A summary of recent developments in insurance, reinsurance and litigation law.

This week's caselaw

HRH Emere v Royal Dutch Shell: Whether English parent company could be the "anchor defendant" in an environmental damage case


The claimants sought to bring an action against the English parent company of a Nigerian subsidiary which had allegedly caused environmental damage in Nigeria. It was argued that the claimants were "cynically" using the English parent company as an "anchor defendant" in order to bring claims here that would otherwise have no connection with England. The claimants countered that both defendants were legally responsible for the pollution.

Fraser J was therefore required to consider the claim against the parent company under English law. In so doing, he acknowledged that the issue of whether a claim would more appropriately be brought in a non-Member State country does not arise where the English court is first seised of a claim brought against a UK-domiciled defendant (see Owusu v Jackson [2005]).

Applying the three ingredients of the test set out in Caparo Industries v Dickman [1990] (foreseeability, proximity and reasonableness), the judge concluded that it was not reasonably arguable that there was any duty of care on the parent company for the acts or omissions of its Nigerian subsidiary. Applying the principle set out by Tomlinson LJ in Thompson v Renwick (see Weekly Update 18/14), it could not be said that "the parent company is better placed, because of its superior knowledge or expertise" than the subsidiary is in respect of the harm and nor could it be inferred that the subsidiary would rely on the parent deploying its superior knowledge.

One further argument considered in this case was whether the use by the claimants' solicitors of Conditional Fee Agreements ("CFAs") was oppressive or whether it meant that there was a real risk that the claimants would not obtain substantial justice if they are required to litigate their claims in Nigeria. Although the judge accepted that this might be a relevant consideration if CFAs were not available in Nigeria, that was not the position on the facts. He concluded that the fact that CFAs are the "business model" of the claimants' solicitors was not a relevant factor one way or the other.

Al-Rawas v Hassan Khan: Bringing a counterclaim after expiry of limitation period


The claimant commenced proceedings in August 2013. In April 2014, the defendant served a counterclaim. That counterclaim had become time-barred, though, in 2012. However, the defendant argued that the effect of section 35 of the Limitation Act was that it could nevertheless advance its counterclaim, provided that it had not previously advanced a counterclaim. That argument was rejected by Laing J and the defendant appealed.

The case turned on the construction of section 35, which the Court of Appeal accepted was "not a model of clarity". It went on to hold, though, that section 35 had only the procedural effect of deeming any new counterclaim as having been brought on the date when the action was commenced (rather than on the date when the counterclaim was first made). It does not have the effect of disapplying the underlying limitation period for the counterclaim: "it is difficult to discern any intelligible legislative policy behind a provision which would enable a counterclaim of any age, and no matter how stale, to be pursued, merely because, as a matter of happenstance, the party raising such a new claim, had been sued. The judge pointed to the absence of clear words mandating such a surprising result; and she characterised such an intention as 'capricious' and productive of legal uncertainty. I agree." (as per Sharp LJ).

Sharp v Leeds City Council: Court of Appeal considers pre-action disclosure costs where claim started and discontinued under the EL/PL Protocol


The short point considered by the Court of Appeal in this case was whether the fixed costs regime for claims which start, but are then discontinued, under the EL/PL Protocol applies to pre-action disclosure ("PAD") in connection with the claim. Different district judges have adopted different approaches to this issue. The Court of Appeal's conclusion was that: "the fixed costs regime plainly applies to the costs of a PAD application made by a claimant who is pursuing a claim for damages for personal injuries which began with the issue of a CNF in the Portal pursuant to the EL/PL Protocol but which, at the time of the PAD application, is no longer continuing under that Protocol ". That is because the fixed costs regime is intended to be clear, with expressly stated exceptions set out, and hence no implied exceptions should be allowed.