Harley & Ors v Smith & Anor [2010] EWCA Civ 78

Case No A2/2009/0350

[2010] EWCA Civ 78

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

QUEEN’S BENCH DIVISION

(MR JUSTICE FOSKETT)

HQ06X02304, HQ06X02764, HQ06X02301

Venue Royal Courts of Justice, Strand, London, WC2A 2LL

Date 17/02/2010

Before

SIR MARK POTTER

PRESIDENT OF THE FAMILY DIVISION

LORD JUSTICE RIMER

SIR JOHN CHADWICK

Between

HARLEY and othersClaimants/

SMITH and anotherDefendants/

(Transcript of the Handed Down Judgment of

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Mr Stephen Cogley (instructed by Clark Ricketts LLP, Waterman House, 41 Kingsway, London WC2B 6TP) for Appellants

Mr Robert Weir (instructed by Thompsons, The McLaren Building, 35 Dale End, Birmingham B4 7LF and Bridge McFarland, 9 Lumley Avenue, Skegness, PE25 2AH) for Respondents

Hearing Hearing date : 28 October 2009

Judgment

Sir John Chadwick:

[1]This is an appeal from an order made on 28 January 2009 by Mr Justice Foskett on the hearing of a preliminary issue in proceedings brought by three former employees against their employer and a co-employee. The claims in the proceedings arose out of an incident which occurred on 7 May 2003 in the territorial waters of the Kingdom of Saudi Arabia. The preliminary issue for determination was whether, pursuant to the Foreign Limitation Periods Act 1984, the claims were time-barred by the expiry of the relevant period of limitation under Saudi law. The judge held that they were not.

The Foreign Limitation Periods Act 1984

[2]Sections 1 and 2 of the Foreign Limitation Periods Act 1984 are in these terms (so far as material): “1(1) Subject to the following provisions of this Act, where in any action or proceedings in a court in England and Wales the law of any other country falls (in accordance with rules of private international law applicable by any such court) to be taken into account in the determination of any matter —(a) the law of that other country relating to limitation shall apply in respect of that matter for the purposes of the action or proceedings; and

(b) except where that matter falls within subsection (2) below, the law of England and Wales relating to limitation shall not so apply. . . . 2(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. . . .” (a) the law of that other country relating to limitation shall apply in respect of that matter for the purposes of the action or proceedings; and (b) except where that matter falls within subsection (2) below, the law of England and Wales relating to limitation shall not so apply.

The underlying facts

[3]The second defendant, Khalifa A Algosaibi Diving and Marine Services (commonly abbreviated to “ADAMS”), is a Saudi-based company. The three claimants, Mr Stephen Harley, Mr Michael Hopley and Mr Andrew Iles, were employed by ADAMS as professional divers. On 7 May 2003 they were working from a vessel owned by Saudi Aramco, the state-owned national oil company, in waters off Al Khobar. The first defendant, Mr Ian Smith was a co-employee and their diving supervisor.

[4]The claimants allege that, on 7 May 2003, they were required to work in water into which toxic chemicals had been discharged from the Aramco vessel; with the consequence that each suffered long-term injury to health. None has been able to resume employment as a diver.

[5]There is, I think, little or no dispute as to what occurred on 7 May 2003. The incident is described in a facsimile message sent by ADAMS local Operations Manager, Mr William Stonebanks, to AON Occupational Health in Aberdeen on 22 May 2003:

“In brief, the divers were undertaking a surface hose change on an SPM. They were working from a Client’s vessel and the client was in charge of flushing the hoses. The chemicals were used by the Client. The task does not involve diving equipment other than a wet suit and/or coveralls and occasionally a face mask as the flanges are 90% out of the water. The divers worked in pairs disconnecting the three flanges and splitting the hose strings and then some hours later reconnecting the three hose strings. Whist disconnecting the last hose string a white/brown sludge was discharged into the sea. The divers did try to disperse it with a water hose. During and after reconnecting the hoses all 6 divers that had been in the water complained of breathing difficulties and a tightness of the chest. . . .”

In a letter dated 24 May 2003 to the First Secretary at the British Trade Office in Al Khobar, Mr Stonebanks explained that:

“These personnel suffered various reactions to the escaped substance, including rashes, nausea and temporary respiratory difficulties. Their initial treatment was on board the ARAMCO support vessel by the ARAMCO paramedic and when they did not recover fully, it was determined that they should be transferred to the Al Mana Hospital in Al Khobar for observation and treatment. Following a period of days in the hospital they were duly discharged . . .”

[6]The claimants returned to the United Kingdom on 17 June 2003. The circumstances leading to their return – and the basis upon which they did so – appear from Mr Stonebanks’ letter of 24 May 2003:

“Subject to medical clearance as to fitness to travel and Saudi coastguard permission, we are at present planning to arrange for the British divers to be repatriated so that their condition can be assessed by a specialist occupational health and offshore medical unit based in Aberdeen. We retain this unit on a long-term basis to provide advice and assistance in the event of an underwater injury or accident. Subject to the outcome of that re-assessment of their present condition and any further treatment as prescribed, they will then undergo a full Diver Medical Examination under UK HSE regulations to ensure they are fit to return to diving work. All costs (transport, medical etc) related to the foregoing will be borne by this Company and during this period these employees will receive their full salary as specified within their individual Contracts of Employment.”

In letters dated 10 June 2003 Mr Stonebanks confirmed to the three claimants that ADAMS would pay the costs of medical assessment and further remedial treatment; and that: “During this period of recuperation you will remain on full pay as per the terms of your Contract of employment”.

