High Court blow for environmental damage representative actions

In a previous blog post, we noted that litigation concerning damage caused by an oil spill off the coast of Nigeria had, unusually, been brought as a representative action under CPR Part 19.

At a hearing (discussed here), this feature of the litigation was commented on by the judge, who noted that there could be serious issues in respect of the procedural requirement for all the affected persons to have suffered the “same damage”.

These comments were seized upon by the Defendant, who suggested that the claim should be struck out on a number of grounds, including that “the action is not a “representative action” because there is insufficient identity of interest between the Claimants”.

Judgment on this issue has now been given in Jalla & Ors v Royal Dutch Shell Plc & Ors [2020] EWHC 2211 (TCC). Stuart Smith J accepted the Defendant’s argument. The decision represents a huge blow for those hoping to use the representative action as a cost-effective vehicle for bringing large-scale litigation arising out of environmental disasters.

At [60], Stuart Smith J gave the following useful summary of the principles distilled from the mess of previous authorities stretching back to the early 20th century.

I shall apply the principles identified above; but it may be convenient to draw some of the salient strands together at this point:

i) Representative proceedings are not the only vehicle for multi-party litigation: see the citation from Zuckerman at [52] above;

ii) The requirement in CPR r. 19(6)(1) that persons have “the same interest” is statutory and is not to be abrogated or substituted by reference to the overriding objective. That said, the rule is to be interpreted having regard to the overriding objective and should not be used as an unnecessary technical tripwire: see [44]-[45], [53] above;

iii) The purpose of a representative action is to accommodate multiple parties who have the same interest in such a way as to go as far as possible towards justice rather than to deny it altogether. This is done by adopting a structure which can “fairly and honestly try the right”: see the citation from page 10 of the Duke of Bedford case at [31] above;

iv) It is for this reason that representative proceedings may be appropriate where the relief sought is in its nature beneficial to all whom the lead claimants propose to represent: see the citation from page 8 of the Duke of Bedford case at [31] above and see [47] above;

v) The “same interest” which the represented parties must have is a common interest, which is based upon a common grievance, in the obtaining of relief that is beneficial to all represented parties: see [47] above. It is not sufficient to identify that multiple claimants wish to bring claims which have some common question of fact or law;

vi) It is not necessary that the claims or causes of action of all represented parties should be congruent, provided that they are in effect the same for all practical purposes: see [39] and [49] above;

vii) The existence of individual claims over and above the claim for relief in which the represented parties have the same interest does not necessarily render representative proceedings inapplicable or inappropriate: see [38] above. The question to be asked is whether the additional claims can be regarded as “a subsidiary matter” or whether they affect the overall character of the litigation so that it becomes or approximates to a series of individual claims which raise some common issues of law or fact: see [33] above;

viii) Similarly, while the court will pay little attention to potential individual defences that are merely theoretical, the existence of potential defences affecting some represented parties’ claims but not those of others tends to militate against representative proceedings being appropriate. One reason for this is that it may be procedurally difficult or impossible to accommodate individual defences in representative proceedings, though the rules make provision for affected parties to be protected: see [53] above. Another is that if a defence is available in answer to the claims of some but not others of the represented class they have different interests in the action: see [56] above. Adopting slightly different language, I would add that the existence of individual defences calls into question whether the action really is a claim for relief that is beneficial for all or is a collection of individual claims sharing some common issues of fact or law;

ix) If the criterion of “the same interest” is satisfied the Court’s discretion to permit representative proceedings to continue should be exercised in accordance with the overriding objective.

Although the claims raised common issues of law and fact, and it was obviously desirable that the claims all be litigated together, the court had alternative case management powers to accomplish this through a GLO or consolidation of claims ([69]).

At [72] he characterised the question in this way:

In principle, the existence of individualised claims does not necessarily prevent an order for representative proceedings. The question is whether the individualised claims can be regarded as “subsidiary” to the main issue that is the subject of the proceedings. In my judgment it is impossible to do so … Nor can it be said that the issues of loss, damage and causation are subsidiary in importance to the Claimants since they are just as critical as the common issues (as outlined above) to any prospects of any success or relief at all. They are not “subsidiary” to another issue that can be described as “the main issue”: they are an integral part of the overall issues that are raised by the proceedings.

It was also significant that the defendant intended to raise individualised factual, causation, and limitation defences to each of the claims (at [74]). At [75], he said:

The matters that the Claimants have in common are insufficient to lead to the relief that they claim; and it is impossible to escape the conclusion that these are a very large number of individual claims requiring individual consideration and proof of damage and generating individual defences.

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