Vedanta Resources Research Articles

Resisting ‘extractive capital’: a comparative study of two adivasi anti-mining movements in postcolonial (and neoliberal) India

ABSTRACT This study compares adivasi movements against two mining projects commissioned in India by Vedanta Resources, a London-based Indian mining corporation. One is the resistance of the Dongria Kondh to the bauxite mining and aluminium processing projects at Niyamgiri. The movement succeeded when the Supreme Court of India scrapped the project in 2013. The other is the movement of the Binjhal against a gold mining project at Sonakhan. The project was to be started in 2015, but intense opposition led the chief minister promise to stop it. We argue that both the movements, which had only ‘cultural resources’ available, established solidarity by mobilizing history, memory and folk imaginaries. The participation of external civil society organizations led to a resounding success across scales in the case of Niyamgiri. But the local contextualization of culture, and limited networks, constrained the success of the Sonakhan movement to the local scale. The ultimate successful outcome for both however depended on the available ‘political opportunities’ across times and scales.

Transterritoriality as a theory to hold corporations accountable for human rights violations: the application of its principles in Vedanta and Nevsun cases

This paper examines the basis for transterritoriality as a theory to hold corporations accountable for human rights violations and attempts to its application in two Business and Human Rights leading decisions: Vedanta Resources Plc and Konkola Copper Mines Plc v. Lungowe and Ors. [2019] UKSC 20 and Nevsun Resources Ltd. v. Araya, 2020 SCC 5. By the analysis of both judgements, issued by two Supreme Courts under the common law regime, the present work aims to prove that, in order to hold corporations accountable for human rights violations, national judges can apply private international law, public international law and international human rights law in an heterarchical and transversal manner to ensure a genuine dialogue between national jurisdictions and international courts under the application of the main principles and rules of international law. Qualitative and deductive methods used were based on interdisciplinary research and primary and secondary business and human rights sources were consulted to develop the proposed theory and case analysis.

Resource Nationalism in Zambia 1964–2020 and the Liquidation of Konkola Copper Mines

Industrial copper production is a major driving force of the Zambian economy. As such, it is seen by the Zambian people as a key vehicle for national development. Until the 1990s, the mining industry in Zambia was controlled by Zambia Consolidated Copper Mines (ZCCM). The mines were subsequently privatised, a process which was facilitated through a series of ‘development agreements’. One of these mines was Konkola Copper Mines (KCM), purchased by Vedanta Resources Holdings. Vedanta also entered into a shareholders’ agreement with the newly formed ZCCM Investment Holdings in November 2004. In 2019, ZCCM Investment Holdings (ZCCM–IH) applied to have KCM liquidated. Its application to the court alleged that Vedanta had operated KCM in a manner that was detrimental to ZCCM–IH’s interests. Through an examination of KCM’s privatisation and subsequent liquidation, this article maintains that Vedanta will have to be compensated for this liquidation under international investment law and that had the Zambian state wanted to avoid this, it should instead have pursued the matter using international environmental law.

The Vedanta challenge to multilateralism: Piercing the boundaries of the global legal order—Afterword to the Foreword by Karen Alter

Abstract In this Afterword, I expand Alter’s argument on multilateralism and colonialism, and argue that the emergence of multilateralism per se (and not only international economic law) played a pivotal role in facilitating global markets through its allocation of governance and coordination costs as well as responsibility between sovereign authorities. I then follow Alter’s lead by turning to the contemporary legal arrangements beyond multilateralism and analyzing the role of the sovereign veil, the corporate veil, and the contract veil in constituting the contemporary global economic order. Finally, I revisit Vedanta Resources PLC v. Lungowe (2019) as a model for value-chain liability. I argue that Alter’s historical reading of the contemporary economic order provides a powerful lens through which to evaluate the normative significance and limitations of Vedanta and similar transnational legal endeavors.

The Delisting of Vedanta – What Went Wrong?

Unlike the concept of IPO, contra IPO or going private by delisting process is not so familiar among many. By buying back the publicly traded shares and acquiring majority of stake, the promoters of a company try to delist themselves from the stock markets. In March 2020, the UK based mining giant Vedanta Resources Plc. has come up with the delisting proposal of its Indian subsidiary Vedanta limited. However, the delisting was not successful. Analysts have identified that low offer price and unconfirmed bids were the primary reasons for the failure of Vedanta Limited’s delisting. The objective of the current case study is to throw light on the delisting and reverse book building process through the case of Vedanta’s delisting failure. It narrates the entire saga of Vedanta Limited’s delisting right from the announcement to the reverse book building process. The case also helps in understanding the reasons behind such delisting failures.

