Abstract
Two English and two Dutch cases have recently clarified the (potential) liability of parent companies vis-à-vis third parties in relation to damage caused by their subsidiaries. They concern the decisions of the UK Supreme Court in Vedanta v Lungowe and Okpabi v Shell, the Hague Court of Appeal in Oguru v Shell and the Hague District Court in Milieudefensie v Shell (climate change case).
Highlights
In early 2021, the Hague Court of Appeal in Oguru and the UK Supreme Court in Okpabi confirmed that parent companies[1] may owe a duty of care as regards the operational activities of their subsidiaries
This mine was operated by Konkola Copper Mines (KCM), a subsidiary of Vedanta, a parent company incorporated in the United Kingdom
In light of other evidence available to the Supreme Court, including documents the Hague Court of Appeal had ordered Shell to disclose, it concluded that the alleged facts had not been shown to be demonstrably untrue or unsupportable and that there were real issues to be answered in a trial.[42]
Summary
If claimants litigate against a multinational’s subsidiary in their own country, a fair trial may be doubtful, if the judiciary is not independent or incapable of handling mass claims, or because the local legal profession cannot match the multinational’s legal power. Claimants prefer to litigate in the parent company’s jurisdiction. This brings the dispute to the heart of the group, generating media publicity and reputational damage. Under EU law, parent companies can be summoned before the court of their seat or head office.[50] The forum non conveniens-defence is not accepted.[51] Whether the court has jurisdiction over claims against non-EU subsidiaries is determined by national law. 51 ECJ, 1 March 2005, Owusu, C-281/02, ECR [2005] I-01383 (Owusu/Jackson)
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