The English Supreme Court in Vedanta Resources PLC and Another v Lungowe and others has allowed over 1,800 Zambian villagers to issue proceedings in England against an English parent and its Zambian subsidiary. This decision could pave the way for other mass tort claim bearing similar features. The decision tipped in favour of England as the proper place to bring this claim due to the perceived inability for the Zambian claimants to obtain access to justice in their local forum. The commentary on the question whether there was a real issue to be tried also provides guidance on the factors giving rise to a duty of care on the part of the parent company.

SUMMARY

The Supreme Court's decision in Vedanta allows over 1,800 Zambian villagers (the "Claimants") to bring a damages claim for personal injury and related claims in England against a Zambian company (Konkola Copper Mines ("KCM")) and its English ultimate parent (Vedanta Resources PLC ("Vedanta")) (together, the "Defendants"). The Claimants allege that the Defendants' copper mine released poisonous emissions over many years, damaging their health and livelihoods.

Whilst the Supreme Court acknowledged that all connecting factors in this case pointed towards Zambia, it nevertheless denied the Defendants' appeal, which challenged the right for the case to be heard in England. The Claimants ultimately succeeded because:

  • the Supreme Court agreed the Claimants would not have access to justice in Zambia, largely due to funding issues; and
  • Vedanta's corporate literature asserted responsibility for the establishment of groupwide environmental control and sustainability standards, as well as proclaiming its intention to implement training, monitor and enforce these standards. This level of supervision contributed to the Supreme Court's determination that a duty of care was owed and accordingly that there is a real issue to be tried against Vedanta as well as KCM.

This outcome will likely make it more attractive for mass tort claims for environmental damages and/or personal injury from countries with less developed legal systems to be litigated in England, including against the England headquartered parent company, increasing the risk of litigation.

THE POSITION PREVIOUSLY

Previously, claimants have often been unsuccessful in their attempts to bring proceedings of this nature in England. For example, in Erste Group Bank AG (London) v JSC (VMZ Red October) and others, the Court of Appeal stated that the case could only be heard in England if the claimants could demonstrate that there was a real issue against the parent that was reasonable for the court to try and that on the facts there was no such issue.

This position was followed by the Court of Appeal in AAA and others v Unilever PLC and Unilever Tea Kenya Limited, in which Kenyan claimants were unsuccessful in bringing proceedings in England because they could not establish that the parent company owed them a duty of care, meaning that there was no real issue to try against the parent company. On the facts of this case, the parent company did not exercise any control over the subsidiary, nor did it hold itself out as being responsible for the actions of the subsidiaries.

A similar position was taken in Okpabi and others v Royal Dutch Shell plc and another. This case involved Nigerian claimants who wanted to bring proceedings against the English parent of a Nigerian subsidiary. The court ruled that the parent did not owe the claimants a duty of care. The parent company was not responsible for the acts complained of, nor did it have responsibility for the subsidiary's actions that were the subject of the claim. The High Court also noted that the claimants would have access to justice in Nigeria, which made Nigeria the proper country to hear the case.

THE JUDGEMENT IN THIS CASE

The Claimants live in the vicinity of KCM's copper mine and alleged that poisonous emissions from the mine had damaged their health and their livestock. The Claimants issued court proceedings against the Defendants in England, serving the UK-based Vedanta as of right.

The Defendants argued that England was not the proper forum for this dispute. Their position was that Zambia would be more appropriate because KCM managed the mine, making it the real target of the litigation. The Defendants asserted that Vedanta, as the English parent company, was being used as an anchor defendant to improperly allow a claim to be brought in England.

In contrast to previous recent cases, the Supreme Court ruled that this case could be tried in England. It stated that Vedanta owed the Claimants a duty of care because Vedanta had publicly stated in its corporate literature that it was responsible for the environmental matters across its entire group of companies. This implied that Vedanta was providing some form of supervision to KCM, and therefore could owe a duty of care to the Claimants. Accordingly, there was a real issue to be tried against Vedanta and the evidence before the first instance judge had been that the Claimants would proceed against Vedanta in any event, even if KCM was not joined to the proceedings in England. Avoiding the risk of irreconcilable judgments therefore also factored into the Supreme Court's reasoning, though Vedanta's offer to submit to the Zambian court's jurisdiction weighed heavily in favour of choosing Zambia over England.

Crucially, however, the Supreme Court concluded that England would offer the Claimants access to justice, which, in the specific facts of this case, could not be obtained in Zambia. The Claimants live at the lower end of the poverty scale in one of the poorest countries in the world. Despite their numbers, they could not collectively fund even the necessary disbursements to start a claim in Zambia, and furthermore Zambia does not permit "no-win, no-fee" arrangements.

PROPORTIONALITY - A WARNING

Lord Briggs stressed (emphatically) at the outset of his judgment that the Supreme Court was not at all impressed by what it saw as the disproportionate costs involved in this jurisdiction challenge. He noted that proportionality requirements have been continuously ignored by litigants and their lawyers, and that in order to change behaviour, it may become necessary to impose adverse cost orders against both parties and their legal advisers for a failure to litigate in a proportionate manner.

THE IMPACT OF THIS JUDGEMENT

This case will likely encourage potential claimants from countries with less developed legal/court systems to issue court proceedings in England. This could be particularly important in the run up to Brexit. The Claimants relied on the Recast Brussels Regulations to engage their anchor defendant argument, meaning that potential claimants may consider issuing proceedings in England whilst this law still applies. Additionally, it could have a similar impact on existing/pending/threatened proceedings from such overseas jurisdictions against other large multi-national corporations headquartered in the UK.

Whilst this decision was fact-specific, it provides further guidance about circumstances in which claimants can establish that the relevant UK-based parent company owes them a direct duty of care and can be sued in England. Statements, such as the one published by Vedanta, are very common in corporate literature. Such statements will no doubt continue to be scrutinized very carefully by claimants' lawyers and NGOs and further litigation can be expected.