In a judgment issued towards the end of last year, the English Court of Appeal ruled on the jurisdiction of the English courts in relation to the liability of UK-domiciled parent companies and their foreign-domiciled subsidiaries for alleged torts committed overseas.

The decision may have a significant impact in light of the growing number of group litigation claims being brought against UK corporates.

In Limbu and others v Dyson Technology Ltd and others [2024] EWCA Civ 1564, the Court of Appeal unanimously allowed the claimants' appeal, holding that England was the appropriate forum for claims brought by migrant workers. The Court of Appeal overturned the High Court’s original decision (Limbu v Dyson Technology Ltd [2023] EWHC 2592 (KB)) which had concluded that Malaysia was the more appropriate forum for the claims, and which had consequently stayed the proceedings in the UK.  

Background

The case concerns 24 Nepalese and Bangladeshi claimants, migrant workers who brought claims against three companies in the Dyson group. They allege that they were trafficked to work in two factories in Malaysia where they were subjected to conditions of forced labour, exploitative and abusive working and living conditions, and (in some cases) detention, torture and beating in the course of manufacturing components and parts in the supply chain for the Dyson Group. The factories were operated by two companies (referred to as ‘ATA’ and ‘Jabco’) which are not, to date, parties to the action.

The case is a mixed case involving both service in and service out of the jurisdiction. The first and second defendants are English companies, which were served in the UK and sought a stay on grounds of forum non conveniens. The third defendant ('D3’) is a Malaysian company, which contracted with ATA and Jabco for the manufacture of Dyson components and products. D3 was served pursuant to a grant of permission to serve out as a necessary and proper party, pursuant to CPR PD6B para 3.1(3), which D3 sought to set aside on forum non conveniens grounds that England was not the proper place in which to bring the claim (CPR 6.37(3)).

The claimants advanced three causes of action: (i) negligence for breach of a duty of care to take reasonable and effective steps to ensure that the claimants did not suffer the economic loss and personal injuries resulting from the abuse; (ii) liability in tort for false imprisonment, intimidation and assault; and (iii) a restitutionary claim for unjust enrichment, through increased trading profits resulting from the abuse. Each of the causes of action is governed by Malaysian law.

Separately, but relevant to the issues considered by the Court of Appeal, the UK defendants (initially joined by Sir James Dyson) commenced defamation proceedings in the High Court, before the issue of the claim form in the main proceedings, against Channel Four and ITN for broadcasting a Channel Four News programme concerning the alleged abuse of workers at ATA factories in Malaysia, which linked Dyson to the abuse. That action was then abandoned two years later.

Applicable law

There was very little dispute between the parties as to the applicable legal principles as established in the House of Lords’ decision in Spiliada Maritime Corp v Cansulex Ltd [1987] AC 460.

In line with Spiliada, where seeking to serve out of the jurisdiction, the burden is on the claimant to show that England is clearly the appropriate forum (the opposite position to a ‘service in’ case). In both cases ‘appropriate forum’ means that in which the case may be tried more suitably for the interests of all the parties and the ends of justice.

In determining the appropriateness of the forum, the court looks at connecting factors to determine with which forum the action has the most real and substantial connection. These include not only factors affecting convenience or expense, but also other factors such as governing law, the place where the parties reside or carry on business, and where the wrongful acts and harm occurred.

Even if the court concludes that the foreign court is more appropriate by reference to connecting factors, applying the relevant burden of proof, the court will nevertheless retain jurisdiction if the claimant can show that there is a real risk that it will not be able to obtain substantial justice in the appropriate foreign jurisdiction (Lungowe v Vedanta Resources Plc [2019] UKSC 20).
There is therefore effectively a two-stage approach followed by the Court of Appeal in this case: the first stage being the ‘appropriate forum’, and the second being ‘access to justice’.

Application to the facts

The English High Court judge at first instance had ruled that, on the ‘appropriate forum’ question, Malaysia was the more appropriate forum than England for the claims, given that, among other things, the events complained of took place there, and Malaysian law was the governing law. As to the ‘access to justice’ question, the judge ruled that whilst the risk of irreconcilable judgments resulting from the defamation proceedings was an important factor, it did not tilt the balance in favour of the English High Court being the proper forum to hear the claims.

In the Court of Appeal’s judgment, Lord Popplewell, giving the main judgment, identified a number of grounds on which he disagreed with the ruling of the High Court’s judgment:

• Domicile: The domicile of the first and second defendants (England) was an important factor, which had not been taken into account, particularly where the claim against these two entities was the primary claim, with the Malaysian defendant a ‘more minor and ancillary defendant’;
• Centre of gravity: It failed to take into account other aspects of the location of conduct or events relevant to duty, breach, harm and remedy, which led to a mistaken assessment of the ‘centre of gravity’ being premised, primarily, just on the location of the alleged underlying abuse. Had all these other matters been taken into account, the centre of gravity would have pointed towards England, or at least as no more than neutral.
• Inconsistent judgments: It was wrong to consider that there was a real risk of irreconcilable findings in relation to the defamation proceedings if the current proceedings had proceeded in England – it was overwhelmingly likely that case management coordination would take place which would succeed in avoiding, or at least very much reducing, duplication of proceedings and the risk of inconsistent judgments.
• Conduct of proceedings: The fact that the defendants' defence of the claims would be coordinated and conducted from England by English employees and officers of the UK defendants was a significant connecting factor to England, and one erroneously not considered at first instance.
• Funding of proceedings: It was wrong for the judge to conclude that there was no real risk that the claimants, and NGOs, would be unable to fund the pursuit of their case in Malaysia where the costs of doing so would be substantial. The claimants are very poor, without the means to fund their claims, and any undertakings provided by the defendants to pay for necessary costs were insufficient.

The Court of Appeal assessed these factors, along with others such as equality of arms in terms of legal representation and practical convenience (where the parties, witnesses and documents are located). As to governing law, although the Court of Appeal concluded that it would be preferable for the Malaysian court to hear a case governed by Malaysian law, it noted that the English court is well equipped to deal with them as a matter of expert evidence, particularly given Malaysian law is closely related to English law.  

The Court of Appeal ultimately concluded that England was clearly and distinctly the appropriate forum given: (i) its assessment of the relevant connecting factors, and (ii) the inability of the claimants to fund proceedings in Malaysia.

Dyson is seeking to appeal the Court of Appeal’s decision in the Supreme Court.

Implications

Where UK corporates from a wide range of sectors and industries are currently the subject of group claims, (e.g. BHP, Apple, Glencore), this judgment suggests that any UK businesses with foreign workers should be alert to the risk of group claims against them being litigated in the English courts, particularly in relation to ESG / workers’ rights issues.  

The Court of Appeal has effectively made it more difficult for defendant UK companies to argue that any such claims can only be brought in the jurisdiction where the alleged breaches took place. Instead, the English courts will look to all relevant factors in their assessment of the appropriate form, including those more likely to lead to a conclusion that the claims should be allowed to run in England. These include where the litigation would be co-ordinated from, the high standard of legal representation available, sophisticated and widely available claimant litigation funding, and the English courts’ ability to case manage proceedings to avoid irreconcilable judgments.  

Particularly where there is a significant imbalance in financial resources between individual claimants and UK corporate defendants, this judgment suggests that the UK courts are increasingly open to determining they are the appropriate forum to ensure equality of arms in the conduct of litigation for justice to be served.

It remains to be seen whether the Supreme Court will confirm the position adopted by the Court of Appeal.  If it does, UK corporates with foreign-based workers / production services should be mindful of their potential liability both in the UK courts and abroad.

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