide certain additional particularisation for each individual Claimant and postponing the GLO determination until after the Claimants had done so. The Court found that the framing of the claims by the Claimants with a view to the Court making a GLO did not automatically release the Claimants from their obligation to provide details of the facts relied on in each individual case to establish a cause of action.  The Court expressly acknowledged that complying with this level of particularisation would be time-consuming and expensive, but reasoned that it was necessary to ensure that the material issues in dispute could be identified and determined in the trial of the lead claimants. 

In making this order, the Court made clear that the GLO regime cannot be used to obscure key elements of a claim such as the causative link between an act/omission and harm: whilst claimants under a GLO can plead their claims in short or general terms, the Court will still require them to provide a level of detail necessary to establish the material facts relied upon and the cause of action to which they relate. In practice, this is likely to require significant investment of time and cost by the Claimant legal team (as acknowledged by the Court in Alame) and may be a difficult exercise.


Jalla v Shell International Trading [2021] EWCA Civ 1389

Whilst the Alame claim is in its relative infancy, a similar claim, Jalla, shows how preliminary procedural hurdles can be highly problematic for claimants. Jalla relates to a single major oil spill of over 40,000 barrels that occurred in 2011 in the Bonga oil field located 120km off the coast of Nigeria.  Shell operated facilities in the oil field whereby crude oil could be offloaded from storage points to oil tankers.  In December 2011, as oil was being loaded onto a tanker, a spill occurred.  The oil from the spill reached the mainland several days later, allegedly causing significant environmental damage including harm to farming, fishing, the mangrove forest and drinking water supplies.  The claimants have sought to bring a number of claims under the Representative Action rules (for more on this, see Figure 2). 

Jalla has had a long and difficult history. Procedural challenges have reached the Court of Appeal on three occasions, with the Defendants succeeding each time.  Judges have expressed their frustration with the claimants' approach, calling it "iterative" and facing "death by a thousand cuts".  Without going into the procedural history of the claims in detail, in short, the Claimants (i) issued the claims right on the limitation period cut-off and (ii) initially sued the wrong Defendant.  This combination of issues has meant that the Claimants have needed to take novel approaches to keep the claims alive.  (We have previously written about the limitation issues faced by the claimants in respect of the January 2021 continuing breach proceedings, which can be found here.)

One of the three procedural challenges that reached the Court of Appeal is particularly relevant for this article, namely the question of whether the claims could proceed as a Representative Action under CPR r 19.6. The Court of Appeal determined in September 2021 that they could not.

By way of background, the original claim form issued in December 2017 identified the Claimants as two Nigerian individuals "and others" (the "Original Claimants"), with no reference to a Representative Action or CPR r 19.6. When the claim form was served on 4 April 2018, it was amended to state that it was brought by the two individuals "for themselves and on behalf of the Bonga Community".  A week later, when the particulars of claim were filed and served, the claim was for the first time expressly stated to have been brought pursuant to CPR r 19.6 (which relates to Representative Actions) and identified 27,800 individuals and 457 "communities" in the schedules to the particulars (the "Additional Claimants"). 

The Defendants argued that the amendments to the claim were very significant, principally because of the aforementioned limitation issues. In essence, they argued that the Additional Claimants had been added to the claim after the expiry of the 6-year limitation period, such that they had brought their claims out of time.  The lawyers for the Claimants countered this by arguing that the "and others" reference in the original claim form was sufficient to invoke the Representative Action procedure under CPR r 19.6 and, therefore, the Additional Claimants were part of the initial claim.  For this to work, the Claimants needed to argue that the Additional Claimants had the "same interest" as the Original Claimants, thereby invoking the CPR rule 19.6 procedure and that, consequently,  their claims could be deemed to have been issued in 2017 with those of the Original Claimants. 

At first instance, the High Court held that the Additional Claimants did not have the requisite "same interest" as the Original Claimants. It focused on the vast size of area affected by the spill and the divergence between the circumstances of the different individuals and groups that made up the Additional Claimants, determining that it was "obvious that individualised factual and causation defences will be raised in relation to all individual claimants … and all communities".  The Court accepted that there was general commonality in aspects of their individual cases, but that this was insufficient to invoke the r 19.6 Representative Action process.  The Court of Appeal agreed.  It considered that, even if one of the two lead Claimants was successful in demonstrating that they had suffered a compensatable injury, the other Claimants would still need to prove the essential facts of their own claims and the court would still need to make an individual decision in relation to each claim.  The Court of Appeal concluded that the claims were not, and never could be, a Representative Action.  This left the Additional Claimants potentially without a remedy as this may be the end of the road for them. 


The Wider Context

The Supreme Court, in its decisions in Vedanta and Okpabi, has allowed ambitious transnational claims similar to Alame and Jalla to overcome early procedural hurdles and gain traction in this jurisdiction. This has had a noticeable impact on the Courts' approach to other novel tort claims, particularly (i) the recently released Municipio De Mariana v BHP Group (UK) Ltd [2022] EWCA Civ 951, (ii) the Court of Appeal's decision of last year in Hamida Begum v Maran (UK) Limited [2021] EWCA Civ 326 (which we wrote about here) and (iii) the High Court's decision in Josiya v British American Tobacco PLC [2021] EWHC 1743 (QB) (which we wrote about here).

It may prove in due course that the hurdles imposed by the High Court in Alame may not be as difficult to overcome as those in Jalla. However it is worth noting that in both Alame and Jalla, the courts required the Claimants to substantiate their case theory in relation to causation: the courts will not relax the requirement that claims be properly pleaded just because that would be costly and difficult in practice.  Depending on the resources available to claimants and where they are located, this may prove to be logistically challenging, and may have an impact on the overall economics of these types of claims. 

We expect foreign-domiciled claimants to continue to make use of existing procedural mechanisms to advance multi-party claims in England, likely with the support of litigation funders. The Supreme Court's decisions in Vedanta and Okpabi are likely to continue to embolden claimant law firms to bring ambitious multi-party claims.  However, such claims will continue to face significant procedural and logistical challenges of the type encountered in Alame and Jalla.    

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