THE FOREIGN LIMITATION PERIOD: ENVIRONMENTAL DAMAGE, PUBLIC POLICY – AND A BASIC ERROR ABOUT THE DATE: CLAIMANT HAS TO FALL BACK ON “UNDUE HARDSHIP” ARGUMENT

The Court of Appeal decision in Begum v Maran (UK) Ltd [2021] EWCA Civ 326 contains some interesting observations on the law of tort and duty of care.  However the claimant in this case faces another fundamental challenge.  There is also an important reminder of the significance of the Foreign Limitation Periods Act, the need to be totally certain of the date of an accident and the difficulties that can arise if an error is made.    The Court of Appeal decision means that this action can only proceed if the claimant can establish “undue hardship”. That matters is to be tried as a preliminary issue and this is a rigorous test – nowhere equivalent to the broad discretion given under Section 33 of the Limitation Act 1980.

“The only reason the claim form was not issued in time was because of the error about the date of death.“

THE CASE

The claimant’s husband died when working on the  an oil tanker being broken up in Bangladesh. The claimant brought an action against the defendant against the defendant ship brokers arguing that it owed her husband a duty of care to ensure that, when the ship was being done safely. It was obvious that the work could not have been done safely in Bangladesh.

The defendant applied for reverse summary judgment on the basis that it did not owe any duty of care. The judge (and the Court of Appeal) found that although the case was far from certain the issue of duty of care owed by a third party are at the forefront of the law of negligence.  The issue needed full determination at trial and was not susceptible to being struck out.

LIMITATION

The action, however, was susceptible to a one year limitation period.  The accident happened on the 30th March 2019, the claim form was issued more than one year after this because of an error.  The Court of Appeal considered the issues relating to this.

Lord Justice Coulson rejected arguments that there was a longer limitation period because the accident was caused by “environmental damage”; similarly the argument that a one year period was contrary to public policy was also dismissed.

The judge found that, pursuant to Article 4 of Rome II, the law of Bangladesh applied to this case: see [76]-[79]. He also found that, if Bangladeshi law applied, the claim was statute-barred because it was brought outside the non-extendible one-year limitation period prescribed by Bangladeshi law. On the face of it, therefore, the claim was statute-barred and was susceptible of being struck out.

1. 1. However, the judge declined to strike out the claim on this basis for two separate reasons. First he found that the Respondent had an arguable case that Article 7 of Rome II applied, because this was a claim arising out of environmental damage: see [76]-[84] which could have the effect of replacing the one-year period with the three-year period applicable in England. The judge rightly dealt with this entirely as a matter of construction of Article 7.

1. 1. In addition, he concluded at [85] that the Respondent’s second argument, that pursuant to Article 26 of Rome II the one-year limitation period should be disapplied, was not capable of being resolved at the hearing and should instead be determined by way of a preliminary issue. As noted above, the Appellant has permission to appeal against both of those findings. If the Appellant is successful on both it would mean that, notwithstanding my views about the duty of care, if my Lords agreed, this claim would be struck out.

1. 1. Mr Hermer said that the arguments on these two points had been limited before the judge, and that in consequence this court should not intervene in what were essentially case management decisions. In my view, there is nothing in that argument. It is immaterial to Article 7, where the issue is entirely a matter of construction of the Article itself. The judge’s construction was either right or wrong and the Appellant has leave to argue that he was wrong. And although the proper management of the issues has some relevance to the debate about Article 26, the position there has, as we shall see, moved on quite considerably since the matter was before the judge, and on one view, it is now the Respondent who requires the indulgence of the court.

9 ARTICLE 7

1. 1. Article 7 provides as follows:

“”Environmental damage

The law applicable to a non-contractual obligation arising out of environmental damage or damage sustained by persons or property as a result of such damage shall be the law determined pursuant to Article 4(1), unless the person seeking compensation for damage chooses to base his or her claim on the law of the country in which the event giving rise to the damage occurred.”

