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Published on December 19, 2023
Dyson Group wins jurisdictional battle in the English court over migrant worker ESG claims: what next for supply chain liability?

Summary

The English High Court has declined jurisdiction over claims brought by Nepalese and Bangladeshi migrant workers against companies in the Dyson Group (including two UK domiciled companies) alleging forced labour and abusive employment practices at one of Dyson’s suppliers in Malaysia.

As multinationals focus on better assessing ESG risks from their overseas operations and value chains, and victims of business-related human rights and environmental abuses continue to look for redress in the English courts, what does this decision mean for the future of global supply chain liability?

The facts

In May 2022, migrant workers from Nepal and Bangladesh lodged proceedings in England against three companies in the Dyson corporate group (the Dyson Defendants). Two of the Dyson Defendants were domiciled in England, and one was domiciled in Malaysia.

The claimants, who had all been employed at factory facilities in Malaysia within the Dyson supply chain (the factories were owned and operated by third parties which had supply contracts with the Malaysian Dyson Defendant), alleged that they were there subjected to unlawful forced labour and abusive working and living conditions.

The claimants argued that the Dyson Defendants were liable for negligence and unjust enrichment, and owed the Claimants a duty of care for their treatment at the factories on the basis that the Dyson Defendants:

  • Exerted a high degree of control over the manufacturing operations and working conditions of the factories; and
  • promulgated mandatory policies and standards concerning the working conditions of workers in the Dyson Group’s supply chain.

As we have seen in comparable ESG claims such as Vedanta, the claimants relied on various Dyson Group policies including an Ethical and Environmental Code of Conduct which refers to ‘No Forced Labour’ and requires suppliers to observe the conditions of the Code of Conduct, and the Dyson Modern Slavery and Human Trafficking Statement 2020. The claimants alleged specific employees of the Dyson Defendants were responsible for creating, managing and implementing these policies as part of a regular audit process.

All three defendants challenged jurisdiction, arguing that the proper forum for the claimants’ claims was Malaysia not England.

Prior to the hearing, the Dyson Defendants gave a series of undertakings as to how they would conduct the proceedings in Malaysia. These undertakings, which were designed to persuade the English court that the claimants would be able to obtain access to justice in Malaysia, included that the Dyson Defendants would pay reasonable costs to enable the claimants to give evidence in Malaysia, would pay for various court fees and disbursements such as transcription costs and remote hearing arrangements, and would not challenge the lawfulness of any funding arrangement agreed between the claimants and their Malaysian lawyers. The two UK domiciled Dyson Defendants also agreed to submit to the jurisdiction of the Malaysian courts.

The judgment

The court held the appropriate forum for the claims was Malaysia.

In reaching its decision the court applied the principles of the House of Lords in Spiliada Maritime Corporation v. Cansulex Ltd. [1987] 1 AC 460 and applied a two-stage test. First, the Court looked at the connecting factors between the case and the available jurisdictions to determine the natural forum for the claim. It decided that England was not the natural forum for the claim and that Malaysia, as an alternative forum, was ‘clearly and distinctly more appropriate’ and the ‘centre of gravity’ of the case. The court considered the following key points in reaching this conclusion:

  • The alleged torts had taken place in Malaysia and the misconduct in Malaysia was likely to be a central issue at trial. On the other hand, relevant documents could be found in both jurisdictions and were likely to play a less significant role at trial.
  • Malaysian law was the governing law and there were novel issues of Malaysian law to decide (as to liability in a supply chain relationship). The court considered the issues would be best decided by Malaysian judges, not English judges applying Malaysian law.
  • Neither England or Malaysia was practically convenient for parties and witnesses and there was no common language.
  • There existed a real risk of irreconcilable judgments if the claims were heard in either jurisdiction.
  • The Malaysian courts had suitable case management powers and frameworks to enable the claimants to participate (for example, remotely from their home countries) particularly where the Dyson Defendants had given undertakings to fund remote hearing arrangements.

In the second stage, the court went on to consider any special circumstances such that justice requires the trial to take place in England. The court did not accept the claimants’ arguments that there was a real risk that they would not obtain substantial justice in Malaysia. It considered there was no real risk that the claimants would not be able to access legal representation or not be able to obtain NGO funding to pursue their claims. The Dyson Defendants’ undertakings to partially fund the claims in Malaysia and to submit to the jurisdiction of the Malaysian courts carried weight here in persuading the court that special circumstances did not apply.

Conclusion

Under both English and Malaysian law, the claimants’ claims seek to expand the boundaries of corporate liability for ESG acts or omissions. While we have seen several parent company liability cases in recent years (such as Vedanta and Okpabi) where claimants have pursued claims before the English courts against a UK domiciled parent company for ESG failings of its overseas subsidiaries, this claim goes further. Here the claimants seek redress from multinational companies for alleged harm arising from ESG breaches outside of the corporate group but within their supply chain.

While the decision appears to represent a shift from the recent trend of allowing ESG claims against UK parent companies to proceed to trial in the English courts, there are novel elements to the migrant workers’ claims which may not apply in future cases. Not only were there novel legal issues at play (as to liability in a supply chain relationship), but the defendants gave extensive undertakings to the court which proved particularly important. In Vedanta, where the English courts accepted jurisdiction, the absence of funding arrangements and experienced lawyers to handle the case in the local courts were key considerations which led the Supreme Court to conclude there was a real risk that the claimants would not obtain substantial justice in Zambia.

Victims of business-related human rights and environmental abuses looking to bring their claims against UK domiciled companies before the English courts are unlikely to be deterred by this recent decision. Following the high-profile judgment in Vedanta, we can expect to see more transnational tort claims against multinationals based on alleged ESG breaches by their overseas subsidiaries, and in their supply chains, although what is clear is that such claims are still far from straightforward, particularly where the alleged harm has taken place outside the corporate group.

Limbu & Ors v Dyson Technology Ltd & Ors [2023] EWHC 2592 (KB).

For more information on ESG, please visit the ESG page or contact Tim Elliss, Daniel Levy and Anna Brownrigg.

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