[7]The judge accepted that, during the period before their return to the United Kingdom, the claimants were concerned as to the claims that they might have against ADAMS: on the basis, it seems, that they took the view that their diving supervisor and co-employee, Mr Smith, bore some responsibility for what had occurred. The judge described, in some detail, the efforts which the claimants had made to obtain legal advice in Saudi Arabia during that period. It is, I think, sufficient – for reasons which will appear later in this judgment – to record the judge’s finding, at paragraph [34] of his judgment,

[2009] EWHC 56 (QB)

, that:

“[34] I am quite satisfied that ADAMS, for whatever reason it was, found the continued presence in the KSA of these three men, who wanted to seek compensation from them and/or from ARAMCO, an embarrassment. Whilst, as I have indicated, it would be impossible to conclude that ADAMS actively strove to prevent them seeing a lawyer, nothing was done to help them to do so in circumstances where, in my judgment, positive and active assistance should have been provided. The men were unwell in a way that must have been distressing physically and emotionally, they had no families to hand who could help and they were plainly unhappy that they were not getting the help and advice they wanted. Their employer was the only realistic source of practical assistance. . . .”

[8]The judge found (at paragraph [84] of his judgment) that, following their return to the United Kingdom, “each claimant continued to be paid as if still employed by ADAMS until June 2006”. He observed that:

“During this period they were undergoing periodic medical examinations funded by ADAMS and the mutual hope, as I perceive it, was that they would one day be able to resume diving for ADAMS. In a sense, the payments were a kind of ‘sick pay’ . . .”

These proceedings

[9]Mr Harley and Mr Iles commenced proceedings by the issue of claim forms on 5 May 2006: Mr Hopley, who had instructed other solicitors, issued his claim form on 5 May 2006. In each case the claims were for damages for personal injury. The judge observed that the claims were issued “within the limitation period that would apply if UK law applied to their cases”. Given that the period of limitation prescribed by section 14(4) of the Limitation Act 1980 is three years from the date on which the cause of action accrued or, if later, from the date of knowledge of the person injured – and that there is nothing in the facts before this Court to suggest that Mr Hopley did not have the requisite knowledge on 7 May 2003 (when the incident occurred) - it is not clear to me why (in the case of Mr Hopley’s claim) the judge took that view. But nothing turns on that; and it has not been suggested that he was wrong to do so.

[10]Particulars of claim were served in each action on or about 5 June 2006. They are each in substantially the same form. Each contains allegations that the claimant was employed by ADAMS at the relevant time; and that Mr Smith was a co-employee. Each contains the allegation that the claimant was exposed to toxic chemicals poured by the crew of the Aramco vessel “. . . into the flushing valve on the port and starboard cargo hoses and into the bunker fuel system with the intention that oil would be flushed through the hoses”. Each contains the allegation that that procedure was witnessed by Mr Smith who, in response to a query by Mr Hopley, gave an assurance “that the maintenance crew knew what they were doing”. Each contains allegations, at paragraphs 6 and 7, in these terms:

“6. The claimant’s exposure to the toxic chemicals was caused by the negligence of the first Defendant [Mr Smith].” 7 The claimant’s exposure to the toxic chemicals was caused by the negligence of the second Defendant [ADAMS], its servants or agents.”

Particulars of those allegations of negligence are set out. The particulars under paragraph 7 include the allegation that ADAMS is vicariously liable for the negligence of Mr Smith.

[11]Defences were served, in response to each claim, on or about 31 October 2006. Again, those defences are in substantially the same terms. Each contains allegations, at paragraphs 4 and 5, in these terms. “4. The proper law governing the claim against Mr Smith and [ADAMS] is Saudi law. 5. Mr Smith and [ADAMS] will aver that the claim brought against either or both of them is, as a matter of Saudi law, time-barred.” No particulars are given as to the provisions of Saudi law which are said to lead to the conclusion that the claims against Mr Smith or ADAMS are time-barred.

[12]Replies to those defences were served on 29 June 2007. It was admitted (at paragraph 2 of those replies) that “the substantive law applying to the issue of liability . . . is the law of [the Kingdom of Saudi Arabia].” Paragraph 6 of each reply is in these terms:

“6. The claim has been brought within the limitation period applicable to the claim under English law. Insofar as the rules on limitation provided by the law of KSA apply to this case, the claimant contends that: (a) Islamic law (Shari’a) is the primary source of law in KSA. (b) Shari’a law does not recognise the concept of limitation. (c) There are no specific statutes imposing limitation periods for a civil liability claim of this nature. (d) Insofar as Shari’a precludes the bringing of civil liability claims of this nature, it is on the basis that the claim is forfeited if it is not brought during a period of 15 years. (e) Accordingly this claim is not barred by limitation.” (a) Islamic law (Shari’a) is the primary source of law in KSA. (b) Shari’a law does not recognise the concept of limitation. (c) There are no specific statutes imposing limitation periods for a civil liability claim of this nature. (d) Insofar as Shari’a precludes the bringing of civil liability claims of this nature, it is on the basis that the claim is forfeited if it is not brought during a period of 15 years. (e) Accordingly this claim is not barred by limitation.”

[13]It is clear that that pleading followed advice which the claimants had received from Professor Adnan Amkhan, who had provided an expert report dated 24 June 2007. The defendants’ response was to obtain advice from Mr Wael Abdelrahman Alissa. That advice is contained in a report dated 20 January 2008. In the light of that report – which must have been disclosed to the claimants’ advisers – the claimants amended and re-served their reply on 12 April 2008 to add an additional paragraph in these terms:

“7. If, which is denied, the limitation period under the law of KSA expired 12 months following the date of the accident as contended for by Mr Alissa, such a provision will not apply, by virtue of section 2 of the Foreign Limitation Periods Act 1984, as it conflicts with public policy. Such a short limitation period, coupled with no additional discretionary right to extend time, would cause undue hardship to the claimants especially in circumstances where the claimant was paid wages by the second defendant throughout the one year period and reasonably took no steps to sue the defendants during that period.”