Recitals 24 and 25 are also relevant:

“(24) ‘Environmental damage’ should be understood as meaning adverse change in a natural resource, such as water, land or air, impairment of a function performed by that resource for the benefit of another natural resource or the public, or impairment of the variability among living organisms.

(25) Regarding environmental damage, Article 174 of the Treaty, which provides that there should be a high level of protection based on the precautionary principle and the principle that preventive action should be taken, the principle of priority for corrective action at source and the principle that the polluter pays, fully justifies the use of the principle of discriminating in favour of the person sustaining the damage. The question of when the person seeking compensation can make the choice of the law applicable should be determined in accordance with the law of the Member State in which the court is seised.”

1. 1. The Respondent’s first argument is that the deceased’s death arose out of environmental damage, or was damage sustained as a result of environmental damage. On that basis, it is said that the Respondent is entitled to choose to base her claim on the law of the country in which “the event giving rise to the damage occurred”. The second argument is that the event giving rise to the damage was the contract for the sale of the vessel to Hsejar, which contract was made in London.

1. 1. If a court concludes that an application for summary judgment under Part 24 gives rise to a short point of construction or law, then it should proceed to decide it: see ICI Chemicals and Polymers Limited v TTE Training Limited [2007] EWCA Civ 725 and Global Asset. The Article 7 issue here is a good example of a point that is capable of such summary determination. I am in no doubt that the Respondent’s submissions are based on an incorrect and insupportable construction of Article 7.

1. 1. Expanding his first argument, Mr Hermer submitted that the beaching of the vessel at a Chattogram beach was an adverse change in a natural resource, as per the definition of ‘environmental damage’ in the Recitals. He said that the term “arising out of” was deliberately wider and looser than “caused by”, such that it could be argued that the death of the deceased arose out of that environmental damage. He said that, since the accident resulted from the chain of events which began with the beaching, with all the environmental risks that that posed, the deceased’s death was caught by Article 7.

1. 1. I profoundly disagree. Article 7 is concerned with the law applicable to a non-contractual obligation: in other words, the duty of care. It is that duty which has to ‘arise out of’ environmental damage for Article 7 to apply at all. I have set out the pleaded duty in this case at paragraph 38 above. In essence, it is the duty to take all reasonable steps to ensure that the sale of the vessel for demolition purposes did not endanger human life or health. That duty did not arise out of environmental damage; it had nothing to do with environmental damage at all. It arose out of the complete absence of workplace safety.

1. 1. The same point can be put in another way. If the relevant duty in this case arose out of environmental damage or the adverse change in a natural resource (the damage caused by beaching the vessel at Chattogram, thereby allowing oil and other pollutants to leak into the sea and onto the land, and perhaps exposing the workers to toxic material like asbestos), then the Respondent would not be able to avail herself of such a duty in order to bring this claim. Such a duty would not be engaged as a result of the deceased’s fall from the top of the vessel. There would be no actionable breach of a duty in respect of environmental damage on which to found the fatal accident claim.

1. 1. That proposition can also be tested by looking at the pleaded duty itself (paragraph 38 above). I note that it refers to ‘damaging the environment’, as well as endangering or protecting human health. But if the references to ‘damaging the environment’ were taken out, that would not affect the validity of the pleaded claim, with its necessary link between the duty owed and the damage suffered. If, however, the references to endangering or protecting human health were taken out of the pleaded duty, so that all that was left was the duty to take reasonable steps not to damage the environment, the pleaded duty would have no connection with the damage suffered and the pleaded claim would fail.

1. 1. Accordingly, for these reasons, I am confident that, as a matter of construction of Article 7, this was not a duty which arose out of environmental damage.

