Establishing Liability for Multinational Oil Companies in Parent/Subsidiary Relationships

Abstract

A number of significant legal challenges impede the attribution of liability to parent corporations for the overseas operations of their subsidiaries. The multinational reach of these entities’ activities raise questions as to which forum is appropriate to hear the case, under which state’s jurisdiction an action may be brought and as to which state’s domestic law should be applied. The elaborate corporate structures exhibited by many multinational corporations (MNCs), which often incorporate holding companies, joint ventures and external contractors, serve to complicate matters still further. The recent case of Akpan & Anor v Royal Dutch Shell plc & Anor dealt with these issues in an environmental context. The case formed part of a class action suit brought by Milieudefensie (Friends of the Earth Netherlands), a Dutch non-governmental organisation (NGO) promoting environmental protection, and four Nigerian farmers. The farmers had all experienced damage to their farmlands and fishing ponds resulting from numerous oil spills across three proximate regions between 2004 and 2007. Akpan, the only successful applicant, is a farmer and fisherman residing in the village of Ikot Ada Udo, Nigeria. Throughout the course of the action, all four Nigerian applicants were supported by Milieudefensie, which itself attempted to bring claims against both the parent company and its wholly owned subsidiary as a third party.