UK High Court decides that Malaysian courts are the proper forum for novel supply chain claim

In May 2022, 24 claimants issued a claim in the UK High Court seeking damages from two UK domiciled companies in the Dyson group (the “UK Dyson Defendants”), and one Malaysian company in the Dyson Group (the “Malaysian Dyson Defendant”, together, the “Dyson Defendants”) in relation to poor living and working conditions allegedly endured by migrant workers in factories in Malaysia, which are owned and operated by third parties who had supply contracts with the Malaysian Dyson Defendant. 

In October 2023, the High Court decided that the proper forum to hear the claim was Malaysia (see Dhan Kumar Limbu and others v. Dyson Technology Ltd. and others [2023] EWHC 2592 (KB)).

Key takeaways 

• The Dyson Defendants sought a stay of the proceedings on the basis that the proper forum to hear this dispute is Malaysia. The hearing took place in July 2023. 
• Clive Sheldon KC, sitting as a Deputy High Court Judge, gave judgment in October 2023 in which he decided that the proper forum to hear the claim was Malaysia. Applying the Spiliada principles, the court decided that England was, on balance, not the proper place to bring the claim, and that there was no real risk that substantial justice would not be obtained in Malaysia. 
• The Judge gave particular weight to Malaysia as the proper forum as it was the jurisdiction in which the alleged torts occurred, as well as the jurisdiction that the Dyson Defendants were willing to submit to and in which they would partially fund the claims and because the issues touched on novel issues of Malaysian law which would be best decided by Malaysian judges.

Facts of the underlying claim – liability for supply chains? 

The claimants were able to serve proceedings on the UK Dyson Defendants as of right, because both companies were domiciled in England. The claimants obtained permission of the English High Court to serve proceedings on the Malaysian Dyson Defendant. 

The basis of the claim is that the Dyson Defendants are liable for negligence and unjust enrichment, and jointly liable with the primary tortfeasors – the third-party factory owner/operators (“ATA/J”) and the Malaysian Police – for the commission of the torts of false imprisonment, intimidation, assault and battery. The claims are based on alleged forced labour and exploitative working and living conditions of migrant workers whilst working for ATA/J in Malaysia (including, unfair wages, unsanitary living conditions and intimidation of those who attempted whistleblowing). 

Whilst the alleged poor working and living conditions were primarily the responsibility of third parties – ATA/J – the claimants alleged that the Malaysian Dyson Defendant had direct oversight of the factories’ owners and management and exerted a high degree of control over the manufacturing operations and working conditions. In addition, it was alleged that the Dyson Defendants promulgated mandatory policies and standards regarding conditions in their supply chains, including the Dyson Ethical and Environmental Code of Conduct and the Dyson Modern Slavery and Human Trafficking Statement 2020, which they were responsible for creating, managing and implementing including by way of regular audits. It was alleged that the Dyson Defendants were aware of the conditions as a result of these audits, owed a duty of care to the claimants, and therefore bore some responsibility for the misconduct. 

The issue of liability was to be decided by applying the laws of Malaysia, which would involve considering novel points of law as well as established Malaysian labour laws and statutes. 

Prior to the substantive hearing of the claim, the defendants sought a stay of proceedings on the basis that Malaysia not England was the appropriate forum for the claim to be heard. 

Decision - Malaysia is the proper forum for the dispute 

In reaching its conclusion, the Court applied the orthodox principles of Spiliada Maritime Corporation v. Cansulex Ltd. [1987] 1 AC 460 (“Spiliada”) to the facts, namely:

• whether England is the proper place to bring the claim or if there is a distinctly more appropriate forum (“Stage 1”) ; and
• whether, in all the circumstances of the case, there is a real risk that substantial justice will not be obtainable in the foreign jurisdiction (“Stage 2”), in this case, Malaysia. 

The Stage 1 analysis 

The Dyson Defendants argued that Malaysia was clearly a more appropriate forum. It was the place of the commission of the torts, the place in which the totality of the dispute could be heard (thereby avoiding the risk of irreconcilable judgments), and a forum where there was appropriate legal representation. Further, the Dyson Defendants were willing to submit to the Malaysian jurisdiction and provide certain undertakings regarding funding of the claims there. Conversely, the claimants argued that England was clearly the appropriate forum. They considered that the focus of the arguments before the Court would not be on the commission of the torts but on the policies and procedures promulgated by the Dyson Defendants and where the oversight was based, which was England. 

