Repsol: Dutch parent company cannot simply be used as anchor defendant to create jurisdiction
Foreign entities are often sued in the Netherlands on the basis of the ‘anchor defendant’ construction. This is possible only if the claims are sufficiently connected: the Dutch entity must be sued on the same factual and legal basis as the foreign entities. In its recent Repsol judgment, the District Court of The Hague ruled that a shareholder relationship and managerial interdependence do not suffice to show the required connection. A party is required to show concrete indications that the parent was directly involved in the actions of the foreign subsidiary.
Facts and background
In January 2022, an oil spill occurred off the coast of Peru. The foundation 'Stichting Environment and Fundamental Rights' (the Foundation) wished to recover the damage incurred by the injured parties from international oil and gas company Repsol, and to that end sued three entities from the Repsol group before the District Court of The Hague: Repsol Perú B.V. (Dutch), Repsol S.A. (Spanish), and La Pampilla (Peruvian) (collectively: Repsol). The Foundation is claiming damages on behalf of more than 34,000 individuals who assigned their alleged claims to it. Repsol raised a jurisdiction defence: does the Dutch court have jurisdiction to hear the claims against foreign entities Repsol S.A. and La Pampilla?
Article 8(1) Brussels I bis and Article 7(1) DCCP: sufficient connection
It follows from Article 8(1) of the Brussels I bis Regulation (Brussels I bis), also referred to in practice as the 'anchor defendant provision', that a foreign entity may be sued before the court of the domicile of a co-defendant, provided that there is a close connection between the claims that justifies simultaneous treatment. The claims must therefore be sufficiently connected. The aim is to prevent conflicting judgments and to promote efficient justice. Article 7(1) of the Dutch Code of Civil Procedure (DCCP) applies to (briefly stated) non-European parties. In principle, this is interpreted uniformly on the basis of case law of the Court of Justice of the EU (CJEU).
When are the claims sufficiently connected? This is subject to a number of requirements under Article 8(1) and established case law of the CJEU (see, for instance, the CDC Hydrogen Peroxide and Reisch Montage judgments):
the claims must relate to the same factual and legal situation;
joint treatment is necessary to avoid irreconcilable judgments; and
the provision should not be abused to artificially subject a foreign party to Dutch jurisdiction.
In addition, the mere fact that a claim was also brought against a Dutch defendant does not suffice: the claim against this anchor defendant must have a chance of success.
Repsol: connection between claims?
The Foundation sought to name the Dutch Repsol Perú B.V. as an anchor defendant so that Spanish entity Repsol S.A. and Peruvian entity La Pampilla could also be sued in the Dutch courts. Repsol argued in the motion contesting jurisdiction that the Dutch court did not have jurisdiction over the Spanish and Peruvian entities because Repsol Perú B.V. allegedly did not play a substantive role in the events in Peru. Therefore, it cannot be subject to the same reproach as Repsol S.A. or La Pampilla. According to Repsol, the claims are therefore insufficiently connected. As a result, Repsol Perú B.V. cannot act as an anchor defendant and the Dutch court lacks jurisdiction in relation to Repsol S.A. and La Pampilla.
The Foundation argued that the claims were indeed sufficiently connected, because Repsol Perú B.V. played a decisive role in the operations of the Peruvian refinery, exposing Repsol Perú B.V. to the same liability as the Peruvian subsidiary. In support of that argument, the Foundation did not point to concrete involvement in the operational activities in Peru, but rather to (i) Repsol Perú B.V.'s 99.2% shareholding in La Pampilla; (ii) overlap/links between directors of La Pampilla and Repsol Perú B.V.; (iii) the mission statement in Repsol Perú B.V.'s articles of association, which includes fossil fuel mining and processing; and (iv) annual meetings in which plans and results of La Pampilla are presented to Repsol Perú B.V.
Court: insufficient evidence of actual involvement, insufficient connection between claims
The District Court ruled that the factors mentioned did not sufficiently demonstrate that Repsol Perú B.V. had control over the operational course of events in Peru. Jurisdiction of the Dutch court over La Pampilla and Repsol S.A. requires that the claims be based on the same factual and legal grounds. Since there is no evidence that Repsol Perú B.V. was involved in maintenance, safety policy or operational decisions, there is no real risk of conflicting judgments. The Foundation must demonstrate concretely that Repsol Perú B.V. actively intervened in the refinery's policies and took decisions that led to damage. As the Foundation has not shown those concrete indications, it has been insufficiently substantiated that Repsol Perú B.V. can be accused of the same alleged faults as La Pampilla. According to the District Court, the claims are therefore insufficiently connected; it ruled that it had no jurisdiction over the Spanish and Peruvian entities. See paragraph 4.18 of the judgment (emphasis added):
"The fact that almost all the shares of La Pampilla are held by Repsol Perú B.V. and annual meetings are held at which La Pampilla's results are presented does not indicate actual involvement of the Dutch company in the actual course of events in Peru. Indeed, it does not follow that Repsol Perú B.V.'s role was any greater than that of shareholder. The mission statement in the articles of association and the fact that a director of La Pampilla is also a director of Repsol Perú B.V. and that other directors may have links with Repsol Perú B.V. may leave room for a mutual relationship whereby the Dutch company also manages the refinery and determines the policy of that company, but it does not follow from this that this actually happened and that Repsol Perú B.V. was involved in policy or other decisions that can be linked to the reproaches made against La Pampilla regarding the oil spill."
The Foundation has insufficiently substantiated its claim that Repsol Peru B.V. had any actual involvement in the actual course of events in Peru with statements or other documents.
Conclusion
The District Court of The Hague clarifies when claims are sufficiently connected within the meaning of Article 8(1) Brussels I bis and Article 7(1) DCCP. Shareholding, overlapping directors or objectives in articles of association are insufficient to assume that claims have the same factual and legal basis.
Claimants seeking to sue foreign entities through a Dutch anchor defendant must allege more than general 'allegations' of control of the anchor defendant over the sued foreign entity. They must concretely substantiate that the Dutch defendant was directly involved in the actual course of events and thus the harmful conduct.
In doing so, the District Court confirms that the scope of Article 8(1) Brussels I bis and Article 7(1) DCCP is not unlimited. This is also important in a broader context. In recent years, quite a number of environmental pollution cases in South America have been brought before the Dutch courts (Stibbe is also involved on the defendant side). It is therefore possible that this judgment on jurisdiction in the Repsol will also play a role in other cases.
See also our previous blogs on this topic:
