The doctrine of forum non conveniens
The applicability of forum non conveniens in the context of Brussels I Recast (or the Brussels Convention of 1968) and its implied harmonisation of legal jurisdiction has been a controversial issue widely discussed in UK and Irish courts.
When a company domiciled outside the EU faces legal action in a Member State, a situation not expressly addressed under european law, Article 6§1 of Brussels I Recast refers to the national law of the member State. 1
Forum non conveniens has demonstrated to be problematic when a case before an EU Member State court meets all conditions for the application of Regulation Brussels I Recast, but involved ties outside the e.U., in the sense that the appropriate alternative forum was located in a third country outside the e .u .’s jurisdiction.
Re harrods (Buenos Aires) Ltd. 2
This case concerns a UK-domiciled company whose activities took place entirely in Argentina. Although liable under Article 2 of the Brussels Convention (the defendant’s domicile), the Court of Appeal in London held that such a basis for jurisdiction did not preclude the use of forum non conveniens to refer the case to Argentina, 3 a country outside the E.U. Although the court also required the absence of ties to any other Member State, subsequent case law has omitted this condition, applying the Harrods precedent to disputes involving contact with several European states, including situations in which “the court of any such state has jurisdiction under the Brussels Convention to hear the case.” 4
Disagreement over the compatibility of the Harrods precedent with the Brussels Convention and Regulation 44/2001 was all the more difficult because many multinational corporations are domiciled in the United Kingdom. Lubbe v. Cape plc illustrates the issue.
Lubbe et al. v. Cape plc
Filed in February 1997, the suit sought damages from the UK-domiciled company Cape plc in relation to its work with asbestos, carried out in part in South Africa.
The plaintiffs, South African nationals, alleged serious health problems resulting from their occupations or the location of their homes near the factory in question. They argued that the parent company had failed to act with general care and to exercise due diligence in monitoring the factory’s activities, and was thus responsible for the problems. English courts established jurisdiction in both procedures under Article 2§1 of the Brussels Convention.
Discussion between the parties focused on the application of forum non conveniens. The company argued that South African courts were a more appropriate forum, because the damage and the event giving rise to damage took place in South Africa.
After lengthy proceedings, 5 the House of Lords rejected the application of forum non convenience, and refused to stay british proceedings in favour of South African jurisdictions. Although the injury, victims and evidence were located in South Africa, the victims could not receive legal aid there.
In Ngcobo v. Thor and Sithole v. Thor, British courts applied forum non conveniens to hear another case involving the activities of a British company’s subsidiary abroad.
Ngcobo v. Thor and Sithole v. Thor 6
In 1994 and 1998, two employees of a South African subsidiary filed separate suits in the High Court of Justice against Thor Chemicals (UK) Ltd, Thor Chemical Holdings Ltd, and John Desmond Cowley, CEO of Thor Chemicals Ltd. In the course of their work for the South African subsidiary, which specialized in the production and handling of mercury, the two employees were exposed to excessive levels of mercury and suffered a variety of neurological problems. The plaintiffs argued that the British parent company had been negligent in implementing and monitoring its dangerous operations in South Africa, and that it had not adopted the measures necessary to prevent such harm.
In each of the two cases, British courts rejected the companies’ calls for the application of forum non conveniens. During the trial of Ngcobo v. Thor, the courts ruled that a link existed between the negligence of the parent company in England and the harm caused in South Africa. The courts also cited the risk of a miscarriage of justice. Under South African law, the Workmen’s Compensation Act 1941 (SA), granted compensation to victims of work related accidents (who were rendered unable to perform their jobs) and subsequently barred them from suing their employer in court. If victims were able to obtain financial compensation, barring them from pursuing further justice, the amount was ridiculous. Both cases settled with compensation going to the victims.
Guerrero v. Monterrico Metals plc. & Rio Blanco Copper SA 7
Monterrico, a UK-domiciled company, has several subsidiaries. One of them, Rio Blanco Copper SA, specializes in copper extraction in Piura, north-western Peru. Although copper extraction is underdeveloped in the region, Monterrico’s project would be one of the 20 largest copper mines in the world. The plaintiffs, mostly farmers in Peru, voiced opposition to the project at a demonstration which lasted from late-July to early-August 2005. During the event, 28 demonstrators were forcibly taken to the site of the mine where they were detained and tortured for three days. Several women were sexually abused and one man died of his injuries. The companies do not dispute the police brutality during the demonstration nor the detention of the demonstrators.
The plaintiffs, argued that Monterrico’s on-site officers should have intervened to prevent such abuses and/or were liable for the bodily harm. The plaintiffs demanded redress from Monterrico citing:
- The direct involvement of Monterrico’s two co-directors in the events;
- The fact that Monterrico agreed to manage the risks inherent in the operation and mana- gement of its subsidiary;
- Monterrico’s effective control over its Peruvian subsidiary, to the extent that they consti- tuted a single entity;
- Monterrico affirmed its method of risk management and direct control over the subsidiary in its annual reports.
In June 2009, the UK and Hong Kong High Courts issued an injunction to freeze the parent company’s bank accounts (Monterrico was delisting from the London stock exchange and transferring its assets and operations to Hong Kong).