The Judge’s key considerations for the Stage 1 analysis were as follows: 

• Malaysia was the place in which the alleged torts (e.g., false imprisonment, etc.) occurred and any claim against the Dyson Defendants was contingent on establishing that harm was caused in Malaysia. Given the misconduct was unlikely be admitted, this would likely be a central issue at trial. The Judge considered that issues regarding the Dyson Defendants’ policies and procedures would likely be subject to more limited consideration.
• Malaysian law was the governing law and there were novel issues of Malaysian law to decide, in particular (i) whether joint liability can apply in a supply chain relationship and not just in the same corporate structure and (ii) whether the unjust benefit in a claim for unjust enrichment has to flow directly from the claimant to the defendant. The Judge considered that novel issues of Malaysian law were best decided by Malaysian judges rather than by an English court trying to “second guess” what they would decide.
• The risk of fragmentation of legal proceedings and irreconcilable judgments, in particular in relation to claims the Dyson Defendants would likely want to bring against third parties who were directly involved in the alleged harms. The Judge accepted that the Malaysian police had not waived State Immunity such that they could not be joined to English proceedings, but noted that claims involving the Malaysian police were only a minor part of the overall claim. Separately, whilst ATA/J had indicated it would refuse to submit to the jurisdiction of the English courts, the Judge accepted the claimants’ evidence that an English judgment against ATA/J would likely be enforceable in Malaysia. Further, the Dyson Defendants had elected to bring separate defamation proceedings in England against Channel 4 in connection with a broadcast about similar allegations. Overall, the Judge held that these considerations, in isolation, favoured hearing the case in England.    
• The Malaysian courts had suitable case management powers and procedural frameworks to enable the claimants to participate in proceedings (e.g., by remote attendance from their home countries), particularly in circumstances where the Dyson Defendants had given an undertaking to provide funding for technical support for remote hearing arrangements. 

Overall, the Judge concluded at the end of Stage 1 that England was not the natural or appropriate forum and that Malaysia was a clearly and distinctly more appropriate forum. 

The Stage 2 analysis

The Judge then proceeded to consider whether there was cogent evidence that there was a real risk that substantial justice was not obtainable. The Judge considered: 

• The purported difficulties in obtaining legal representation for migrant workers. The Judge found that forced labour was a high-profile political topic in Malaysia and that large cases for migrant workers had been pursued in Malaysia previously, such that it should be possible for the claimants to obtain legal representation. Further, although the case was complex and required appropriately experienced lawyers, this did not mean that the claimants had to be able to receive a “Rolls Royce” or “Tesla” service in order to obtain substantial justice. The Judge also considered that there was not a real risk that the conditional fee arrangements would be unlawful, such that legal representatives would be able to take on the case on a part contingency basis. 
• The cost of bringing proceedings. The Judge considered that the undertakings given by the Dyson Defendants as to costs were sufficient (including in relation to expert fees), and any costs which fell outside of that were likely to be limited and capable of being met by an NGO. The Judge also considered that the basis fee payable by the claimants for the case to be handled on a part contingency basis was realistic and not too high.  

Overall, the Judge concluded that there was no real risk that substantial justice could not be obtained in Malaysia, as there was no real risk that the claimants would not be able to obtain legal representation and necessary NGO funding.

Analysis – fact specific assessment but undertakings and novelty of claims prove key

The Judge applied the Spiliada principles to this novel claim to reach the conclusion that the Malaysian Courts are the proper forum for the claim. In doing so, the Judge carefully set out each of the relevant factors (drawing on previous case law) and in relation to each factor reached an assessment of what direction it pointed. What proved to be particularly important in the assessment was the undertakings given by the Dyson Defendants not only to submit to the jurisdiction of the Malaysian courts but also to partially fund the claims in that jurisdiction. Whilst the claimants considered the undertakings a “cynical tactic”, they did carry real weight with the Judge and enabled the Dyson Defendants to overcome a number of arguments made by the claimants at Stage 2 regarding access to justice. 

It is also worth noting that although the claimants attempted to ground the facts of the claim in England by reference to the fact that the UK Dyson Defendants set their policies and procedures from there, the location of the underlying physical harms appeared to carry more weight. However, that may be less of a significant factor in future cases if the underlying facts are admitted.   

Finally, the novelty of the claims also proved to be important. The Judge gave high regard to the fact that the governing law was Malaysian law, and these would be novel issues of Malaysian law and therefore best decided by Malaysian judges. Since matters concerning supply chain liability are also novel in other jurisdictions, this conclusion is likely to be cited in future claims (assuming it is not successfully appealed).

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