Supply chain risk: England not appropriate forum for ESG-related claims against Dyson relating to actions of Malaysian manufacturer

The High Court has declined to exercise jurisdiction over claims brought by migrant workers against English and Malaysian companies in the Dyson group regarding alleged abusive employment practices by one of Dyson's suppliers in Malaysia: Limbu v Dyson Technology Ltd [2023] EWHC 2592 (KB).

For some time, large multinational corporations have faced claims brought by groups of foreign claimants relating to the alleged acts or omissions of their subsidiary companies abroad, typically on the basis that the parent company owes a direct duty of care to those affected. The current case shows a more recent development, in which claims are based on alleged breaches by an unrelated business partner in the corporation's supply chain, rather than a subsidiary or group company.

The present decision did not address the merits of the claims, but rather the question of whether the English court was the appropriate forum to hear the dispute – a question which is once again relevant, in contrast to the pre-Brexit position where the English court was obliged to accept jurisdiction over UK-domiciled defendants regardless of considerations of forum non conveniens. On the facts of this case, the court held that the appropriate forum was Malaysia, as that was the "centre of gravity" of the case and (contrary to the claimants' submissions) there were no special circumstances which meant that justice required a trial in England.

It is noteworthy, however, that the defendants gave extensive undertakings designed to help persuade the court that the claimants would be able to obtain access to justice in Malaysia. These included not only that they would submit to the Malaysian courts if sued there, but also for example that they would pay certain of the claimants' costs and would not challenge the lawfulness of any success fee arrangement between the claimants and their Malaysian lawyers.

For further discussion of these issues, see this article in our series on climate disputes: Climate disputes – parent company and supply chain risk.

Background

A claim was brought against three defendants in the Dyson group of companies by a group of migrant workers who had been employed at factory facilities in Malaysia which manufactured components for Dyson-branded products. The first two defendants were domiciled in England and the third was domiciled in Malaysia.

The claimants alleged that they were subjected to forced labour and highly exploitative, abusive working and living conditions. They alleged that the defendants were: (i) liable for negligence; (ii) jointly liable (with the Malaysian manufacturers and Malaysian police, neither of whom were sued in the English proceedings) for the torts of false imprisonment, intimidation, assault, and battery; and (iii) liable to make restitution of their alleged unjust enrichment.

The factual basis on which the defendants were said to be liable was the alleged control they exercised over manufacturing operations, working conditions and standards throughout the group's supply chain. As has become common in ESG-related litigation, the claimants relied on Dyson's ESG-related policies and public reports in support of this allegation.

The claimants served the proceedings on the first two defendants in England and on the third defendant in Malaysia, having obtained the court's permission to serve the proceedings out of the jurisdiction on a "without notice" application in the usual way. All three defendants challenged the court's jurisdiction on the basis that the proper forum was Malaysia.

Decision

The High Court (Clive Sheldon KC sitting as a deputy High Court judge) stayed the proceedings against the first two defendants and, with regard to the third defendant, set aside the order granting permission to serve out and set aside service.

The judge noted that there was no dispute as to the applicable principles, which derived from Spiliada Maritime Corporation v Cansulex Ltd [1987] 1 AC 460.

Since the first two defendants were served with the proceedings within the jurisdiction, the burden was on them to show that England was not the natural or appropriate forum and there was another available forum that was clearly and distinctly more appropriate (Stage 1). If this was made out, the burden shifted to the claimants to show that there were special circumstances such that justice required the trial to take place in England (Stage 2).

Since the third defendant was served outside the jurisdiction, the burden was on the claimants at Stage 1 to show that England was clearly the appropriate forum for the trial of the action. If the claimants failed at Stage 1, then Stage 2 would be considered.

In cases such as this one concerning a mix of both "service in" and "service out", the court would look for a single jurisdiction in which the claims against all the defendants could "most suitably be tried." If a claim against some of the multiple defendants could not be tried in a particular jurisdiction that was "only one factor, albeit a very important factor indeed, in the evaluative tasks of identifying the proper place" (Lungowe v Vedanta Resources plc [2020] AC 1045).

