The UK’s Supreme Court provided its significant judgement in February 2021 in the case of Okpabi v Royal Dutch Shell PLC. The case referred to above revolves around the widespread contamination supposedly initiated by the Shell oil group in Nigeria, explicitly by its Nigerian subsidiary, SPDC Ltd. The well-known claimants are fellows of Nigerian populations distressed by that pollution. However, in the English courts, they have preferred to sue not merely SPDC but also the supreme parent company in the Shell Group, Royal Dutch Shell PLC (RDS), in the contention that the parent company also owed them a duty of care.
From the inception, RDS sought to stop the English courts from hearing the case, arguing that there was no disputable case that RDS owed the claimants a duty of care concerning the contamination. Together the High Court and Court of Appeal went along with RDS. Debatably the Supreme Court decided the claim against RDS is at least arguable. The case can continue to a trial in England to determine whether the two corporations are liable.
Though the Supreme Court permitted the appeal and established the claim beside the parent to be debatable, it confirmed the general tendency originated in the latest instances in this space, in which the law has relocated from the place recognised in Chandler v Cape plc. Thus, Chandler’s dealing of tortious claims concerning parents concerning a new duty of care was rejected, and the four ‘indicators’ that Chandler put down to decide when a parent would owe duty have been successfully side-lined.
Latest cases like AAA v Unilever and Vedanta v Lungowe Resources held that ‘ordinary tort principles’ relate, so that parent companies will typically be liable merely for their active misfeasance, where they sufficiently take over, control, intervene, advise/supervise the organisation of those secondary activities which have initiated harm to the community. The Supreme Court in Okpabi has repeated that this is an accurate method.
Yet, the Supreme Court in Okpabi has explained and perhaps thus somewhat extended what paternal conduct may make the parent owe a duty of care. Foremostly, the parent does not want to be exercising total power on a subsidiary to owe a duty of care. What signifies is the parent’s participation in the specific subsidiary action which produced the damage. Secondly, the Court disallowed RDS’s argument that a parent could never be accountable just because it had issued group-wide strategies that its secondaries were predictable to keep on track. Therefore, the Supreme Court initiated that simply delivering policies might be adequate, even if secondaries were not required to apply those strategies.
More importance of the law is added to the practical consequences of the Supreme Court’s verdict. It permitted the appeal, mainly since it sensed that the Court of Appeal and the High Court had the wrong attitude to decide whether the claimants’ issue was debatable. The lower courts had each assessed the power of the actual and probable evidence on RDS. The Supreme Court held that such a method was unsuitable. This caused a prolonged mini-trial of the claim to decide whether a debatable case would necessitate a full trial. In its place, for the drive of assessing whether the claim was disputable and should therefore be permitted to continue to trial in England, the Court should have expected that the claimants’ claims were accurate, except ‘exceptionally, they are untrue or unsupportable’.
This sets a considerably lower threshold for deciding whether an issue is arguable. It creates a more accessible approach for candidates to institute a debatable claim on a parent company, though the claim might ultimately fail when it arises to a trial. This approach is deliberately very influential, at least in those cases where a subsidiary was functioning damages applicants in a country with a problematic civil justice organisation. Having an ‘arguable’ claim on the parent can be enormously beneficial for claimants, even if that claim flops at a subsequent full trial. By launching a disputable claim on an English parent corporation, the claimants can carry that claim and also their lawsuit against the overseas subsidiary in England. For claimants in nations with weak structures of civil justice, achieving English jurisdiction can be fundamental.
Still, the strategy is endangered if the parent can submit that the action on the parent is unarguably premature in the dealings. Doing such would allow only the subsidiary claim, which would be judged in the nation where the damage was grieved. However, succeeding Okpabi, claimants can now more effortlessly stay with the parental claim and the subsidiary claim to an English trial. The detail that the parental action may ultimately flop at the trial will be distant from disastrous, providing probably the much sturdier subsidiary claim is accomplished. The paternal claim will have aided its purpose of receiving an English trial against the subsidiary.
References
www.ashurst.com. (n.d.). Parent liability for overseas subsidiaries’ actions: when will the English courts have jurisdiction? [online] Available at: https://www.ashurst.com/en/news-and-insights/legal-updates/parent-liability-for-overseas-shareholders-actions-when-will-the-english-courts-have-jurisdiction/ [Accessed 25 Oct. 2021].
www.shlegal.com. (n.d.). Facing up to responsibility: Parent liability for overseas subsidiary actions in the English courts. [online] Available at: https://www.shlegal.com/news/facing-up-to-responsibility-parent-liability-for-overseas-subsidiary-actions-in-the-english-courts [Accessed 25 Oct. 2021].
https://www.nortonrosefulbright.com/en-us/knowledge/publications/721042ff/uk-supreme-court-ruling-on-parent-company-liability-for-acts-of-its-overseas-subsidiaries [Accessed 25 Oct. 2021].
Shell in Nigeria: Polluted communities “can sue in English courts.” (2021). BBC News. [online] 12 Feb. Available at: https://www.bbc.com/news/world-africa-56041189.
sultan hassan 27 (2021). HELPING OVERSEAS VICTIMS SUE ENGLISH PARENT COMPANIES OKPABI V ROYAL DUTCH SHELL PLC. [online] Undergraduate Laws Blog. Available at: https://lawsblog.london.ac.uk/2021/03/01/helping-overseas-victims-sue-english-parent-companies-okpabi-v-royal-dutch-shell-plc/ [Accessed 25 Oct. 2021].
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