The Impact of Brexit on Access to Justice in Business and Human Rights Multijurisdictional disputes

It is often extremely difficult, if not impossible, for victims of abuse by multinational companies to access justice in their own domestic courts.

Many victims of human rights abuses cannot afford to pay for legal representation and are therefore dependent on legal aid or lawyers willing to act on no-win-no-fee agreements. In many jurisdictions, legal aid is not readily accessible and either no-win-no-fee agreements are not legal under local laws or only a very small pool of lawyers are willing to act on one, leaving victims with no access to remedy.

Victims, therefore, are often forced to seek justice extraterritorially: by bringing actions in the jurisdiction of the multinational company itself, or its parent company. Many recent such examples have been heard by the Courts of England and Wales; such as Vedanta, Okpabi and Begum v Maran.

Each of these examples was issued before 1 January 2021, the point when the UK ceased to be a member of the EU. The Claimants, therefore, could rely on EU legislation (the Recast Brussels Regulations) which allowed them to sue a Defendant domiciled in the UK as of right.

Neither Defendants were permitted to defend the claim on the basis that another jurisdiction, other than the UK, was the more appropriate forum to hear the claim, a principle known as forum non conveniens. The unavailability of a forum challenge in business and human rights claims brought against UK-domiciled Defendants was confirmed by the Supreme Court in the Vedanta case.

The test for forum non conveniens is two-fold. (1) is there clearly a more appropriate forum? And (2) if so, is there a real risk that substantial justice cannot be achieved in the more appropriate forum? In the main, business and human rights cases have focused on the second stage of the case.

It was a concern to human rights practitioners that following Brexit, the re-emergence of forum non conveniens would have a chilling effect on business and human rights litigation as Courts would apply the second stage of the test narrowly. Thankfully, this does not appear to be the case.

The Position Pre Brexit

Article 4(1) of the Recast Brussels Regulations states that “persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State”.

This Article, which mirrors Article 2 of the Lugano Convention, establishes that victims of human rights abuses have a mandatory right to bring a civil case in the jurisdiction where the company alleged to be responsible for the abuse (either directly, or if sued in relation to alleged abuse by its subsidiary) is domiciled.

The purpose of this regulation is designed to protect EU domiciliaries from being sued in other jurisdictions and also provide certainty to claimants about where they may sue.

A decision of the CJEU, Owusu v Jackson [2005] held that this rule meant that even if a competing jurisdiction was potentially available then the impact of Article 4(1) meant that a Defendant could not challenge jurisdiction on forum non conveniens grounds.

This was a welcome ruling for business and human rights practitioners. Often, powerful multinationals would attempt to frustrate claims with lengthy and expensive interlocutory proceedings on the question of forum. Defendants would apply to stay the claims on the basis that the jurisdiction where the damage took place was the appropriate forum, even if that jurisdiction (in the Claimants’ view) does not offer the Claimants access to justice.  A devastating example of the effects of this delay was in the case of Lubbe v Cape where thousands of claimants died during the protracted forums non conveniens dispute.

The combined impact of the Recast Brussels Regulations, Owusu, and Vedanta settled the question that a UK-domiciled company could not defeat a claim on forum grounds except in extremely narrow circumstances.

The Impact of Brexit

After the Brexit Transition period, on 31 December 2020, the UK ceased to be a member of the EU. The UK remained a member of some conventions, however this did not include the Lugano Convention and so the mandatory right to sue a company in the country where they are domiciled was lost.

In April 2020 the UK formally applied to accede to the Lugano Convention. However, despite criticism from human rights organisations such as the European Coalition for Corporate Justice, Amnesty, and Human Rights Watch, the European Commission in May 2021 advised that the UK’s application be rejected. This decision was also criticized on other grounds, such as it would damage consumer rights  and disrupt family law proceedings.

This rejection was confirmed on 22 June 2021 when the EU announced that it was “not in a position to give its consent to invite the UK to accede” to the Lugano Convention.

Since 1 January 2021, therefore, victims of alleged corporate abuse due to the actions of UK-domiciled multinationals no longer have the automatic right to bring their cases in the UK and are vulnerable to an application of forum non conveniens.  

Situation now

There is a real concern that the current legal landscape will deny victims access to justice if they are forced to litigate their claims in jurisdictions which contain systemic barriers to justice in the human rights sphere.

For example, at the most basic level, an impoverished claimant may be forced to bring their claim in a jurisdiction where no-win-no-fee agreements are unlawful and there is no legal aid, meaning, essentially, that they will lack representation, despite business and human rights cases being technically and legally complex and against extremely well-resourced Defendants.

There is a secondary fear that the UK will become an attractive location for corporations to domicile in order to escape being held accountable for human rights abuses or litigatio arising from environmental pollution or climate change.

As expected, in many business and human rights cases the Defendants are now raising forum non conveniens at an early stage and applying to stay the claims on the grounds that a foreign jurisdiction is more appropriate. We are involved in cases on behalf of claimants in Nepal, Bangladesh and Zambia where this has already occurred (the applications are yet to proceed to a substantive hearing).

However, in the first major judicial examination of forum non conveniens since Brexit, the Court of Appeal declined to exercise its discretion to stay a major environmental case on the grounds that an alternative forum was more appropriate.

Municipio de Mariana v BHP Group is a colossal case on behalf of over 200,000 victims of the 2015 Fundão Dam disaster. Although the case was issued pre-Brexit, due to the second Defendant being an Australian-domiciled company, the issue of forum non conveniens fell to be adjudicated.

The High Court originally found that the claimants had not discharged the burden of demonstrating that they would not obtain substantive justice in Brazil, and therefore that the claims would be stayed on forum non conveniens grounds. 

The Court of Appeal, however, overturned this decision on appeal. At §§333-372 of the judgment, the Court examined the law and the facts of the case, and held that the UK was the appropriate forum. They reached this decision through a close examination of whether there was a real risk that the Claimants would not obtain substantive justice in Brazil. The Court cited the Claimants’ legal experts who described the “insuperable obstacles” facing the Claimants in Brazil, and it rejected (at §357-359) the Defendants’ argument that the Claimants could be blamed for not trying to overcome those obstacles before litigating in England (because, the Court found, they knew the obstacles to be momentous).

Conclusion

What the Mariana decision demonstrates is that access to justice remains a significant factor in deciding whether or not the UK courts should hear claims on behalf of claimants in a foreign jurisdiction.

If Claimants can demonstrate cogent evidence that there is a real risk that they would not obtain substantive justice in their home courts, then the law permits them to bring claims against UK-domiciled Defendants in the courts of England and Wales.

While this option is no longer theirs by right – and while this lacuna remains a serious issue which must be remedied as soon as possible – it would be a foolish and expensive mistake for British multinationals, operating in countries with less sophisticated legal systems, to think that they cannot be held accountable in a post-Lugano world.

This article was first published in the Jan-Mar 2023 issue of Corporate Disputes