Stage 1 – Malaysia clearly and distinctly more appropriate

In submitting that Malaysia was clearly and distinctly the more appropriate forum, the defendants argued:

• Malaysia was the only forum where the totality of the dispute could be heard, since the Malaysian manufacturers were not willing to submit to the English court's jurisdiction and the Malaysian police could only be joined to proceedings in Malaysia (and the first two defendants were willing to submit to the Malaysian courts).
• Malaysia was the location of the alleged tortious wrongdoing, where the claimants were living and working when breaches of Malaysian statutory law allegedly took place, and where any allegedly defective or negligent policies were implemented.
• Five of the claimants were in Malaysia and none had any connection with England. The third defendant and the relevant third parties (namely the Malaysian manufacturers and Malaysian Police) were in Malaysia.
• The applicable law governing the claims was Malaysian and differed from English law in material respects.
• The relevant evidence was predominantly located in Malaysia.
• Certain of the claims for contribution and/or indemnity against the third parties could only be brought in Malaysia, and the defendants would have to re-establish liability to the claimants in Malaysia, creating a significant risk of irreconcilable judgments.

In reply, the claimants submitted:

• There was a strong connection between the claims and England, where two of the three defendants were based and many of the key acts occurred. This also meant that many, if not most, of the key witnesses and evidence were in England.
• There was a significant risk of duplication and inconsistent judgments if the claimants were required to pursue their claims in Malaysia, since it was likely that the same factual allegations would be determined by the English courts in related defamation proceedings.
• There were no material differences between Malaysian and English law.
• The claimants would be unable to participate in a trial in Malaysia in person or remotely.
• The defence of claims would be conducted and coordinated from England.
• There were no real obstacles to obtaining documents from the Malaysian manufacturers or Malaysian Police if the claims were pursued in England.

In balancing the various arguments advanced, the High Court identified the following key factors:

• Neither England nor Malaysia was practically convenient for all parties and witnesses and there was no common language for each of the witnesses.
• The system of law which would be applied was that of Malaysia.
• The relevant conduct took place in both England and Malaysia and documents relevant to the trial of the action could be found in both jurisdictions.
• There is a real risk of a multiplicity of proceedings and irreconcilable judgments, wherever the claim was heard.

Taking all of these factors into account, the court ultimately concluded that England was not the natural and appropriate forum for the dispute. The "centre of gravity" of the case was in Malaysia and accordingly that was the forum with "the most real and substantial connection" to the dispute.

Stage 2 – Justice could be served in Malaysia

As the court had decided that England was not the appropriate forum for the claims, Stage 2 of Spiliada needed to be considered.

In submitting that substantial justice could be served in Malaysia, the defendants provided the court with a number of undertakings as to how they would conduct the proceedings if their jurisdictional challenge was successful and the claim was brought in Malaysia, namely that they would:

• not seek security for costs or an adverse costs order against the claimants if and to the extent such costs would not be recoverable under the Qualified One Way Cost Shifting regime in England;
• pay the reasonable costs necessary to enable the claimants to give evidence in Malaysian proceedings;
• not oppose an application by the claimants for remote attendance at a hearing/the trial in Malaysian proceedings;
• pay for the claimants' share of the court interpretation fees, transcription fees and joint expert evidence, to the extent reasonably incurred and necessary;
• not seek to challenge the lawfulness of any success fee arrangement entered into between the claimants and their Malaysian lawyers; and
• not oppose an application for a split trial.

Additionally, the first two defendants (who were domiciled in England) undertook that they would submit to the jurisdiction of the Malaysian courts if they were sued there.

The judge noted that, as Lord Briggs warned in Vedanta, "a conclusion that a foreign jurisdiction would not provide substantial justice risks offending international comity", and therefore such a finding "requires cogent evidence, which may properly be subjected to anxious scrutiny”.

The High Court was ultimately persuaded that there was no real risk that the claimants would not be able to obtain legal representation and necessary NGO funding to pursue their claims in Malaysia. While the level of service might not be the "Tesla type service" they would receive in England, there was no real risk they would be unable to source suitably qualified and expert legal representatives to take on their case in Malaysia on a partial contingency fee basis, with their fees and disbursements funded by a combination of the defendants (pursuant to their undertakings), NGOs, and the legal representatives themselves.

The High Court observed that this case was not one of the "exceptional cases" where "the absence of a means of funding litigation in the foreign jurisdiction, where such means are available in England, will lead to a real risk of the non-availability of substantial justice", as the court ultimately found it would in Vedanta.

Note: The Court of Appeal allowed an appeal against this decision on 13 December 2024.