1. 1. Even if Mr Hermer was right and, as a matter of construction of Article 7, the court had to consider whether the death (rather than the duty) arose out of environmental damage, the result would be the same, and for the same reasons. Even assuming for this purpose that the beaching of the vessel itself constituted environmental damage, the deceased’s death did not arise out of that environmental damage or result from such damage. Instead, the death arose out of the absence of safe working practices and, in particular, the absence of a safety harness. The deceased could have been working in the most environmentally-friendly shipbreakers in the world, but sadly the absence of a safety harness would still have killed him.

1. 1. To the extent that it is relevant, I note that these conclusions appear to be in accordance with the three commentaries to which we were referred by Mr Bright: Dicey, Morris & Collins on the Conflict of Laws (15^th edition, 2018) at paragraph 35-067 (which suggests that, for Article 7 to apply, personal injury damage must be ‘direct’ and must be caused by the environmental damage); The European Private International Law of Obligations by Plender and Wilderspin, 4^th edition, at pages 657-664; and Huber’s Rome II Regulation Pocket Commentary on Article 7, at 212 (which states, in a chapter written by Angelika Fuchs, that personal injuries are included in Article 7 “if, and only if, they result from damages to the environment”). Mr Hermer did not refer to, much less challenge, these passages.

1. 1. Just stepping back and looking at Article 7 in the round, it seems reasonably clear what it is designed to do. Some countries will have more lax standards as to environmental risks than others. If, say, a state or a person suffers environmental damage in country A, because of a petrol-chemical plant in a less environmentally-aware country B, five miles over the border, Article 7 is designed to give country A or its citizens the choice to use its courts to bring the claim against the plant in country B: see Dicey, Morris & Collins at 35-070. All of that is a million miles away from the facts of this case.

1. 1. Moreover, if Mr Hermer’s submission was correct, Article 7 would apply to every claim for damage to persons and property, provided that there was some sort of a link (as he put it) to some other environmental damage, even if that environmental damage was incidental, in that it was not the subject of the claim. He suggested that Article 7 would not apply if the vessel had been in a dry dock, but if his broad interpretation is right, it would be inevitable that some (albeit limited) environmental damage would be caused by, say, the cutting up of the steel hull, even if the workplace was generally safe. So Article 7 would still apply. That would be an astonishing interpretation, giving Article 7 a scope and an impact which cannot be discerned from its words, or the commentaries upon it. The absence of any caselaw to that effect is also an indication that it cannot have such a broad application.

1. 1. Although my views as to environmental damage make it unnecessary to reach a concluded view as to whether or not “the event giving rise to the [environmental] damage” could be said in this case to be England, I think there is a fundamental difficulty with the Respondent’s argument on that aspect of the construction too. The Respondent has to say that the event which gave rise to the damage was the sale of the vessel, an event which, of itself, was a mere paper transaction with no direct effect on the environment at all. The same paragraph in Dicey, Morris & Collins noted in the previous paragraph suggests that the event giving rise to the damage should be identified with “the human activity which is the principal or substantial cause of the environmental damage”. In this case, that must be the demolition of the vessel in Chattogram.

1. 1. Contrary to Mr Hermer’s submissions, I consider that this is the common sense interpretation of the words “events giving rise to the damage…”. Furthermore, I consider that the Swedish authority to which he referred (Arica Victims KB v Boliden Minerals (2019) Ovre Norrland Court of Appeal), was also against him. There the damage caused by the wet sludge took place in Chile, but the Swedish court accepted jurisdiction. That was not (as Mr Hermer suggested) because the first event in the chain happened to be in Sweden, but because the defendant was a Swedish company, and numerous relevant and significant events happened in Sweden, including meetings with the Swedish Environmental Protection Agency and other key decisions about who would take over responsibility for the wet sludge.

1. 1. In this way, the Arica case is simply an example of the equivalent English law as to jurisdiction in tort claims, where the claiming party who wishes to litigate in England needs to show that “the damage has resulted from substantial and efficacious acts committed within the jurisdiction”: Metall und Rohstoff v Donaldson [1990] 1 QB 391 at 437 E-G. Arica is not authority for any proposition or principle, much less the suggestion that you simply take the first event in a chain of events as being “the event giving rise to the damage”.