[14]On 17 April 2008 Master Rose ordered that the question whether the claims were time-barred be tried as a preliminary issue. He directed that the parties file a joint statement of the two experts. Professor Amkhan and Mr Alissa conferred and agreed a statement setting out their respective views. They agreed on the following issues: “Islamic law (Shari’ah) is the primary source of law in the Kingdom of Saudi Arabia (hereinafter referred to as ‘KSA’). Unlike modern Arab legal systems, Shari’ah does not recognise the concept of time limitation. Therefore, were the instant case tried under Shari’ah law the present claims of the Claimants would not be time barred. In principle, Shari’ah law is the governing law for civil liability (tort) claims. The KSA's Shari’ah courts would enjoy a wide margin of discretion as to whether or not to hear the present claims of the Claimants. However, if a Shari’ah court would decide to hear the claims of the Claimants, the present claims would not be time barred. Article 222 of the KSA’s Labour Law (promulgated by Royal Decree No. M/51, 23 Sha’ban, 1426 (27 September 2005)) limits the time during which to bring a claim before ‘The Commissions for Settlement of Labour Disputes’”.

[15]The joint statement set out Article 222 of the Labour Law in these terms:

“Article 222 (1) No case shall be accepted by the commission provided for in this law involving a claim of the rights provided for in this law or arising from a work contract after twelve months following termination of the work relation. (2) No case involving a claim of the rights provided for in the previous labour Law shall be accepted after twelve months following the effective date of this Law. (3) No complaint regarding violations of the provisions of this Law or the regulations and decisions issued hereunder shall be accepted after twelve months following the date of the occurrence of the violation.”

Professor Amkhan and Mr Alissa disagreed (i) on the question whether article 222 of the KSA labour law applied to the claims made in the present case; and (ii) on the question whether, if the article did apply, the effect (on the facts in the present case) was that the claims were time-barred. Those issues were, as they said “critical” and gave rise to “marked differences” between them.

[16]The order of 17 April 2008 was amended by an order made on 19 November 2008 by Mr Justice Blake. The preliminary issue came before Mr Justice Foskett for hearing in December 2008. He directed himself (at paragraph [6] of his judgment), that there were “two broad issues:” “. . . first, are the claims time-barred by Saudi law and second, if so, should I hold, pursuant to section 2 of the Foreign Limitation Periods Act 1984, that the Saudi limitation period should not apply because to permit it to do so ‘would cause undue hardship’ to the Claimants?” He answered both of those questions in favour of the claimants. The judge’s reasons

[17]The question whether the claims were time-barred under Saudi law was, as the judge recognised, a question of fact to be decided upon evidence. The judge reminded himself of the observations of Mr Justice Moses in City of Gotha v Sotheby’s and another (9 September 1998, unreported, but set out by Mr Justice Gray in Islamic Republic of Iran v The Barakat Galleries Limited

[2007] EWHC 705 (QB)

, [14]) as to the approach to be adopted in cases where there was conflicting expert evidence as to foreign law; and of the guidance given by this Court in Bumper Development Corporation Limited v Commissioner of Police for the Metropolis

[1991] 1 WLR 1362

, 1368-1371. He observed (at paragraph [47] of his judgment) that “. . . it appears not to be a wholly unusual situation for a court of England and Wales to be confronted with expert evidence on foreign law that does not appear altogether satisfactory. . . . I fear that I have found myself in that position in this case”.

The judge identified the contentions of the parties at paragraph [36] of his judgment:

“ADAMS assert that there is a requirement in Saudi Arabia that any claim of the nature sought to be advanced by the Claimants must be lodged within one year from the date of the incident or, alternatively, from the termination of the work relationship which is either the date when they ceased working for ADAMS (which was effectively the same date as the incident) or no later than when their contracts ceased. If that is so, it is accepted that their claims would be out of time. However, it is argued on behalf of the Claimants that since the claims are claims in tort and that there is no limitation period under Shari’ah law in respect of such claims, then (irrespective of the tribunal that adjudicates on the claim . . .) the claims are not time-barred. The alternative argument on behalf of the Claimants is that the one-year period ends only upon the termination of the work relationship and, in the events that happened in this case, that work relationship did not end until June 2006 and, accordingly, the claims are well in time.”

The contention that any claim of the nature sought to be advanced by the claimants must be lodged within one year was founded on article 222 of the Labour Law.

[19]In a section of his judgment (paragraphs [66] to [78]) headed “the Shari’ah courts or the labour courts?” the judge addressed what he described as “the fundamental issue of whether the Shari’ah courts would retain jurisdiction over claims such as these rather than deferring to the Labour courts.” He noted that it was common ground that, if the Shari’ah courts would retain jurisdiction, the claims would not be time-barred. He concluded (at paragraph [78]) “with some hesitation (and, of course, merely on the balance of probabilities)” that “the claims made by the Claimants, including the claim made against Mr Smith, are or would be subject to the exclusive jurisdiction of the labour courts in the KSA”.

[20]The reasoning which led the judge to that conclusion may, I think, fairly be summarised as follows:(1) If the option existed of commencing a claim such as that advanced by the claimants before the Shari’ah courts and there was no compulsion upon the Shari’ah court to transfer it to the labour courts, then there would be no basis for concluding that the claim would be defeated by limitation: paragraph [67] of the judgment.

(2) But, if the reality was that the claim would, notwithstanding that it was commenced before the Shari’ah courts, inevitably find its way to the labour courts, the “the question of limitation would have to be assessed by reference to the way in which the Labour courts would treat such a claim”: paragraphs [68] and [69] of the judgment.

(3) The labour courts were “specialised courts” for the purposes of article 26 of “The Law of the Judiciary”, promulgated by Royal Decree dated 15 December 2007. The effect of that article, read in conjunction with article 28 of that Law, was that the Shari’ah courts were “exempted” from having jurisdiction – and so effectively deprived of jurisdiction - in relation to matters within the jurisdiction of specialised courts: paragraph [71] of the judgment. The Shari’ah courts could be expected to act in accordance with the law as promulgated in the Royal Decree: paragraph [72].

(4) The Labour Law was intended to be a single code embracing all aspects of the relationship between employer, employee and fellow employees: paragraph [76] of the judgment. That was to be deduced from articles 5(1) and articles 214(1) and (2) of the law.

(5) It followed that any issue arising out of something that occurred within the working environment was potentially within the jurisdiction of the labour courts: paragraph [77] of the judgment.

