Legal Analysis of Authority, Costs, and Funding in Representative Litigation: Harrison Jalla & Ors v Royal Dutch Shell PLC & Ors Clarifies Key Legal Principles
Introduction
The case of Harrison Jalla & Ors v Royal Dutch Shell PLC & Ors in the High Court of Justice’s Technology and Construction Court provides a multifaceted legal analysis surrounding issues of authority, costs, and funding in litigation. The judgment, delivered by Mrs Justice O’Farrell DBE, demonstrates the consideration given to the representative standing in litigation, the costs implications for parties on either side of a dispute, and the implications of legal financing arrangements on proceedings and cost recovery.
Key Facts
The case stems from the Bonga oil spill in Nigeria, where the claimants allege environmental degradation due to the spill caused by the defendants’ operations. A protracted set of legal battles occurred, including issues related to jurisdiction, strike out of representative action, limitation, and community claims. Two key proceedings labeled as Jalla 1 and Jalla 2 encompassed these legal battles. During the latter parts of the litigation, the issue of authority of Rosenblatt Limited (RBL) to act on behalf of the claimants came to the fore, prompting legal scuffles on whether they were appropriately authorized under the law to advance the claimants’ case.
Legal Principals
Several legal principles were at play in this case:
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Authority to Represent: Foundational to legal representation is the authority to act on behalf of claimants. The Court was required to determine whether RBL had proper authority to act for 27,830 claimants. Under Nigerian law, it was held that consent from individuals is essential before a legal representative can bind them to proceedings unless the actions pertain to communal land interests.
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Costs Orders against Non-Parties: Pursuant to Section 51 of the Senior Courts Act 1981, which grants courts the discretion to order costs against non-parties, the Defendants sought an order against RBL, who was found to not have authority to act for the claimants. This principle was used to argue the crossing of a line from legal representation to becoming a “real party” to litigation, potentially making a third-party funder liable for costs.
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Disclosure and Inspection Rules: The Court applied the Civil Procedure Rules (CPR) 31.17 and inherent powers regarding disclosure from non-parties when costs orders against them are anticipated. This was used to assess the viability of a section 51 order and understand the funding structure behind the litigation.
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Wasted Costs Orders: The potential for a wasted costs order under CPR 46.8 was raised, based on improper, unreasonable, or negligent behavior by legal representatives contributing to unnecessary or wasted costs for the opposing party.
Outcomes
Mrs Justice O’Farrell DBE ordered the claimants to pay 90% of the costs of the authority issue to the defendants, reflecting modest success for the claimants on community claims and a handful of individual claimants for whom authority was demonstrated. RBL was directed to disclose information potentially supporting an application for a non-party costs order. The judgment established criteria for evaluating when solicitors cross the line into parties with material interest, which could affect their liability for litigation costs under section 51 of the Senior Courts Act 1981.
Conclusion
The case is a landmark in clarifying the boundaries within which legal representatives must operate to not be deemed as litigants themselves for the purposes of cost recovery. The court’s meticulous approach highlights the necessity for clear authorization in representative litigation, especially where foreign legal principles are in play, and underscores the serious cost implications for funders and solicitors who may exceed their traditional roles. The outcome has significant implications for the funding of litigation and poses a cautionary tale for those facilitating access to justice through various intrinsic funding models.