1. 1. For these reasons, I consider that the judge was wrong to find that it was arguable that Article 7 was engaged in this case. As a matter of construction, it plainly was not. Thus the first potential way round the one-year limitation period is not therefore open to the Respondent.

10 ARTICLE 26

1. 1. Article 26 of Rome II provides:

“The application of a provision of the law of any country specified by this Regulation may be refused only if such application is manifestly incompatible with the public policy (ordre public) of the forum”

1. 1. Recital 32 provides:

“Considerations of public interest justify giving the courts of the Member States the possibility, in exceptional circumstances, of applying exceptions based on public policy and overriding mandatory provisions. In particular, the application of a provision of the law designated by this Regulation which would have the effect of causing non-compensatory exemplary or punitive damages of an excessive nature to be awarded may, depending on the circumstances of the case and the legal order of the Member State of the court seised, be regarded as being contrary to the public policy (ordre public) of the forum”.

1. 1. The parties were agreed that this provision was echoed in Section 2 of the Foreign Limitation Periods Act 1984 which provides:

“(1) In any case in which the application of Section 1 above would to any extent conflict (whether under subsection (2) below or otherwise) with public policy, that section shall not apply to the extent that its application would so conflict.

(2) The application of Section 1 above in relation to any action or proceedings shall conflict with public policy to the extent that its application would cause undue hardship to a person who is, or might be made, a party to the action or proceedings”

1. 1. The argument put forward by the Respondent is that the one-year time limit imposed by Bangladeshi law should be disapplied by operation of Article 26. The prime reason for that was an argument concerned with undue hardship. On appeal, Mr Hermer also relied, rather more faintly, on general public policy.

1. 1. The judge dealt with the point briskly:

“85. Mr Hermer’s Reply and skeleton argument raised the application of the public policy exception under Article 26 of Rome II to the one-year non-extendable Bangladeshi limitation period, assuming that it was applicable. At the hearing, the submissions in support of this contention, made both orally and in writing, were exiguous on both sides. According to the Reply, the claimant had had no previous access to justice against the defendant, but pre-action correspondence written before 30^th March 2019 demonstrates that averment to be incorrect. The Reply also asserts that the egregious nature of the defendant’s breach of duty is relevant. In my view the focus must be principally on whether it would be offensive in English law to countenance the application of so short a limitation period, and the submissions on this aspect were light indeed. Aside from taking a pleading point, Mr Bright did not advance a substantive rebuttal. Thus, I am asked to resolve this issue on a basis that is far from satisfactory. My conclusion is that it would not be right to determine the issue at this stage, and certainly not in the defendant’s favour. If the overriding objective and reasons of proportionality support the definitive resolution of the Article 26 issue in advance of the trial, the Court may come back to it.”

In other words, the judge rejected the argument as to undue hardship because of the pre-action correspondence, but concluded that any wider arguments as to whether or not the one-year limitation period would be offensive in English law should be resolved by way of a preliminary issue.

1. 1. Mr Hermer sought to support that conclusion in front of us. He submitted that the Article 26 point could not be decided without evidence, in particular evidence relating to whether or not the Respondent would suffer undue hardship and whether or not there would be a denial of access to justice. That rather overlooked the point that the judge had already decided that issue against the Respondent because the pre-action correspondence showed that she had had access to Leigh Day well before the expiry of the limitation period.

Undue Hardship

1. 1. Accordingly, the first question is to decide whether undue hardship is in play in this appeal at all. There is no cross-appeal, which would normally make it difficult for a Respondent to be able to reopen this point. That said, I am conscious that this case is rather unusual. The Article 26 issue only arose after the hearing itself, and the judge dealt with the point very much in passing, and at the stage of corrections to his draft judgment. Through no fault of the judge, it cannot be said to have been fully ventilated.

