Friday 27 January 2017

UK: England and Wales: parent company liability for subsidiary company actions

In HRH Emere Godwin Bebe Okpabi v Royal Dutch Shell Plc [2017] EWHC 89 (TCC) the High Court has once more considered the circumstances in which a parent company may owe a duty of care in tort in respect of the actions (or omissions) of subsidiary companies. The decision is noteworthy because of the discussion it contains of the Court of Appeal decision Chandler v Cape Plc [2012] EWCA Civ 525 as well as the significance of statements made in public documents relating to corporate groups. To quote the trial judge (at paras. [95] and [96]):
... even if passages in public documents that state the policies of a group of companies could be construed as being sufficient to establish the presumption of a duty of care on the part of a parent for the acts of its subsidiary, then the words which appear in the Shell documents effectively disclaiming that interpretation would negate that presumption ... [moreover] I do not consider that such a presumption would operate in any event on the basis of such statements. The London Stock Exchange is a Recognised Investment Exchange under UK law, and operates a regulated market. The Exchange must ensure that all securities admitted to trading on its markets, and the dealing in those securities, are conducted in accordance with the relevant legislation (both primary and secondary). That includes complying with certain disclosure standards. It is highly unlikely in my judgment that compliance with such disclosure standards could of itself be characterised as an assumption of a duty of care by a parent company over the subsidiary companies referred to in those statements. There is certainly no authority to this effect and in the absence of any, I would hold that such compliance cannot in itself be a sufficient factor to found a duty of care on the part of a parent holding company."

Update (2 February 2017) - the ICLR has provided a summary of the case: see here.

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