Dominic Liswaniso Lungowe and Others v Vedanta Resources Plc and Another
| Jurisdiction | England & Wales |
| Judge | Lord Justice Simon,Lady Justice Asplin,Lord Justice Jackson |
| Judgment Date | 13 October 2017 |
| Neutral Citation | [2017] EWCA Civ 1528 |
| Docket Number | Case No: A1/2016/2502 & 2504 |
| Court | Court of Appeal (Civil Division) |
| Date | 13 October 2017 |
[2017] EWCA Civ 1528
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
(The Hon Mr Justice Coulson)
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Jackson
Lord Justice Simon
and
Lady Justice Asplin
Case No: A1/2016/2502 & 2504
Charles Gibson QC, Geraint Webb QC and Ognjen Miletic (instructed by Herbert Smith Freehills LLP) for the Appellants
Richard Hermer QC, Marie Louise Kinsler QC and Edward Craven (instructed by Leigh Day) for the Respondents
Hearing dates: 5 and 6 July 2017
The respondents (whom it is convenient to refer to as the claimants) are Zambian citizens who live in the Chingola region of the Copperbelt Province in the Republic of Zambia. On 31 July 2015, they brought proceedings against the first and second appellants ('Vedanta' and 'KCM' respectively) alleging personal injury, damage to property and loss of income, amenity and enjoyment of land, due to alleged pollution and environmental damage caused by discharges from the Nchanga copper mine ('the Nchanga mine') since 2005.
The mine is owned and operated by KCM, which is a public limited company incorporated in Zambia. Vedanta, which is incorporated in this country, is a holding company for a group of base metal and mining companies, which include KCM.
The claimants' solicitors served the claim form and Particulars of Claim on Vedanta on the basis of its domicile in this country. On 19 August 2015, the claimants were granted permission to serve the claim form and Particulars of Claim out of the jurisdiction on KCM.
On 15 September 2015, Vedanta applied for a declaration that the Court did not have jurisdiction to try the claims; alternatively, that it should not exercise such jurisdiction that it might have, pursuant CPR Part 11(1)(a) and/or (b); and a stay of proceedings pursuant to CPR Part 11(6)(d) and/or CPR Part 3.1(2)(f).
On 5 October 2015, KCM applied for a declaration that the Court did not have jurisdiction to try the claims, or alternatively, that it should not exercise any jurisdiction that it had, pursuant to CPR Part 11(1)(a) and/or (b); and an order setting aside the order of 19 August giving permission to serve out of the jurisdiction, or alternatively, a stay of proceedings.
By an order dated 16 June 2016, following a judgment dated 27 May, Coulson J ('the Judge') dismissed the jurisdictional challenges brought by Vedanta and KCM, who appeal against that order.
This judgment is divided into the following parts:
A. The hearings and an outline of the claimants' claim
B. Vedanta's applications
C. KCM's applications
D. Conclusion
A. The hearings and an outline of the claimants' claim
The hearings
The hearing before the Judge took three days; and the appeal lasted two full days before us. A large amount of factual material and legal authority, contained in many bundles, was deployed on both occasions. In addition to the material before the Judge, the parties thought that we would benefit from a transcript of the hearing before the Judge.
An outline of the claims
It will be necessary later in this judgment to look with greater precision at the claim against Vedanta, but the nature of the claims can be summarised at this point.
Although the Nchanga mine began operating in 1937, it is convenient to pick up the history in 2004 when Vedanta Resources Holdings Limited ('VRHL'), a subsidiary of Vedanta, acquired a 51% interest in KCM; the remaining 49% being held by ZCCM-Investment Holdings Plc ('ZCCM'), a State-owned company. In February 2008 VRHL increased its shareholdings, via call options, to 79.42%. The remaining 20.58% of the shares in KCM are still owned by the Zambian State through ZCCM.
KCM operates the mine pursuant to statutory authority in the form of a mining licence. Only a Zambian domiciled company can be the holder of a mining licence. KCM also holds a number of discharge licences which, subject to various conditions, permit it to make discharges from the mine into local waterways.
As a holding company, Vedanta has a number of subsidiaries. The Judge noted references in the papers to it being worth around £37 billion. It has 19 employees, of which eight are directors, with the remainder in corporate or administrative support roles. By contrast, the group employs some 82,000 people worldwide through its subsidiary companies. These operating companies, like KCM, are involved in all kinds of mining and manufacturing, as well as oil, gas and power generation. Mr Gibson QC contrasts the small number of Vedanta's employees with the very large number employed by its subsidiaries.