[21]It will be necessary, later in this judgment, to examine the basis for that reasoning: in particular, it will be necessary to examine the basis for the judge’s conclusion that claims in tort against a co-employee (and vicarious claims against the employer based on the tortious liability of a co-employee), if commenced in the Shari’ah court, would be defeated by a defence of limitation which would have been available under the Labour Law.

[22]On the basis that the position under Saudi law fell to be determined by reference to the provisions of the Labour Law – rather than under Shari’ah law – the judge turned to consider (at paragraphs [79] to [84] of his judgment) the effect of article 222(1) of the Labour Law. He had already concluded (at paragraph [64]) that article 222(3) had “no bearing on the issue of limitation”. In his view, article 222(3) was directed to complaints involving some breach of chapters 1 and 2 of Part VIII of the Law (Protection against Occupational Hazards, Major Industrial Accidents and Work Injuries, and Health and Social Services): it had no application to the claims in the present case.

[23]The period within which a case “involving a claim of the rights provided for in this Law or arising from a work contract” must be brought before the labour courts ends “twelve months following termination of the work relation”: article 222(1) of the Labour Law. It was necessary, therefore, for the judge to decide, in the case of each claimant, the date on which the “work relationship” terminated.

[24]Each of the claimants was employed under a written contract: as the judge had explained at paragraph [9] of his judgment. Mr Hopley’s contract provided, in terms, that the “Last Day of Contract” was 1 March 2004. Mr Harley and Mr Iles had contracts drawn with an “Effective Date of Contract” of, respectively, 14 April 2003 and 22 April 2003. The contracts provided for a base period of 70 days. Each provided that the period of engagement might be extended beyond the base period “subject to the mutual agreement of the parties”. Each contained an express provision that it was “subject to the Laws of Saudi Arabia only”. The judge found (at paragraph [11] of his judgment) that Saudi law required that “a foreign national may be employed only on the basis of a fixed term contract”. The contract might be extended; but it must stipulate for a fixed period.

[25]There was no pleaded allegation that a claimant’s contracts of employment had been extended by mutual agreement. It would follow that, in the case of Mr Harley and of Mr Iles, their contracts of employment had terminated by or about the end of June 2003; and that, in the case of Mr Hopley, his contract of employment had determined no later than 1 March 2004. The judge made no express findings to that effect. But it is, I think, implicit in the first two sentences of paragraph [36] of his judgment (which I have set out earlier in this judgment) that the hearing had proceeded on the basis that the contractual periods of employment had terminated before May 2005: that is to say, at least twelve months before the commencement of these proceedings.

[26]The judge held (at paragraph [84] of his judgment) that “the limitation period under Article 222(1) does not end until the effective termination of the relationship of the employer and employee which does not necessarily mean the time at which the strict contractual period comes to an end”. After observing (in a passage to which I have already referred earlier in this judgment) that each claimant continued to be paid as if still employed by ADAMS until June 2006 and that “in a sense, the payments were a kind of ‘sick pay’”, he went on to say this:

“[84] . . . . However the matter is analysed, in my judgment, the ‘work relations’ in respect of each claimant did not end until June 2006. If that conclusion is correct, it is accepted that the claims presently being advanced by the claimants are not defeated by limitation.”

[27]In reaching that conclusion, the judge acknowledged (at paragraph [84] of his judgment) that he was “doing the best I can . . . on evidence that is not particularly clear”. He had set out (at paragraphs [80] to [83]) his understanding of that evidence. In summary:(1) He noted that the expression in article 222(1) of the 2005 Labour Law – “twelve months following termination of the work relation” - differed from that in the equivalent provision in the 1969 Labour Law – “twelve months from the termination of the contract”.

(2) He noted the opinion of Mr Alissa that that change was made “to improve the drafting of the law” (paragraph [81](i) of his judgment).

(3) He noted that, “Although Professor Amkhan was not asked directly about these matters”, it was plain that he did not accept the rationale for the change offered by Mr Alissa (paragraph [82] of his judgment).

(4) He went on to say this:

“[82] . . . [Professor Amkhan] did reassert (which Article 4 and the general law of the KSA make plain) that the Labour law had to be interpreted and implemented in accordance with Shari’ah law. The logic of this, presumably, in relation to the first of the matters raised by Mr Alissa would be that the 2005 Labour law was phrased differently from the 1969 law in order to render less inflexible the starting point for the relevant limitation period, but that the flexibility should be seen as, in appropriate circumstances, postponing the commencement of that period until the true working relationship between the employer and employee is over. That would, in the context of a personal injury claim, liberalise what would otherwise be a strict limitation period and would be more consistent with the Shari’ah principles of there being no limitation period (or at least none as short as one year) in relation to ordinary personal injury claims.”

[28]The judge recognised that, if he were correct to hold that the claims were not time barred under articles 222(1) or (3) of the Labour Law, it would be unnecessary for him to consider the second of the two broad issues which he had identified: should the twelve month limitation period under Saudi law be disapplied pursuant to section 2 of the Foreign Limitation Periods Act 1984? Nevertheless, he thought it appropriate to consider that issue in case he were wrong in his conclusions as to the effect of article 222.

[29]The judge reminded himself of the observations of this Court in Jones vTrollope Colls Cement Overseas Limited and another (24 January 1990, unreported), Arab Monetary Fund v Hashim and others

[1996] 1 Lloyd’s Rep 589

and Durham v T & N PLC and others (1 May 1996, unreported). He held (at paragraph [94] of his judgment) that the following propositions could be deduced from those authorities:

“(i) That it is not sufficient to cross the ‘undue hardship’ threshold [posed by section 2(2) of the 1984 Act] by reason only of the fact that the foreign limitation period is less generous than that of the English jurisdiction. (ii) That the claimant must satisfy the court that he or she will suffer greater hardship in the particular circumstances than would normally be the case. (iii) That in considering (ii) the focus is on the interests of the individual claimant or claimants and is not upon a balancing exercise between the interests of the claimants on one hand and the defendant on the other.”

