Friday 12 February 2021

UK: England and Wales: Supreme Court on parent company liability for actions of subsidiary companies

A belated (and overdue) return to the blog, to report the delivery today, by the Supreme Court, of its judgment in Okpabi v Royal Dutch Shell Plc [2021] UKSC 3: see here or here (pdf).  A summary of the judgment is available here (pdf). 

The Supreme Court unanimously held that the Court of Appeal (in [2018] EWCA Civ 191) had erred in law in several respects, thereby opening the way for the claim to be brought in England against the UK incorporated parent company in respect of environmental harm caused by a Nigerian subsidiary.  It was wrong, the Supreme Court held, to approach the question of whether a parent company owed a duty of care in respect of the conduct of its subsidiaries by reference to any generalised assumption or presumption. Moreover, the Court of Appeal had focused unduly on the question of control by the parent company; what mattered, the Supreme Court stated, was the extent to which the parent took over, or shared with the subsidiary, the management of the relevant activity (something that control by the parent might demonstrate, but not necessarily).  The Supreme Court also held that, to the extent that the Court of Appeal had suggested that the parent company's promulgation of group wide policies or standards could never in itself give rise to a duty of care, that was inconsistent with Lungowe v Vedanta Resources plc [2019] UKSC 20.

An oral summary of the Supreme Court's decision was delivered by Lord Hamblen: see below. 

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