Vedanta Ltd. – attempts to go private

Learning outcomes On completion of analysis of this case, students would be able to: appreciate the context of a typical delisting decision of a public company that is part of a large business group; analyze the complex nature of the relationships among the promoter shareholders, minority shareholders, government-controlled financial institutions, independent directors and executive directors in such a situation of transfer of value; and develop the best possible course of action for the promoters, independent directors and public shareholders, keeping into consideration the principles of corporate governance and the objective of shareholders’ wealth maximization. Case overview/synopsis The case presents an opportunity to examine the corporate restructuring and governance issues associated with the delisting attempt of India-based mining company Vedanta Ltd., by its London-based parent company, Vedanta Resources. The case focuses on the conflict of interests between the promoters of a business group and the public shareholders of a subsidiary, and the pivotal roles independent directors and proxy advisory firms play in supporting the public shareholders. Complexity academic level The case can be discussed in a graduate-level corporate strategy course that deals with restructuring and governance issues in companies, especially large group companies. It can also be discussed in a course of corporate governance where students have the opportunity to understand the potential conflict between promoters and other shareholders, and the moderating roles the independent directors and institutions may play in resolving such conflicts. Supplementary materials Teaching notes are available for educators only. Subject code CSS 11: Strategy.

THE CORPORATE GROUP: SYSTEM, DESIGN AND RESPONSIBILITY

AbstractLungowe v Vedanta Resources plc presages more liberal criteria for determining when a parent company owes a duty of care to third parties injured by subsidiary activities. It invokes systems language and points to potential parent company liability for omissions in managing the group. This article develops these ideas. It portrays the corporate group in systems-managerial terms. The parent creates group-wide structures and deploys management strategies and integrating mechanisms that facilitate achievement of its purposes. It has a substantial causal influence upon subsidiary acts and omissions. Prima facie the parent cannot avoid extended liability claims by hiding behind the “pure omissions” rule.

Okpabi and Others v Royal Dutch Shell plc and Another [2021] UKSC 3

The Supreme Court’s recent decision in Okpabi and Others v Royal Dutch Shell plc and Another [2021] UKSC 3 follows a similar trajectory to its predecessors, Chandler v Cape plc [2012] EWCA Civ 525 and Vedanta Resources plc and Another v Lungowe and Others [2019] UKSC. In this short note, we explore the judgment in Okpabi and the implications of increased parent liability for subsidiaries’ actions. This decision removes procedural barriers for claimants particularly around jurisdiction and civil procedure. Specifically, we reflect on the potential that this judgment has for greater access to remedy for those who have suffered a negative human rights impact because of business activities.

The Future of Tort Litigation against Transnational Corporations in the English Courts: Is Forum [Non] Conveniens Back?

AbstractThis article examines private international law issues raised by civil liability cases commenced in the courts of home states against transnational corporations concerning their alleged involvement in the overseas human rights violations. These claims have been particularly successful in the United Kingdom, where in the last several years the framework of Brussels I Regulation (recast) and English common law rules made it appropriate for the English courts to assert jurisdiction over corporate defendants without the possibility of subjecting claims against the parent companies to forum non conveniens control. In 2019, however, the Supreme Court in a high-profile case Lungowe v Vedanta Resources plc expressed doubts as to whether England should always constitute a proper forum for litigating overseas wrongs arising from the operations of British multinationals. The article aims to assess how the search of the most appropriate forum to litigate the dispute might impact victims of business-related human rights abuses in the post-Brexit environment and propose avenues for legal change.

Transnational corporations and modern slavery: Nevsun and beyond

ABSTRACT A recent decision of the Supreme Court of Canada Nevsun Resources Ltd. v Araya, has brought the issue of transnational corporations’ responsibility for human rights violations to the forefront in Canada. After critically examining the decision, this article aims to propose an effective legislative design for Canada. The article also examines another pertinent decision (this one from the UK), Vedanta Resources plc. v Lungowe in this regard. The proposals for effective legislation in Canada set out in this article will also be relevant for other countries considering the introduction of (or amending) modern slavery laws.