The judge went on to say this:

“[95]Applying these principles on the basis that the Saudi limitation period was either 12 months from the date of the incident or somewhat longer, but no longer than the expiration of the fixed term contracts that each claimant had, I would be satisfied that the ‘undue hardship’ threshold had been crossed in respect of each claimant in this case. On the premise to which I have referred the following factors would persuade me that this is so: (i) Each claimant was impeded in obtaining local advice and representation in the KSA in the manner I referred to in paragraphs 33-35 above. (ii) Had each of them obtained such advice or representation at the time, their respective interests would probably have been protected. (iii) Each sought advice in the UK as soon as it was practicable to do so upon their return. (iv) Each was misled by advice that was received to the effect that the limitation period did not begin until June 2006. (v) Those giving the advice, whether in the UK or in the KSA, were disadvantaged because of the uncertainty of the legal position in the KSA and, as a result, the claimants were victims of that uncertainty. (vi) Through no fault of their own they will be deprived of any opportunity of seeking any kind of redress as a result of the incident unless the limitation period is disapplied.”

It may be said that none of those factors had been relied upon by the claimants in paragraph 7 of their amended replies; and that the judge did not find persuasive the factor which was advanced in that paragraph (the payment of wages throughout the one year period). (i) Each claimant was impeded in obtaining local advice and representation in the KSA in the manner I referred to in paragraphs 33-35 above. (ii) Had each of them obtained such advice or representation at the time, their respective interests would probably have been protected. (iii) Each sought advice in the UK as soon as it was practicable to do so upon their return. (iv) Each was misled by advice that was received to the effect that the limitation period did not begin until June 2006. (v) Those giving the advice, whether in the UK or in the KSA, were disadvantaged because of the uncertainty of the legal position in the KSA and, as a result, the claimants were victims of that uncertainty. (vi) Through no fault of their own they will be deprived of any opportunity of seeking any kind of redress as a result of the incident unless the limitation period is disapplied.”

[31]In summarising his conclusions,

the judge said this:

“[96] It follows that my essential conclusion is that, whilst a 12-month limitation period does apply to a case such as this, the period runs from the end of the ‘work relations’ between employer and employee which, in this case, did not come to an end until June 2006. [97] If I was wrong about that, I would have held that the ‘undue hardship’ threshold was crossed in this case and that the more limited 12-month period than that referred to in paragraph 96 should be disapplied.”

The order which he made on 28 January 2009 contains a recital of those determinations; and declaration that the claims of the claimants are not time-barred.

This appeal

[32]ADAMS and Mr Smith appeal from that order. They do so with the permission of this Court (Lord Justice Ward) granted on 10 June 2009. The grounds of appeal appear from a skeleton argument dated 1 March 2009. In summary it is said:(1) That there was no factual basis upon which the judge could draw the conclusion (at paragraph [84] of his judgment) to which I have referred earlier in this judgment: that “the limitation period under Article 222(1) [of the Labour Law] does not end until the effective termination of the relationship of the employer and employee which does not necessarily mean the time at which the strict contractual period comes to an end”.

(2) That, in holding that he would have disapplied the twelve month limitation period under article 222(1) of the Labour Law (had that period commenced at or earlier than the end of the strict contractual period), the judge was wrong, exercised his discretion on a wrong basis, or did not take into account (or did not attach any weight to) all relevant factors. It is not said that the judge was wrong to reach the conclusion that article 222(3) of the Labour Law had no application to the claims in the present case.

The respondents’ notice

[33]The claimants filed a respondents’ notice on 29 June 2009. They challenge the judge’s conclusion that the issue of limitation under Saudi law is to be determined by the Labour Law. They submit that the judge should have held that the issue fell to be determined by Shari’ah law: and that “Since there was no limitation period under Shari’ah law in respect of such claims, the claims are not time-barred”. In the circumstances that it has been common ground that there was no relevant period of limitation under Shari’ah law, it is not in dispute that, if the respondents are correct in their contention that the issue fell to be determined by Shari’ah law, the appeal must fail whether or not the appellants make out the grounds which they advance.

[34]The expert witnesses agreed that civil claims in respect of tortious liability for negligence could be brought in the Shari’ah courts. In particular, Mr Alissa had stated, at paragraph 6.1.1.2 of his report dated 28 January 2008 – and confirmed in his oral evidence (transcript, 16 December 2008, pages 147-8) – that:

“The Shari’ah courts are courts of general jurisdiction. This court may agree to hear the matter.”

But he had gone on to add that:

“It is important to note that the court may refuse to hear the matter because it is one within the jurisdiction of another specialized court.”

It was in the light of that evidence, the judge treated as “fundamental” the question whether the Shari’ah courts would retain jurisdiction over claims such as these (if commenced in those courts) rather than deferring to the Labour courts.

[35]As I have said, the judge concluded that “the claims made by the Claimants, including the claim made against Mr Smith, are or would be subject to the exclusive jurisdiction of the labour courts in the KSA”. It is, I think, clear from his reasoning (set out earlier in this judgment) that he took the view that the claims of that nature would, if commenced before the Shari’ah courts, either be transferred to the labour courts; or perhaps (if, the twelve month limitation period applicable in the labour courts had already elapsed) be dismissed by the Shari’ah courts. It seems to me that that is what he must have had in mind when he held that “the question of limitation would have to be assessed by reference to the way in which the Labour courts would treat such a claim”.

[36]In reaching his conclusion that the Shari’ah courts were deprived of, or would decline, jurisdiction to entertain claims of the nature brought in the present case the judge relied on articles 26 and 28 of “The Law of the Judiciary”, promulgated by Royal Decree dated 15 December 2007. He held (at paragraph [72] of his judgment) that the Shari’ah courts could be expected to act in accordance with the law as promulgated in the Royal Decree. But, as the respondents point out, the relevant time for considering whether the Shari’ah courts would accept jurisdiction in respect of the claims in the present case was as at May 2006 (when the claims were issued). It is difficult to see how a Royal Decree issued some eighteen months later could be of direct relevance in that context. The judge accepted that, at most, it could be said to be “some confirmation of existing practice”.