1. 1. In my view, the just course is this. The Respondent should be allowed to reopen the judge’s conclusion on undue hardship, but only to the limited extent identified in the recent exchanges between the parties and outlined below.

1. 1. The best-known authority dealing with undue hardship is the decision of Wilkie J in KXL v Murphy [2016] EWHC 3102 (QB) where he identified a number of propositions from the earlier cases. These included that:

a) ‘Undue’ in this context means ‘excessive’ (Jones v Trollope Colls Cementation Overseas Limited, The Times January 26 1990 (CA));

b) The focus is on the undue hardship caused to the claimant by the application of a foreign limitation period over and above that inevitably caused by the application of the foreign limitation period in question (Jones);

c) If, within the foreign limitation period, the claimant acquires all the material required for bring the action, it is not contrary to public policy to apply the foreign rule, even if he is only a few days late in commencing the proceedings (Arab Monetary Fund v Hashim and Others [1993] 1 Lloyd’s Rep. 543);

d) The fact that a claimant did not issue in time on account of inaccurate legal advice as to the limitation period does not suffice, as a hardship would not have been caused by the foreign limitation period (Harley v Smith [2010] EWCA Civ 78).

1. 1. This approach has been followed in a number of subsequent cases including Kazakhstan v Zhunus [2017] EWHC 3374 (Comm) and Roberts v Ministry of Defence [2020] EWHC 994 (QB).

1. 1. I accept Mr Hermer’s submission that, in an ordinary case, evidence as to what legal resources the Respondent had available to her, the nature of her communications with her solicitors, and how and when those were facilitated, might well be directly relevant to any consideration of undue hardship and access to justice. But I am confident that none of that is relevant in the present case, because we know – and as the judge found – that, on 22 January 2019, Leigh Day sent a 13-page letter of claim to the Appellant. Amongst other things, that letter expressly recognised, as part of the alternative case, that the law of Bangladesh would apply to the claim. Accordingly, whatever the difficulties may have been before January 2019 in terms of access to justice, it was quite apparent that all the material required for bringing the claim had been obtained on behalf of the Respondent two months before the expiry of the limitation period.

1. 1. On the face of it, therefore, the case was entirely within the category of case identified in the Arab Monetary Fund case, cited by Wilkie J in KXL. That was clearly the judge’s view, because he found that the pre-action correspondence (namely the detailed letter of claim) demonstrated that the complaint about access to justice was inapplicable.

1. 1. On appeal, an argument was raised for the first time that the Leigh Day letter of claim wrongly identified the accident date as 24 April rather than 30 March 2018 and that this error was also reflected in the claim form. The claim form was issued within a year of that (incorrect) date. The suggestion was, therefore, that there had a been an error in the identification of the date of death and the Respondent should not be liable for the consequences.

1. 1. At the end of the hearing, this court required Martyn Day, the Respondent’s solicitor, to provide a witness statement saying when and in what circumstances his firm became aware of the actual date of the deceased’s death. Mr Day’s statement says that the incorrect date of 24 April 2018 came from a source at the Zuma Yard and had been confirmed by the Respondent. He said that the error was not spotted by his team until 1 August 2019. However, Ince Gordon Dadds (the Appellant’s solicitors) pointed out in their response of 18 February 2021 that – amongst other things – the material provided by Mr Day showed that the death certificate, which referred to the correct date of the accident (“30/3/18”), had been provided to Leigh Day on 18 March 2019, 12 days before the expiry of the one-year limitation period. Mr Day did not suggest that his firm was unaware of the one-year limit under Bangladeshi law. The only reason the claim form was not issued in time was because of the error about the date of death.

1. 1. On the basis of this material, none of which was available to the judge, it seems to me that there is a short, sharp issue between the parties as to the undue hardship exception, and whether it can be invoked in this case. It is a very limited issue, relating only to the documents and other information that was available to Leigh Day about the date of the accident between 22 January 2019 (the date of the letter of claim) and the expiry of the limitation period. The period prior to the letter of claim on 22 January 2019 is irrelevant for this purpose, for the reasons given by the judge, and which I have endorsed above. This limited issue ought to be capable of swift resolution at a preliminary issue hearing.

