Disputes Briefcase

The claims

The claims were brought by migrant workers who argued they had suffered forced labour and exploitative working and living conditions when working for a Malaysian manufacturer and supplier to the Dyson Group. The workers relied on Dyson policies and standards to argue that the defendants (English and Malaysian companies in the Dyson Group) owed them a duty of care as the defendants exerted a high degree of control over the supplier’s operations. 

The High Court refused jurisdiction holding that England was not the appropriate forum to hear the claims. Applying the well-established two-stage test, the High Court held:

Stage 1 – Malaysia is the “clearly and distinctly more appropriate” forum

The Court weighed up factors connecting the claims to England and Malaysia including: the location of the parties and witnesses; the use of remote hearings to enable the workers to give evidence; the availability of a common language; the location of documents; and the risk of multiple proceedings and irreconcilable judgments. The Court decided that Malaysia was the “centre of gravity” for the dispute as it was the place where the core alleged harms underlying the claims took place. In addition, as the claims were governed by Malaysian law, there were good policy reasons for the Malaysian courts to determine the novel points of law being raised, rather than letting the English courts “second guess” what they might decide.

Stage 2 – There is no real risk claimants cannot obtain “substantial justice” in Malaysia

The Court considered if there were special circumstances which meant that justice required the claims to be heard in England. The Court found there was no real risk the claimants would not be able to access substantial justice in Malaysia. Substantial justice did not require the claimants to receive a “Tesla type service”. There was no real risk the claimants would not find suitability qualified legal representation in Malaysia acting on a partial contingency fee basis.

What this means for corporates

The decision indicates that it is now easier for UK-based defendants to argue that England is not the appropriate venue for foreign-focussed claims against overseas subsidiaries and third-party overseas supply-chains. However, that does not prevent proceedings being brought elsewhere and in this case the defendants offered extensive undertakings, including submitting to the Malaysian courts and offering to pay some of the claimants’ costs, to persuade the Court that the claims could proceed in Malaysia.

Read more in our briefing.

Key takeaways from Smith

The Supreme Court took a claimant-friendly approach to limitation, clarifying that:

1. Where there is an ongoing credit relationship between the lender and customer, the point in time at which unfairness will be assessed is as at the date of trial.
2. Where there is no longer a credit relationship, the limitation clock will start ticking from the date the credit relationship ended (not when the last payment for the PPI policy was made).

This means that customers that have ongoing relationships with lenders that mis-sold PPI to them (or who had a relationship with those institutions up until six years ago) are still able to bring claims under the Consumer Credit Act, even though they stopped making PPI payments many years ago.

Key takeaways from Potter

1. The Supreme Court took a claimant-friendly approach by confirming the word “concealed” in s32(1)(b) (deliberate concealment of a fact relevant to a right of action) is to be construed broadly. It means to keep something secret, either by taking active steps to hide it, or by withholding information. There is no need for the claimant to prove that the defendant was under a duty to disclose the commission.
2. This claimant-friendly approach to concealment is tempered by the more restrained approach taken to the meaning of “deliberate” (used in both s32(1)(b) and in s32(2) (deliberate commission of a breach of duty in circumstances where the breach is unlikely to be discovered for some time)). “Deliberate” involves knowledge or intention on the part of the defendant. Awareness of risk is not sufficient.
3. Given the breadth of s32 (which can be relied on in all cases involving deliberate concealment), this case is likely to have ramifications beyond only the PPI context.
4. Potter was a test case. Twenty-six thousand claims of a “similar nature” have been filed with the courts. It is likely that some claimants will now seek to progress their claims by relying on the most claimant-friendly aspects of Potter.

What this means

Following these decisions, we expect to see an increase in PPI mis-selling claims, as claims previously thought to be time-barred may now be brought.

However, lenders can take some comfort from the Supreme Court’s comments in Smith that unfairness will be assessed “as a whole” and because of the highly discretionary nature of remedial orders under the Consumer Credit Act.

Read more in our briefing.

Before Christmas, the High Court thwarted a novel attempt to bring a securities litigation claim as a “representative claim” – effectively, an opt-out class action. The claimant, seeking to represent shareholders in two UK-listed companies, had asked the court for declarations that the companies had made misleading statements or omissions in market announcements. Had the claimant succeeded, individual shareholders could have piggy-backed on the declarations to bring their own claims for compensation. The net effect would have been to reduce the up-front costs for claimants by allowing them to sit out the first stage of legal proceedings. Conversely, it would have front-loaded costs for listed company defendants. The decision can be contrasted with a Court of Appeal judgment (delivered a few weeks later) which took a more permissive approach to the use of representative actions in the context of claims against a patent attorney seeking repayment of secret commissions. The High Court’s decision is being appealed and the outcome will be closely watched. It could open up a new front in the ongoing push by claimant lawyers and litigation funders to build a commercially attractive model for securities litigation in England.

The UK will accede to a convention that facilitates cross-border enforcement of commercial judgments. The Government’s announcement last November that the UK will join the 2019 Hague Judgments Convention was welcomed by business. Because the EU is already a party to the Convention, accession will restore a level of UK-EU co-operation in this field not known since the end of the Brexit transition period. At the moment, the lack of a common framework means parties seeking to enforce English judgments in EU states (and vice versa) are reliant on a patchwork of national law processes which can in some cases be slow and may necessitate the instruction of local lawyers. The UK signed the Convention on 12 January and is expected to ratify in the coming months. It will come into force for the UK 12 months after that – probably in mid-2025. The Convention will only apply to judgments given in proceedings started after its entry into force.

The Retained EU Law (Revocation and Reform) Act, which became law last year, revoked some Retained EU Law and ended the supremacy of that which remained over pre-Brexit domestic legislation. One important part of the Act is expected to come into force later this year: new rules to make it easier for courts to depart from retained CJEU case law and related pre-2021 domestic case law. The Court of Appeal will be required to have regard to specified factors, including the extent to which the relevant retained EU case law “restricts the proper development of domestic law”. The breadth of this provision will, for the first time, give litigants the scope to argue for new interpretations of the law in the many areas where Retained EU Law (now known as “Assimilated law”) remains relevant.

A new Arbitration Bill to reform the Arbitration Act 1996 was introduced to Parliament in November 2023. The Bill aims to solidify England’s reputation as a world leading centre to resolve legal disputes. The Bill reflects the Law Commission’s proposed reforms to the current Act (as reported in our October edition of Briefcase), including changes to the governing law of the arbitration agreement. One important exception is that the Bill would apply to existing arbitration agreements, but not to arbitrations that have already commenced. This change differs from the Law Commission’s proposal that the Bill should not apply to existing arbitration agreements and seeks to reflect concerns about the creation of a dual system. The Act is following a fast-track legislative process and is expected to be passed into law by mid-2024.

The Singapore Mediation Convention aims to create an international framework for the enforcement of settlement agreements following mediation. Whilst the Convention currently has limited take-up (13 parties), in time it could become as significant and wide-reaching as the New York Convention is for arbitral awards. Having signed the Convention last May, the UK Government has indicated that it plans to ratify the Convention in 2024, subject to parliamentary scrutiny and once the necessary implementing legislation and rules are in place, and for the Convention to come into force for the UK six months later. However, it is not clear what impact the forthcoming UK general election will have on the Government’s legislative plans.