[37]The judge relied, also, on articles 5(1) and articles 214(1) and (2) of the Labour Law. The conclusion that the Law was “intended to be a single code embracing all aspects of the relationship between employer, employee and fellow employees” was (as he said, at paragraph [76] of his judgment) to be deduced from those articles. Those articles are (or were, at the material time) in these terms:

“Article 5: The provisions of this Law shall apply to: (1) Any contract whereby a person commits himself to work for an employer and under his management and supervision for a wage. . . .” “Article 214: The Preliminary Commission shall have jurisdiction to: (1) Render final decisions on: (1.1) Labour disputes irrespective of their type, the value of which does not exceed 10,000 Riyals. (1.2) Objection to the penalty imposed by the employer upon the worker. (1.3) Imposition of the punishments provided for in this law for a violation of which the punishment does not exceed 5,000 Riyals and violations with a combined punishment not exceeding 5000 Riyals. (2) Render preliminary decisions on: (2.1) Labour disputes the value of which exceeds 10,000 Riyals. (2.2) Disputes over compensations for work injuries, irrespective of the amount of compensation. (2.3) Disputes over termination of service. (2.4) Imposition of the punishments provided for in this law for a violation the punishment of which exceeds 5000 Riyals and violations with a combined punishment exceeding 5000 Riyals. (2.5) Imposition of punishments on violations punishable by fines and consequential punishments.” (1) Any contract whereby a person commits himself to work for an employer and under his management and supervision for a wage. The Preliminary Commission shall have jurisdiction to: (1.1) Labour disputes irrespective of their type, the value of which does not exceed 10,000 Riyals. (1.2) Objection to the penalty imposed by the employer upon the worker. (1.3) Imposition of the punishments provided for in this law for a violation of which the punishment does not exceed 5,000 Riyals and violations with a combined punishment not exceeding 5000 Riyals. (2.2) Disputes over compensations for work injuries, irrespective of the amount of compensation. (2.3) Disputes over termination of service. (2.4) Imposition of the punishments provided for in this law for a violation the punishment of which exceeds 5000 Riyals and violations with a combined punishment exceeding 5000 Riyals. (2.5) Imposition of punishments on violations punishable by fines and consequential punishments.”

The Preliminary Commission shall have jurisdiction to:

[38]The judge had referred, earlier in his judgment to the fact that, in Mr Alissa’s initial report of 28 January 2008:

“[54] . . . He mentioned the 2005 Labour Law referred to in the Joint Statement and said that Articles 210-214 establish Preliminary and High Commissions to settle disputes under the Labour Law, depending on the amount of money involved. He drew attention to Article 219 which states that these Commissions ‘solely have exclusive right to consider all disputes relating to this [Labour] Law and the disputes arising from work contracts’”

He went on to explain that:

“[60] After the conclusion of the arguments and when reviewing the material for the purposes of drafting the judgment I noted the terms of Article 214 which, though mentioned in passing by Mr Alissa in his first report (see paragraph 54 above), was not referred to explicitly by either expert. I invited the assistance of Counsel on the question whether it was of relevance to the issues that fell to me to consider. They consulted the experts, made further submissions in writing and the experts furnished further brief reports. . . .”

The “further brief reports” are dated, respectively, 10 December 2008 (Professor Amkhan) and 30 December 2008 (Mr Alissa).

[39]Professor Amkhan’s report of 10 December 2008 contained no express reference to article 214 of the Labour Law. But, in affirming his view that the claims in these proceedings were not time-barred under either Shari’ah law or under the Labour Law, he said this:

“8. The question . . . arises whether a Shari’ah court would dismiss the claims of the Claimants on the grounds that such claims fall under the jurisdiction of the Labour Commissions set up under the Labour Law. Unfortunately, the answer to this question cannot be stated with any degree of certainty. The reason for this is because Shari’ah courts in Saudi Arabia enjoy a significant judicial power combined with an extremely wide margin of discretion. The legal principle, however, remains that Shari’ah courts are the proper fora for tort claims.”

Paragraph 1.1(c) of Mr Alissa’s further report (in a letter dated 30 December 2008) contains a reference to article 214 of the Labour Law, in these terms:

“1.1 (c) Article 214 of the 2005 Labour Law provides that the Preliminary Commission shall have jurisdiction to render final decisions on three items and to render preliminary decisions on broadly speaking five items, Article 214 does not mention exclusive”

[emphasis in text] It is impossible to find any support in those passages for the judge’s view, expressed at paragraph [76] of his judgment, that it can be deduced from articles 5(1) and 214(1) and (2) that the Labour law was intended to be a single code embracing all aspects of the relationship between employer, employee and fellow employees; including, in particular, claims arising from injuries suffered by an employee in consequence of the negligence of a co-employee.

[40]More pertinent, I think, is a passage in the oral evidence of Mr Alissa (transcript, 16 December 2008, pages 150-1) to which

the judge did not refer in his judgment:

“MR JUSTICE FOSKETT: . . . Imagine that I am a nurse . . . working in a hospital and I suffer some injury as a result of the negligence of one of my colleagues – perhaps someone accidentally stabs me with some scissors or something like that – something that causes me an injury. It is in my work setting, it is in the place that I work in a hospital, and I want to pursue some compensation against the person who accidentally stabbed me with the scissors. First of all, can I claim compensation? A. You can claim on the Shari’ah Court because there is a relationship between the nurse and the guy that was working with her. . . . It’s not between the nurse and the hospital. MR JUSTICE FOSKETT: No, but if the guy whose scissors caused the injury has got no money – A. He will be sent to jail till he pays the money. MR JUSTICE FOSKETT: Oh. Right. That is a claim against an individual. I am just trying to think of an example where, if the nurse has got some claim against the hospital because the hospital – the systems have all gone wrong – A. If it is a labour case – something like between the nurse and the hospital, like sexual harassment, it goes to the Shari’ah court. MR JUSTICE FOSKETT: That goes to the Shari’ah Court. A. You sub-divide these things.”

