Anglo American: a right to sue in the UK as well as in South Africa?

16 July 2012 by

Flatela Vava et al v. Anglo American South Africa Ltd [2012] EWHC 1969 (QB)  16 July 2012, Silber J read judgment

Back to the problem of when and where you can sue various members of a group of companies. In the Cape case (for which see my post), a parent company was held liable for failing to ensure that its subsidiary properly managed the risks posed by asbestos. In this case of Vava, the claimants wanted to sue a South African registered holding company (AASA) in the UK, on the basis that the real decisions were taken in the UK, and hence AASA were domiciled in the UK for purposes of suing them.

The case came before Silber J, on an application by the claimants for documents relevant to this jurisdictional issue. AASA resisted, on the basis that there was not a good arguable case that it could be sued in England, and therefore it did not have to produce the documents relevant to this issue.

The underlying actions were brought in England by gold miners who had contracted silicosis as a result of their employment with AASA in South Africa, as well as by someone who alleged clinical negligence against AASA company doctors there. In each case, they could only do so if AASA was domiciled in England. “Domicile” is defined for these purposes in Article 60 of the EU Brussels I Regulation as being any of

(a) the statutory seat (which is in South Africa)

(b) “central administration” and

(c) principal place of business.

Argument focussed around (b).

The key company structure was this. Anglo American PLC (AA plc)  is registered in England. It is the ultimate parent of AASA. AASA’s assets in South Africa are worth approximately £6.5 billion, and these constitute about 40% of the worldwide assets of AA plc. AASA has its own board of directors who are largely based in South Africa. Another AA company provided company secretarial, executive director, and financial performance management services in South Africa. But this, said, the claimants, was far from the full story. AA plc made the policy and strategic decisions which AASA then implemented. The claimants pointed to various AA plc committees such as the Group Management Committee and Executive Committee which, they said, played a significant part in deciding the line which AASA was to take. By contrast, it was said, the AASA board met insufficiently frequently to make the real decisions to guide this multi-billion pound enterprise.

Did all this matter? In particular, what is meant by the phrase “central administration” in Article 60 of the Brussels I Regulation? Silber J, after a review of domestic and German case law and EU-wide academic writings, concluded

43. It is common ground that there is no authoritative ECJ decided case or cases on the meaning of the term “central administration”, but the writings to which I have referred….. support Mr. Layton’s case, which suggests that the “central administration” of a company is where decisions are made; and where the entrepreneurial management takes place. The decisions in the cases to which I have referred are also broadly supportive of this approach which also means that the place of central administration is not simply where a company’s Board meetings and AGMs are held. So I am quite satisfied that the claimants have at least an arguable case that the “central administration” of a company is where management decisions are taken and where entrepreneurial decisions take place irrespective of where its economic activities occur.

Having taken this approach, it was not difficult for the judge to decide that it was well arguable that the entrepreneurial management took place in England. This was on the basis that London, as the headquarters of AA plc, was the place where such decisions relating to AASA were taken.

This is interesting, revealing and important. A SA corporation was having its domiciled determined, not by reference to where it’s (AASA’s)  business was carried out, but where the decisions (by its parent) were taken which led how that business was carried out. So the Regulation, thus interpreted, was looking to the economic reality of the relationship, rather than the way in which things had been structured, doubtless for tax and other reasons. But beware – the decision, despite its considerable learning, only decides that the claimants’ point is properly arguable. Anyway, it may not rest where it is. A further action, involving 1106 claimants, sits in the wings awaiting the result. So do not assume that this multi-national £6.5bn defendant will take this reverse lying down.

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  1. The Engineer says:

    Presumably a decision as to domicile is not exclusive, i.e. AASA is domiciled also in South Africa and could be sued there?

    1. That’s right. They can be sued in SA on the basis of their “seat” being there, and it also being AASA’s principal place of business.

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