Transnational Corporate Liability Litigation and Access to Environmental Justice: The Vedanta v Lungowe Case

On April 10, 2019, the Supreme Court of the United Kingdom released the Vedanta Resources Plc & another v Lungowe & others judgment. This case dealt with an English domiciled parent company’s possible liability for alleged environmental damage caused by one of its subsidiaries in Zambia. Based on the arguable duty of care Vedanta could owe to foreign claimants affected by the operations of one of its overseas subsidiaries, the Supreme Court ruling adopted a ‘new approach’ –regarding transnational corporate liability litigation–, which established that the parent company’s home state’s national courts might have jurisdiction to hear this case. This article seeks to explore the Supreme Court’s judgment, which is expected to have significant consequences and influence the reasoning of other domestic courts in countries where parent companies are located. Although the Supreme Court’s decision aims to give access to justice to the affected (Zambian) community, this article argues that it is questionable whether the adoption of this ‘new approach’ would encourage parent companies to adopt measures oriented towards the compliance of international environmental standards. Instead, the Court’s ruling could lead parent companies to assume less responsibility and to be less transparent regarding operations carried out by their foreign subsidiaries.

Vedanta Resources Plc and Another v. Lungowe and Others

In Vedanta v. Lungowe, the United Kingdom Supreme Court determined that civil claims for negligence brought by Zambian claimants against an English parent company (Vedanta) and its Zambian subsidiary (Konkola Copper Mines plc (KCM)) for damages experienced in Zambia can proceed in English courts. While framed as a domestic tort law case, the decision is significant for international efforts aimed at holding businesses accountable for their “negative impacts” on human rights. Writing for a unanimous Court, Lord Briggs's judgment hinged narrowly on the right of victims to access substantial justice. More broadly, Lord Briggs suggested that parent companies that hold themselves out in public disclosures as overseeing the human rights, environmental, social, or labor standards employed by their subsidiaries assume a duty of care to those harmed by the subsidiary. This suggestion has the potential to transform current corporate approaches to human rights due diligence and accountability.

Residents’ perceptions of the environmental and social impacts of KCM’s mining activities inNchangaNorth Township, Chingola, Zambia

The study explores and assesses mining and its environmental and social impacts on communities within which mining activities take place. The focus is on a mining community in Chingola, Zambia called Nchanga North Township where mining is carried out by a mining group called Vedanta Resources Plc, KCM. The study investigates the real and latent environmental and social impacts and the residents’ perception of impacts of mining activities on their communities in the light of the numerous promises and prospects that mining is said to provide for communities.Nchanga North Township in Chingola was purposively selected as the study area because of its close proximity to KCM’s Nchanga Mine. Several data collection methods were used, including; observations, literature review, 60 semi-structured interviews, water and soil sample analysis for pH. In assessing the perceptions of residents towards the environmental and social impacts of mining activities, systematic random sampling was used to interview a total of 60 households. This was out of a total number of 540 households in Nchanga North Township.It was found that mining operations at Nchanga mine were releasing dust to air mainly during blasting. There was also noise produced mainly by mine equipment and blasting operations. It was also discovered that suspended solids resulting from carry overs of sediments with runoff from pit slopes resulted into water contamination. There was no significant difference between the pH values measured at the eight sample points in Nchanga North Township (mean = 6.20; range= 5.07-8.14) and the expected normal soil pH (mean = 6.25; t = -0.121; p = 0.907) at probability level p = 0.05. This implies that there was no pH raising or decreasing contaminants in the soil. There was no significant difference between the water pH values obtained in the field with the normal water pH (t = 6.636; p = 0.095) at probability level p = 0.05. This implies that there was no pH raising or decreasing contaminants in the Kafue River at the point of sample collection. Nchanga North Township residents believe that mining operations at Nchanga mine are affecting their environment and social life negatively. The lack of an environmental management plan by the mine to combat the adverse effects on the residents meant the residents close to the mine, were highly affected negatively.

Vedanta Resources plc and Another v Lungowe and Others

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Vedanta Resources PLC and Another (Appellants) v. Lungowe and Others (U.K. Sup. Ct.)

On April 10, 2019, the U.K. Supreme Court (UKSC) handed down judgment in the case of Vedanta Resources PLC and Another (Appellants) v. Lungowe and Others (Respondents). The case raises important issues regarding jurisdiction and the potential for a duty of care to be imposed on a parent company in respect of harm caused by its subsidiary. The UKSC has also made clear that a duty of care could be imposed in a nonequity relationship such as in relation to a company's supply chain.