Mr Alissa’s answer to the first of the judge’s questions provides support for the view that a claim by one employee against a co-employee in respect of an incident in the work-place would be brought in the Shari’ah court. The answer directly contradicts the conclusion that the judge reached in his judgment: that the labour courts would have exclusive jurisdiction over such a claim. The answer to the second of the judge’s questions was, perhaps, unexpected. In the light of Mr Alissa’s other evidence he might have been expected to say that the claim against the hospital should be brought in the labour courts. But the judge gave him the opportunity to do so; and he did not take it.

[41]The appellants seek support for the conclusion that the labour courts would have exclusive jurisdiction over a claim by one co-employee against a co-employee in respect of an incident in the work-place from article 219 of the Labour Law. The article is (or was, at the material time) in these terms:

“Article 219 Each of these Commissions shall solely have exclusive right to consider all disputes relating to this Law and the disputes arising from work contracts. It may summon any person for interrogation or assign one of its members to conduct such interrogation. It may also require submission of documents and evidence and take any other measures it may deem fit. The Commission shall also have the right of access to any premises of the firm for the purpose of conducting the investigation and reviewing all books records and documents it deems necessary.”

[42]At paragraph 6.1.1.1 of his report dated 28 January 2008 Mr Alissa had referred briefly to that article:

“Article 219 states that these Commissions ‘solely have exclusive right to consider all disputes relating to this [Labour] Law and disputes arising from work contracts”. [emphasis in text] But that was followed immediately by his observation (in paragraph 6.1.1.2), to which I have referred earlier in this judgment, that: “The Shari’ah courts are courts of general jurisdiction. This court may agree to hear the matter. It is important to note that the court may refuse to hear the matter because it is one within the jurisdiction of another specialized court.”

As I have said, Mr Alissa affirmed in his oral evidence that that was the position; and we were not taken to any passage in his oral evidence where he suggested that that position was inconsistent with article 219. The judge set out the terms of article 219 in his judgment and (at paragraph [73]) described as “the essential issue for this purpose . . . whether the dispute concerning the circumstances of the incident ‘related to’ the labour law and/or arose ‘from [a] work contract’ (see Article 219 . . .)”. But he said nothing to indicate that he placed reliance on that article in resolving that issue: that is to say, in reaching his conclusion (at paragraph [78] of his judgment) that the claims in the present case would be subject to the exclusive jurisdiction of the Labour courts.

[43]In his report dated 6 December 2008 Mr Alissa had referred to article 219 of the Labour Law; but not in terms which added to his earlier report. But, after he had given oral evidence – and in response to the judge’s request for assistance in relation to article 214 – he wrote, in the letter dated 30 December 2008 to which I have already referred:

“1.1(b) Article 219 of the 2005 Labour Law provides that ‘Each of those Commissions shall solely have exclusive right to consider all disputes relating to this Law and the disputes arising from work contracts’. The reference to ‘this law’ is to the 2005 Labour Law which includes claims in respect of ‘work injuries’. The claims here are in respect of work injuries and also are disputes arising from work contracts. Article 219 is (i) much broader than Articles 174 and 179 of the 1969 Labour Law, and (ii) specifically states ‘solely have exclusive right’. It is my view that this was clearly deliberate and intended to prevent any arguments arising as to what the exclusive jurisdiction extends to. In addition and equally important, Article 219 of the 2005 Labour Law further puts the matter of exclusivity beyond any doubt by referring to ‘all disputes arising from work contracts’. The Arabic in Article 219 that refers to exclusivity is exactly like Article 179 of the 1969 Labour Law.”

The judge did not refer to that paragraph of Mr Alissa’s letter of 30 December 2008. There is nothing explicit in his judgment to suggest that he relied upon it. He would have been wrong to do so: in that the passage went well beyond Mr Alissa’s previous evidence and there was no opportunity for the claimants to challenge it at the trial. I have referred to the passage in this judgment for completeness only: I am satisfied that the appellants cannot rely upon it on this appeal.

[44]Given that the experts were in agreement that the claims in the present case could have been brought in the Shari’ah courts, the judge’s task (as he recognised) was to decide, on the evidence before him, whether – had the claims been brought in those courts in May 2006 - the Shari’ah courts would have chosen to retain jurisdiction, to transfer the claims to the labour courts (where they would have been time-barred) or to dismiss the claims (in deference to the limitation period applicable in the labour courts). That was no easy task – as the judge recognised – given that the evidence was conflicting and less than satisfactory. But it is important to keep in mind that it was for the appellants (as defendants relying upon the defence of limitation) to establish, on the balance of probabilities, that the Shari’ah courts would have chosen to transfer or dismiss the claims, rather than to retain jurisdiction. In my view the evidence was not capable of supporting the conclusion that the defendants had succeeded in doing so.

[45]In those circumstances, I am satisfied that the appeal must be dismissed on the ground advanced in the respondents’ notice.

The appellants’ grounds of appeal

[46]If it were not for the fact that the judge’s determinations in respect of the two issues which are the subject of challenge in the appellants’ grounds of appeal are recited in the order of 28 January 2009 I would have thought it unnecessary to address those issues in this judgment. But it would be unsatisfactory to leave the order in its present form if (as I think) the judge was wrong to determine those issues as he did. The first ground

[47]In my view there is force in the criticism that there was no factual basis upon which the judge could draw the conclusion that, for the purposes of the limitation period under Article 222(1) of the Labour Law, the effective termination of the relationship of the employer and employee “does not necessarily mean the time at which the strict contractual period comes to an end”.

[48]The question which the judge had to decide was whether, for the purposes of article 222(1) of the Labour Law, “the work relation” formerly subsisting between the claimants and ADAMS by virtue of the contracts of employment continued after those contracts had determined in accordance with their terms and the relevant provisions of Saudi law; in particular, whether that “work relation” had continued until ADAMS had ceased to make what were accepted to be ex gratia payments to its former employees. As I have explained, earlier in this judgment, the judge decided that question in favour of the claimants on the basis the change in the language of the relevant article, made when the 1969 Labour Law was replaced by the 2005 Labour Law, was made with the intention of introducing some flexibility to the previous, strict, position; by “postponing the commencement of that period until the true working relationship between the employer and employee is over”. That would, in the judge’s view, have the effect, in the context of a personal injury claim, of liberalising what would otherwise be a strict limitation period and “would be more consistent with the Shari’ah principles of there being no limitation period (or at least none as short as one year) in relation to ordinary personal injury claims.”