KCM is the largest private employer in Zambia; and employs approximately 16,000 people there, the vast majority of them at Nchanga. The Nchanga mine operates in demanding conditions given a high annual rainfall and the high water-table. There are waterways in the area of the mine which flow into the Kafue river; and it is this river and the adjacent waterways which are at the heart of the claimants' claim in the proceedings.
The pleaded claims
It is convenient to divide the Particulars of Claim into: (i) those parts which are common to both appellants, (ii) the parts which are directed to the claim against Vedanta, (iii) the parts that are directed to the claim against KCM and (iv) the relief sought.
(i) The parts common to the claim against both appellants (paragraphs 1–77)
At paragraphs 5–7, the pleading describes the claimants' reliance on the waterways as 'their primary source of clean water for drinking, bathing, cooking, cleaning and other domestic and recreational purposes'. It is said that the waterways irrigate crops and sustain livestock (paragraph 6), are a source of fresh fish and that, in consequence, the waterways are 'of critical importance to [the claimants'] livelihoods and their physical, economic and social wellbeing' (paragraph 7).
Paragraphs 8–27 deal with the Nchanga mine and the processing and disposal of tailings and other effluent. References are made to the licence granted to KCM.
There are then a series of specific allegations relating to the discharge of harmful effluent into the waterways and the local environment. It is alleged that Vedanta and KCM were both aware of these; and reliance is placed on the result of a report in 2006 ('the ECZ Pollution Report') on acidic material which found its way into the Kafue River from KCM's operation of the Nchanga mine. This was an incident that gave rise to the Nyasulu litigation which figures later in this judgment.
From paragraph 39, the Particulars of Claim sets out other matters relevant to pollution from the mine, including a report commissioned by KCM in 2010 from SNC Lavelin into 'the frequency and severity of spillage release into the environment', a KCM internal report in 2013 and a report from the Zambian Government Auditor General in 2014, which found that effluent discharged from the Nchanga mine into surface water contained material quantities of toxic metals and other substances which significantly exceeded permitted levels. This report contained criticisms of KCM's mining operation (paragraphs 39–45). This particular section of the pleading concludes at paragraph 46 with a summary of the environmental damage which had been caused as a consequence of the pollution.
There is then a lengthy section dealing with the applicable law (which, it is common ground, is the law of Zambia) and the relevant causes of action under Zambian law. These are described as common law causes of action (tortious liability) and statutory causes of action deriving from (among other sources) the Zambian Mines and Minerals Act 2008, the Environment Management Act 2011 ('the EMA'), the Environment Protection and Pollution Control Act 1990 and the Public Health Act 1930.
(ii) The claim against Vedanta (paragraphs 78–94)
At paragraphs 78–89 (pages 32–47) the case is pleaded against Vedanta in negligence. Paragraph 79 alleges that Vedanta owed a duty of care to the claimants as a result of its:
… assumption of responsibility for ensuring that [KCM]'s mining operations do not cause harm to the environment or local communities, as evidenced by the very high level of control and direction that [Vedanta] exercise at all material times over the mining operations of [KCM] and [KCM's] compliance with applicable health, safety and environmental standards.
At paragraph 80, there is a plea of a relationship of proximity between Vedanta and the claimants. It is said that, in those circumstances, the imposition of a duty of care is fair, just and reasonable in the light of four specific factors:
(a) the businesses of [Vedanta] and [KCM] are in a relevant respect the same, namely they are both involved in the business of mining, processing, refining and selling natural mineral resources;
(b) [Vedanta] knew or ought reasonably to have known that [KCM's] operations and equipment at Nchanga Copper Mine were unsafe and were discharging harmful effluent into the waterways and local environment;
(c) [Vedanta] had or/ought reasonably to have had superior expertise, knowledge and resources in relation to relevant aspects of health, safety and environmental protection in the mining industry;
(d) [Vedanta] knew and/or ought to have foreseen that [KCM] would rely on [Vedanta's] superior expertise, knowledge and resources in respect of health, safety and environmental protection in the mining industry.
It will be necessary to consider these factors in more detail later in this judgment in the context of the appellants' argument that the iteration of these factors which were found to give rise to a duty of care in...
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