On 16th October 2009, the court acknowledged the existence of sufficient evidence and accordingly stated that the plaintiffs had cause of action. GBP 7.4 million (the amount of damages that could be awarded) was frozen in the company’s bank accounts. The court noted in its opinion that Monterrico did not challenge the jurisdiction of UK courts under Article 2 of Regulation 44/2001 and the court itself cited Owusu v. Jackson case, emphasizing that Monterrico was domiciled in England at the time the suit was brought. The court thus rejected the doctrine of forum non conveniens on its own accord. The trial was scheduled to begin in October 2011 in London, but the parties reached a confidential settlement in July 2011 under which the victims would receive compensation payment.
On 1 March 2005 the European Court of Justice’s (ECJ) decided in Andrew Owusu v. N.B. Jackson that forum non conveniens theory was incom- patible with the Brussels Convention of 1968 8 . The case pitted a British national residing in the UK against the company N.B. Jackson, also domiciled in the UK, for harm caused in Jamaica. The decision is in line with previous ECJ rulings 9 . In theory, EU courts could no longer invoke forum non conveniens to dismiss a case when the company involved is domiciled in the forum state, without facing the risk of its decision being challenged before the ECJ.
Even if the matter has been settled by the European Court of Justice, after its exit from the EU the UK could in theory reintroduce the doctrine, even in relation to defendants domiciled in its territory.
Because Regulation Brussels I Recast does not address immunities, they are governed by the national laws of individual states and are thus likely to affect civil suits against multinational companies.
For example, in the UK, immunity applies not only to states, but also to their employees and agents, even when acting outside their official duties. 10 A state enterprise acting as an agent of the state could therefore be granted immunity when faced with a civil suit.
The question of a foreign state’s immunity from jurisdiction has been raised in French courts in a case against Veolia Transport, Alstom and Alstom Transport. The courts were able to circumvent this obstacle by arguing that the state (in this case Israel) did not exercise sovereignty over the territories in which the events in question took place.
The Jerusalem tramway case
On 17th July 2005, the Israeli government signed a contract with several companies, including the French companies Veolia and Alstom, for the construction and operation of a tramline. The tram is to connect West Jerusalem (Israeli) to two Jewish settlements in the West Bank via East Jerusalem (Palestinian). The companies obtained a thirty-year operational contract.
The Association France Palestine Solidarité (AFPS) lodged two complaints with the High Court of Nanterre, one against the Veolia Transport and Alstom, and the other against Alstom Transport. The Palestinian Liberation Organisation (PLO) joined AFPS in the suit. Initially, the first two companies were ordered to hand over copies of the entire concession contract and its annexes to the plaintiffs. Releasing those documents revealed Alstom Transport’s involvement in the project in question, leading to the second complaint.
AFPS and the PLO argue that the contract is illegal, and seek its annulment and a halt to the companies’ ongoing activities under the agreement. The plaintiffs argue that the contract was entered into in violation of national and international law and that it violates the Fourth Geneva Convention of 1949 as mentioned in UNSCR 465 of 1 March 1980. Paragraph 5 of that resolution states that “all measures taken by Israel to change the physical character, demographic composition, institutional structure or status of the Palestinian and other Arab territories occupied since 1967, including Jerusalem […] have no legal validity”. The Security Council further calls upon all states to deny Israel all assistance in settling the occupied territories. Plaintiffs also argue that the contract is contrary to French public policy and therefore null and void under Articles 6, 1131 and 1133 of the French Civil Code.
The defence has argued that French courts do not have jurisdiction and the complaints are thus inadmissible, particularly on the basis of the State of Israel’s immunity from jurisdiction. The high court issued its decision on 15th April 2009, ruling that only the AFPS was admissible considering that the PLO had no cause of action. The court also accepted material and territorial jurisdiction over the case.
- On the one hand, the companies facing suit could not claim the State of Israel’s immunity from jurisdiction. The courts ruled that not only was the State of Israel not party to the proceedings, but that Israel did not qualify as a sovereign state. The courts ruled that Israel is an “occupying power of the section of the West Bank where the disputed tramway was built and operated, a section recognized by the international community and the International Court of Justice as Palestinian territory” (free translation).
- On the other hand, the companies were domiciled in France. The French courts based their decision on Article 6§1 of the European Convention on Human Rights which recognizes the right to an independent and impartial tribunal. They expressed their desire to ensure the plaintiffs’ free access to justice. The risk of a miscarriage of justice, inherent in disputes of this nature, bolstered the French courts’ claim to jurisdiction. To quote the court, “It is well-established in jurisprudence that the risk of a miscarriage of justice is a criterion for French courts accepting jurisdiction when the dispute has ties with France ” (free translation). Such is the case here, where the companies facing suit are domiciled in France, and specially since 46 of Jerusalem tramway’s railcars are produced in french soil by five Alstom Transport’s plants.
Alstom and Alstom Transport appealed the decision regarding jurisdiction but on 17th December 2009, the Versailles Court of Appeal upheld the trial court’s ruling. On 30th May 2011, the High Court of Nanterre dismissed a petition by the France-Palestine Solidarity Association to nullify under French law contracts signed by French transports Veolia and Alstom. The Nanterre court found that under French law these particular international law provisions have no direct effect on private individuals and companies who are not a party to the conflict. Under French law, only states which signed the Geneva Conventions of 1949 can be regarded as being bound by the specific treaty provisions listed in AFPS’s legal arguments.