1. 1. As I have indicated, although this is something of an indulgence to the Respondent (because it is a new point on which they need to succeed in order to keep this claim from being struck out), I am confident that it is a just course. The issue that has now arisen was never even mentioned to the judge. I am entirely satisfied that, if the judge had had the material which is now available to this court, he would have concluded that a preliminary issue on the issue of undue hardship was appropriate.

Public Policy

1. 1. Mr Hermer suggested that considerations of public policy also militated against the imposition of the one-year limitation period. That argument found favour with the judge, at least to the extent of being hived off to be dealt with at a preliminary issue. However, for the reasons set out below, I disagree with that conclusion. I am in no doubt that, if the matter had been properly argued before him, the judge would have dismissed the argument based on public policy.

1. 1. Mr Hermer’s first submission was that there may be further evidence on disclosure relevant to the issue of public policy. In particular, he said that disclosure might be material if the documents showed that one of the reasons why the sale of the vessel happened at all was because the Appellant was aware that the short limitation period in Bangladesh made it most unlikely that it would have to pay any ultimate legal price for the decision to sell to Hsejar.

1. 1. That is both fanciful and irrelevant. It is fanciful because, as I have already explained, the Appellant always knew that there would be no ultimate legal price to pay, because of the toothlessness of clause 22. And it is irrelevant because such documents, even if they existed, would be of no relevance to the Section 2(1) / public policy test. Section 2(1) is concerned with wider principles, not the particular facts of any given case. It is impossible to see how in principle, even if the short limitation period in Bangladesh had been a factor in the sale, that could give rise to any sort of public policy argument.

1. 1. As Wilkie J noted in KXL, public policy should be invoked for the purposes of disapplying a foreign limitation period only in exceptional circumstances. That could only be where the foreign limitation period was contrary to a fundamental principle of justice. That is, deliberately, set as a very high bar. Mr Bright rightly drew attention to the words of Article 26, which said it “only” applied if the foreign limitation period was “manifestly incompatible” with public policy.

1. 1. Nothing here suggests that the Respondent has come anywhere close to meeting this high hurdle. The argument that it is manifestly less generous than the English limitation period is nothing to the point: as Sir Thomas Bingham MR noted in Durham v T & N PLC (1 May 1996, CA, unreported), it would be wrong to treat a foreign limitation period as contrary to English public policy simply because it was less generous than the comparable English provision. And, on analysis, that is the only point that the Respondent can make on public policy.

1. 1. Accordingly, whilst I consider that the new evidence about the incorrect date of the accident justifies a short preliminary issue hearing on the “undue hardship” test, I do not consider that the same is necessary or appropriate in respect of the policy issue. On the contrary, in the present case, there is no basis, other than possibly undue hardship, for the one-year limitation period to be disapplied.

11 CONCLUSIONS

1. 1. For the reasons set out in Sections 6 and 7 above, I consider that the duty of care alleged in this case, although faced with formidable hurdles, cannot be dismissed as fanciful. It survives the CPR r.3.4/r.24.2 test. And to the extent that it is close to the borderline, I consider that, because it is an unusual argument in a rapidly-developing area of law, it would also be wrong in principle to strike it out at this stage.

1. Subject to the undue hardship argument, I consider that, for the reasons set out in Sections 9 and 10, the claim is statute barred. I do not consider that there is any relevant material concerning the application of either Article 7 or Article 26 which is not available to the court. For the reasons set out in Section 9 above, I conclude that Article 7 does not apply to this case. For the reasons set out in Section 10, I conclude that Article 26 does not apply either, unless the Respondent is able to establish, within the confines of the particular issue noted above, the undue hardship argument.