What is forum non-conveniens?
According to the principle of “forum non-conveniens” (or inconvenient forum), a court has the power to dismiss a civil action where an appropriate and more convenient alternative forum exists. Variations of the principle exist in most common law jurisdictions, including England, Canada, the USA and Australia.
In this post, we look at how forum non-conveniens applies in transnational business and human rights cases. First we compare the approach of the English and Canadian courts in light of a series of recent decisions. Then we consider its impact on access to remedy where the rule of law in the jurisdiction where the human rights impact takes place is weak and make some practical suggestions about steps which a business can take to reduce the risk of an adverse human rights impact and associated litigation in the UK or Canada.
How does it apply in transnational business and human rights cases?
Conventionally, forum non-conveniens made it difficult for the victims of business related human rights impacts to “export” their claims from the state where the impact occurred (the “territorial state”) to another state with jurisdiction, for example the state where the parent company of the alleged defendant is domiciled.
The situation in England
Under English law, the appropriate forum is the one in which the case may most suitably be tried in the interests of all the parties and the ends of justice. This involves a two stage test. First, the party resisting jurisdiction (usually the defendant) must establish that there is an alternative forum which has jurisdiction and which is clearly more appropriate than England. If the defendant succeeds in doing so, the court will move to the second stage. At this point, the burden switches and the party which wants to proceed in England (usually the claimant) must establish that, in the interests of justice, the action must proceed in England (Spiliada Maritime Corpn v Cansulex Ltd  AC 460). It is at this, second stage, that the English courts will consider evidence about access to remedy in the territorial state. The unavailability of legal aid or alternative methods of litigation funding (such as conditional fee arrangements), a lack of capacity at the local bar, political interference in judicial proceedings and judicial corruption may militate in favour of an argument that the interests of justice are best served by proceeding in England. However, the threshold which claimants must surmount is high and a significant amount of discretion is given to judges. This high threshold is justified on the basis of comity (loosely defined rules of mutual respect) and the equality of states. English judges are understandably reluctant to be seen to judge the quality of justice in other sovereign states.
For as long as the UK remains bound by European rules on jurisdiction (the Recast Brussels Regulation and Lugano Convention) and subject to the jurisdiction of the European Court of Justice, forum non-conveniens arguments are not available to a defendant domiciled in the UK or another European state (see our previous post on the recent Vedanta judgment). This significantly restricts the scope of the doctrine. Further, in the first instance judgments in Vedanta and Unilever, the courts found that, where there is a real issue to be tried as between claimants and an English parent in the English courts, this will “virtually conclude” the issue of appropriate forum in favour of England thus extending the restriction to foreign domiciled subsidiaries.
However, this restriction is not cast in stone. Firstly, the Court of Appeal in Vedanta did not endorse the first instance judge’s reasoning. Instead it concluded that the judge was “entitled to this view” before unilaterally stating that: “There must come a time when access to justice in this type of case will not be achieved by exporting cases, but by the availability of local lawyers, experts, and sufficient funding to enable the cases to be tried locally.” This leaves it open to judges in similar cases to conclude that, notwithstanding the existence of a parallel claim against a defendant domiciled in the UK (or another European state), England is not the appropriate forum in which to hear a claim against a foreign defendant. Secondly, the post-Brexit application of the existing rules on jurisdiction is shrouded in uncertainty. One possible outcome is that the European rules will cease to apply and the English courts will revert to common law rules on jurisdiction, according to which the restriction on forum non-conveniens would not apply.
Developments in Canada
Meanwhile, in Canada, a series of recent decisions have been decided in favour of claimants seeking to bring claims against Canadian companies for human rights impacts associated with their overseas operations. In these cases, the courts did not follow the two stage approach of the English courts.
In Garcia v Tahoe Resources Inc.  BCCA 39, the Court of Appeal for British Colombia held that Canadian jurisprudence “reflects a more unified approach” to the application of forum non-conveniens. Instead, all factors and concerns must be weighed together, in one stage, with the overall burden on the defendant to establish that the alternate forum is in a better position to dispose fairly and efficiently of the litigation. This means that, unlike England, evidence about access to remedy in the territorial state ranks equally amongst other factors (such as access to witnesses, documents, costs etc.). When presented with evidence of corruption and injustice in the territorial state, the Canadian court will ask whether the evidence shows a real risk that a suit there will not provide justice. This approach makes it easier for victims of human rights impacts in states where the rule of law is weak to export the claim to Canada. Given that over half of the world’s mining companies are headquartered in Canada, this is a development of considerable practical significance.
A similar approach was adopted by the same court in Araya v Nevsun Resources Ltd  BCCA 401. This case involved allegations of complicity by a Canadian mining company in forced labour, slavery and torture committed by the Eritrean government. Nevsun applied for a stay of proceedings in Canada in favour of the territorial state (Eritrea) on the grounds of forum non-conveniens. However the application was dismissed on the basis that there was a real risk of corruption and unfairness in the Eritrean legal system and the decision was upheld on appeal.
Conclusion – what does this mean in practice for multinational businesses?
- In England, the scope to argue forum non-conveniens remains, for the time being, restricted by European rules. This means that companies domiciled in the UK (and elsewhere in Europe) cannot argue forum non-conveniens in the English courts. However, in light of the appeal judgment in Vedanta, non-European subsidiaries brought into the jurisdiction as part of a claim against their UK parent may be able to argue forum non-conveniens.
- Where it does apply, forum non-conveniens according to the English formulation remains a powerful tool for parties seeking to resist jurisdiction. Claimants must, for example, produce cogent evidence that they will not be able to access a remedy in the territorial state in order to satisfy an English court that it should accept jurisdiction. However, this is not impossible. In two recent cases (Unilever and Vedanta), the court was willing to accept that rule of law problems in the territorial state created a real risk that the claimants could not obtain substantial justice.
- The “unified approach” of the Canadian courts appears less deferential to comity and will in practice make it more difficult to argue that Canada should not accept jurisdiction over the extra-territorial human rights impacts of Canadian companies. However, all of the English cases mentioned in this post (Unilever, Vedanta, Tahoe and Nevsun) are subject to further appeal. Watch this space in 2018 to see whether this trend continues or whether there is a convergence of approach.
- Irrespective of their country of domicile, to reduce the likelihood of litigation for an extra-territorial human rights impact, businesses should be vigilant to prevent the impact occurring in the first place. They should take steps to understand, manage and mitigate human rights risk throughout their value chain.
- Long term investors may wish to consider investing in the rule of law in a host state as a means to preventing the export of cases to jurisdictions such as England and Canada. Ultimately, the interests of justice and international comity are best served where victims can access a remedy in the territorial state, without exporting the case to Europe or North-America. Where the rule of law is weak, this may be academic. However, where litigants have access to funding for litigation, a capable bar and a capable, properly trained and impartial judiciary there will be no need to export the case and no justification for doing so. Hogan Lovells offers low or pro-bono advice to businesses which want to strengthen the rule of law through our Rule of Law 2030 Get in touch with firstname.lastname@example.org or email@example.com to find out more.