[49]Reasonable as that approach might be in the eyes of an English lawyer, there was no evidence to support it. It was contradicted by the evidence of Mr Alissa: whose view was that the change had been introduced to meet the case where the employment relation was terminated prior to the contractual term of the contract. And, as the judge recognised (at paragraph [81] of his judgment) Professor Amkhan gave no direct evidence on the point. His view, which the judge did not accept, was that, on the facts, the contractual term had continued throughout the period of ex gratia payments: (transcript, 16 December 2008, pages 117-121, 124). On the question what meaning should be given to the phrase “work relation” in article 222(1), he went no further than to confirm (as article 4 of the Law provided in terms) that Labour Law “had to be interpreted and implemented in accordance with Shari’ah law.” That, he said, meant that the term had to be interpreted with regard to the facts of the case.

[50]In the absence of evidence that recognised principles of interpretation under Shari’ah law would require an extended meaning to be given to the phrase “work relation” in article 222(1), the judge, in effect, decided for himself what Shari’ah law would require. In that respect – as it seems to me - he went beyond what he could properly do under the guidance given by this Court in Bumper Development Corporation Limited v Commissioner of Police for the Metropolis

[1991] 1 WLR 1362

, 1368D-1371D. He purported to construe foreign legislation by applying principles of interpretation which had not been established by evidence. The second ground

[51]I think there is force, also, in the criticism that, in holding that he would have disapplied the twelve month limitation period under article 222(1) of the Labour Law (had that period commenced at or earlier than the end of the strict contractual period), the judge exercised his discretion on a false basis.

[52]The judge appreciated that that each of the claimants consulted lawyers shortly after they returned to the United Kingdom in June 2003: paragraph 95(iii) of his judgment. Each had accepted that in his oral evidence: (transcript: 15 December 2008, page 36 (Mr Harley), page 73 (Mr Hopley), page 83 (Mr Iles)). It was not in dispute – but, in any event, it was plainly to be inferred – that they had done so with a view to making a claim against their employer in respect of the incident on 7 May 2003. It is clear that, by the time the claimants returned to the United Kingdom in June 2003, they knew the circumstances in which the incident had occurred, they knew that they had suffered injury as a result, and they knew that Mr Smith (and ADAMS, as the common employer) might have some responsibility for the incident. By the end of June 2003, the difficulties which the claimants had encountered in obtaining access to a lawyer while they had remained in Saudi Arabia, to which the judge referred in paragraph [95(i)] of his judgment – had ceased to be of relevance. The real question was why no steps were taken – either in the United Kingdom or in Saudi Arabia – to commence proceedings within, say twelve months of June 2003 (which would have been within any limitation period applicable under article 222(1) of the Labour Law).

[53]The judge held (at paragraph [95](iv) of his judgment) that “each was misled by advice that was received to the effect that the limitation period did not begin until June 2006”. If that is a finding as to the position under Saudi law, I have found no evidential basis to support it. The advice as to Saudi law – in a letter dated 3 May 2004 to Mr Hopley’s solicitors from the Al-Sohaibani law office – was that a limitation period of one year was provided in labour laws regarding claims against the employer “for rights and entitlements arising out of and resulted from the employment contract between the parties”: if the claim had no connection with the employment contract, there would be no relevant limitation period. Be that as it may, the factor relied upon by the judge is not that undue hardship arose from the fact that the relevant limitation period under Saudi law was twelve months (if that was, indeed the case); but rather from the fact that the lawyers in the United Kingdom whom the claimants consulted in June 2003 did not appreciate that that was, or might be, the position. But that cannot be a relevant factor. The question is not whether undue hardship is caused by wrong advice; but whether it is caused by the application of the foreign limitation period. There is nothing to suggest that, on the basis of the advice which they had received, the claimants chose to delay the commencement of proceedings until after the period of twelve months had expired; or that, if they had appreciated the need to commence proceedings within the twelve month period, there would have been any difficulty, in the present case, in doing so.

[54]The judge went on to hold (at paragraph [95](v) of his judgment) that those giving advice to the claimants, whether in the United Kingdom or in Saudi Arabia, “were disadvantaged because of the uncertainty of the legal position in the KSA” and “as a result, the victims were victims of that uncertainty”. But, again, if that were correct, it would not be the application of the Saudi law relating to limitation that caused undue hardship. The uncertainty of the legal position, if it been known to be uncertain, would have made it necessary to bring proceedings sooner rather than later in order to avoid the risk, to which the uncertainty gives rise, of being out of time: the uncertainty does not add to the hardship (if any) caused by the need to bring the proceedings within twelve months. And, as I have said, there is nothing to suggest that, if the lawyers had appreciated the need to commence proceedings within twelve months in order to avoid the risk of being out of time, there would have been any difficulty, in the present case, in doing so.

[55]It follows, in my view, that the judge was in error in thinking that any of the matters to which he referred in sub-paragraphs (i), (iii), (iv) and (v) of paragraph [95] of his judgment led to a conclusion that application of a twelve month limitation period under Saudi law would cause undue hardship to the claimants for the purposes of section 2(2) of the Foreign Limitation Periods Act 1984. The judge failed to apply the propositions which (correctly, at paragraph [94] of his judgment) he had derived from the authorities to which he had referred. He should have appreciated that it was not sufficient to cross the threshold by reason only that the period of twelve months is less generous than the period of three years allowed under English law: and he should have appreciated that the application of a limitation period of twelve months (instead of three years) led to no greater hardship in the particular circumstances than would normally be the case.

Conclusion

[56]I would dismiss this appeal. But I would vary the order of 28 January 2008 by deleting the second recital.

Lord Justice Rimer:

[57]I agree.

Sir Mark Potter, President

[58]I also agree.

Cited in 12 later judgments

and 3 more of the most senior