Judges have ruled that claims made by a group of workers in a Malaysian factory that formed part of Dyson UK’s supply chain should be heard before the courts in England and Wales and not Malaysia.
The decision, made by the Court of Appeal, sets the case, brought by a group of 24 Nepalese and Bangladeshi migrant workers against two Dyson UK companies and a Malaysian subsidiary, up to proceed to trial before the High Court in London.
Experts in litigation at Pinsent Masons said the case is representative of a broader trend where companies’ supply chain activities are coming in for increased scrutiny and predicted that it will be keenly watched by other UK-based businesses with supply chains that extend overseas.
The group of workers have alleged forced labour and dangerous working and living conditions at a Malaysian factory that formed part of Dyson’s supply chain. They argue that Dyson UK was liable for the alleged wrongs because, they say, it created and promulgated policies relevant to the alleged wrongdoing, and because it had allegedly known about the abuse and failed to act.
The merits of those claims were not considered by the Court of Appeal, which was instead focused on determining whether the courts in England and Wales, rather than Malaysia, are the right forum for the claims to be heard. The High Court had previously determined that the case should proceed to trial in Malaysia, but that decision has now been overturned by the Court of Appeal after an appeal by the group of workers.
The group has argued that the more appropriate jurisdiction would be England and Wales and that they would not be able to access substantial justice in Malaysia – including because they would not have access to appropriate funding of disbursements in Malaysia.
Dyson argued that the claim could suitably be heard in Malaysia, saying that it would not amount to substantial injustice if the standard of legal representation the claimants received in Malaysia did not achieve the standard they might otherwise receive in England. The company further offered undertakings to cover the costs of some of the claimants’ disbursements in Malaysia.
Setting aside the High Court’s decision, the Court of Appeal determined that the factors at play in the case “make England clearly and distinctly the appropriate forum in which the case should be tried”.
Michael Fletcher of Pinsent Masons said: “The UK is widely considered to be one of the largest mass claims markets in the world: the UK’s courts and court processes are therefore well equipped to handle claims of this nature. There are a number of claims currently before the courts where the law governing those claims is that of another country, and the alleged events on which the claims are based took place in another jurisdiction. For these reasons, claimants in claims such as this one are increasingly seeking to have their claims heard in England. This decision is significant in how the question of jurisdiction will be approached by the courts.”
“The decision, like the recent decision of the Court of Appeal in the case of Alame v Shell, demonstrates the focus the courts are placing on what they describe as ‘equality of arms’ between claimants and corporate defendants in ESG proceedings,” he said.
“For example, the Court of Appeal recognised that the claimants would be able to access legal representation in Malaysia but observed that Dyson would be able to access a higher standard of legal service than the claimants in Malaysia, whereas in England the claimants could also be represented by experienced and well-resourced solicitors. This was found to be a factor favouring England as a more appropriate forum, even though the court did not regard it as something which gave rise to a real risk of substantial injustice. The court also placed significant weight on the uncontested fact that the defence to all three defendants’ claims would be coordinated from England, and that the majority of the relevant documentation would be located in England,” Fletcher added.
Katie Hancock of Pinsent Masons said: “Dyson’s offer of an undertaking to cover certain of the claimants’ disbursements in Malaysia was described by the Court of Appeal as ‘unprecedented’ but the court did not consider that it resolved the jurisdiction question in favour of Malaysia, finding that the provision of undertakings involved a conflict of interest which could give Dyson a litigation advantage for a number of reasons.”
“The allegations in this claim include allegations of negligence on the part of Dyson UK in respect of wrongs allegedly perpetrated by companies outside its corporate group. The Court of Appeal recognised that this is a novel issue in English law. The claim will now proceed to trial in England and will be closely watched by UK-domiciled corporates with overseas supply chains,” she said.
“As part of their claim, the claimants allege that Dyson UK exercised a high degree of control over its manufacturing operations, making it liable for the activities of its suppliers. The ‘control’ exercised over subsidiaries and supply chains, which forms the basis for the duty of care arguments in a number of cases currently before the English courts, is likely to be tested further in light of upcoming changes to EU legislation. The Corporate Sustainability Due Diligence Directive, which has this year been adopted in the EU, imposes obligations relating to due diligence and mitigation of harm on entities heading corporate groups or supply chains, in respect of their subsidiaries and those in the chain of activities,” she said.
Lord Justice Popplewell, giving the leading judgment for the court, considered that the group of workers would not be able to bring the claim in Malaysia because of the need for substantial disbursements and that there was insufficient evidence that those disbursements could be properly funded by the undertakings Dyson had made, or by other sources. This factor, it determined, pointed overwhelmingly in favour of England and Wales as the more appropriate forum.
The judges also considered that it is Dyson UK, rather than its Malaysian subsidiary, that is the “principal protagonist” in respect of the claims being brought. Because the company is based in the UK, the court considered this to be another factor weighing in favour of the trial proceeding in England and Wales.
Another factor the court weighed was the fact the policies relevant to the claims in the case, as well as documents relating to the way those policies were implemented and what Dyson knew about the allegations raised, were devised and stored in the UK. The convenience for witnesses to appear in court in the UK; and the fact Dyson UK would coordinate the litigation from England on behalf of Dyson Malaysia, were also found to be relevant.
The Court of Appeal also assessed the connection of both England and Wales and Malaysia with the issues in the case – being duty, breach, harm and remedy – as being mixed but, if anything, more closely associated with England than Malaysia.
The fact that Malaysian law is the governing law for all the claims was deemed to be of little significance, because the disputes about Malaysian law are relatively narrow. The court found that Malaysian law draws heavily on English decisions as well as case law from other Commonwealth countries. While the judges assessed that some differences between the laws of the two jurisdictions would make it preferable for the Malaysian court to resolve them, they considered they are issues which the English courts are well equipped to deal with.
The need to ensure “equality of arms in the conduct of litigation if justice is to be served” was also assessed by the court, which considered that that factor favoured the litigation proceeding in England and Wales.
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