Dear all

Reading Vedanta, it seems to me that a lot of parent companies would
exercise the level of control indicated by the Court as a trigger for
potential liability for the torts of a subsidiary. Am I wrong? Views
welcome.

Kind regards

Ger

On 4/21/19, Tettenborn A.M. <a.m.tettenborn@swansea.ac.uk> wrote:
> Thanks, Simon: service out cases are often more useful than they look on
> obligations law.
>
> Andrew
>
> On 21/04/19 19:32, Baughen S.J. wrote:
>
> Dear Colleagues,
>
>
> 2017 saw three ‘anchor defendant’ cases before the High Court involving tort
> claims against a UK parent corporation in respect of the activities of its
> overseas subsidiary. The claimants sought leave to serve the subsidiary out
> of the jurisdiction under the ‘necessary and proper party’ gateway for
> service out of the jurisdiction in paragraph 3.1 of Practice Direction 6B in
> the Civil Procedure Rules (“CPR”). In two cases, AAA v Unilever and Okpabi v
> Shell, leave was refused but was granted in the third case, Vedanta
> Resources PLC and another v Lungowe. The key issue was whether there was a
> triable issue against the UK parent corporation. Lungowe involved alleged
> pollution from toxic emissions from a copper mine in Zambia owned by a
> Zambian company, KCM, whose ultimate parent company is Vedanta Resources Ltd
> which is incorporated and domiciled in the UK.
>
>
>
> The Supreme Court, [2019] UKSC 20, in which Lord Briggs gave the lead
> judgment, has upheld the findings at first instance and in the Court of
> Appeal that there was a triable issue as regards Vedanta on the basis of a
> plausible case that its involvement in the activities of KCM gave rise to a
> duty of care to those affected by those activities.
>
>
>
> There was nothing novel about the negligence claim against a parent company.
> It all goes back to Dorset Yacht Co Ltd v Home Office. The question is
> whether there was a plausible case that the parent company was playing the
> role of the home office in relation to the wrongs allegedly committed by its
> subsidiary, in the role of the borstal absconders. The duty would arise
> from a sufficiently high level of supervision and control of the activities
> at the mine with sufficient knowledge of the propensity of those activities
> to cause toxic escapes into the surrounding watercourses. This was a
> question for Zambian law, which it was agreed followed English tort law. It
> was a question of fact as to what that level actually was. On the facts,
> there was sufficient material identified by the judge in support of the view
> that the claimants’ case was arguable and the judge made no error of law in
> assessing this issue, so his decision on the negligence claim must stand.
>
>
>
> The Judge had identified the following evidence as establishing that there
> was an arguable case that Vedanta owed a duty of care. There was part of the
> published material, namely a report entitled “Embedding Sustainability”
> which stressed that the oversight of all Vedanta’s subsidiaries rested with
> the board of Vedanta itself, and which made particular reference to problems
> with discharges into water and to the particular problems arising at the
> Mine. There was the management services agreement between Vedanta and KCM ,
> and a witness statement of Mr Kakengela.
>
>
>
> Lord Briggs was not so keen on the last two of these, but stated that he
> regarded [61] “[t]he published materials in which Vedanta may fairly be
> said to have asserted its own assumption of responsibility for the
> maintenance of proper standards of environmental control over the activities
> of its subsidiaries, and in particular the operations at the Mine, and not
> merely to have laid down but also implemented those standards by training,
> monitoring and enforcement, as sufficient on their own to show that it is
> well arguable that a sufficient level of intervention by Vedanta in the
> conduct of operations at the Mine may be demonstrable at trial, after full
> disclosure of the relevant internal documents of Vedanta and KCM, and of
> communications passing between them.
>
>
>
> Useful guidance for UK parent companies in multinational mining and
> extractive industries.
>
>
> Best wishes,
>
>
> Simon
>
>
> --
>
> --
>
>
>
>
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>
> Andrew Tettenborn
> Professor of Commercial Law, Swansea University
>
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