Merger and Acquisition - Income Tax Perspective

In ever-growing economies, in case of business entities, the acquisition, consolidation or merger options are impeccable to endure and, relevant in the market. Globalization coupled with faster to be developments in technology are further challenging to both, the centuries-old businesses and the new entities alike. The term Merger and Acquisition (hereinafter 'M&A') is a broader one and includes other forms also, to say, amalgamation, acquisition via business purchase, share purchase, slump sale and itemized sale, combination, capital restructure via buyback and capital reduction, reverse merger and demerger. History has recorded seven-periods as 'Merger Waves' 1 caused by the aforesaid reasons. The first six-merger wave occurred between 1897 and 2007 and seventh wave from 2011 onwards. In India's context, the first major M&A attempt was witnessed during 1983 when Sri. Swaraj Paul, a London-based industrialist's bid to take management control of two Indian entities, viz., Escorts Limited and Delhi Cloth Mills Limited followed by India Cements attempt on Raasi Cements Limited during 1998. Recent past successful attempts can be listed as Vodafone Group Plc.'s business transfer deal with Hutchinson in 2007, Emami Limited's acquisition of Zandu Pharmaceutical Works Limited in 2008, Vedanta Resources Plc.'s acquisition of the stake in Cairn India in 2011, Walmart Inc.'s acquisition of the stake in Flipkart Private Limited and Idea Cellular's merger with Vodafone India, Hindustan Unilever Limited's all-stock acquisition of Glaxosmithkline Consumer Healthcare Limited during 2018 and the latest one by Larsen and Toubro's acquisition of the stake in Mindtree Limited during March 2019. Meanwhile, sensing the hostile bidding attempts and to regulate 'M&A Regime', the Indian Government has brought in a number of legislations with suitable amendments as and when its found necessary, such as Industrial Development and Regulation Act, 1951, Monopolistic and Restrictive Trade Practice Act, 1969, Foreign Exchange Regulation Act, 1973 (now replaced with Foreign Exchange Management Act, 1999), Companies Act, 2013, SEBI (Listing Obligation & Disclosure Requirements), 2015, SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, Income-tax Act, 1961, Delisting Regulations 2009, Indian Accounting Standards or Ind-AS, Competition Act, 2002, recently introduced Insolvency and Bankruptcy Code, 2016, GST Laws and proposed changes in Foreign Direct Investment to regulate e-commerce sector. The present article predominantly deals with income-tax law perspective.

Profit Opportunities from Vedanta and Cairn India Merger

On June 14, 2015, Vedanta Resources PLC of the UK announced the merger of two of its Indian subsidiaries, namely, Vedanta Limited and Cairn India Limited. Per the terms of the merger, Vedanta Limited would issue one share of itself for every share of Cairn India. In addition, it would also issue a preference share of INR 10 in face value. The stock prices of the two companies, however, soon started trading outside the range suggested by the above exchange ratio. This gave rise to different possible trading strategies for the investors with different possible outcomes. The case is written around mid-September 2015, when the share prices of both companies declined and the shareholders were yet to receive any formal communication from the management.

Vedanta Resources PLC and Another v Lungowe and Others [2019] UKSC 20

As globalization has expanded in recent years, a number of novel issues have arisen on the international stage, regarding the relations and interaction between legal regimes – both from the perspective of states (in contexts such as human trafficking), and from that of multinational corporations. One such issue in this latter context concerns liability of parent companies for actions or omissions of their (overseas) subsidiaries or branches – especially considering the lack of transparency surrounding such relationships, and the very public face presented by a multinational. Given the potential for a claim to be brought in either of the two jurisdictions concerned, a number of cases have sought to bring some clarity to this decision. Vedanta Resources plc and another v Lungowe and others1 is the latest in a line of cases at the UK courts concerning liability of parent companies for actions of foreign-domiciled subsidiaries. AAA v Unilever plc2 and Okpabi and others v Royal Dutch Shell plc and another3 discussed, and were dismissed largely because of, lack of ‘sufficient proximity’ between the parent company and subsidiary to prompt a duty of care. As discussed below, this was one question of law on which the claimants succeeded in Vedanta: a common law duty of care was found. The implications of Vedanta for Okpabi upon its upcoming appeal (and similar future cases) in extending the applicability of a duty of care (in certain circumstances) to stakeholders other than employees or consumers, are wide-ranging. Given the less than optimistic outcome for victims in both AAA and (to date) Okpabi from a business and human rights perspective, it is hoped that Vedanta can contribute to a more victim-centered approach. Case note: Vedanta Resources plc and Another v Lungowe and Others [2019] UKSC 20

Investment-Induced Displacement in Central India

India’s abundant natural resources are a key feature of its newfound status as an emerging market that attracts foreign investments. As the country’s output of metals and their ores increases, investments to secure deals over mineral deposits and manufacturing plants increase. Apart from direct funding for new projects, new investments pay for a large increase in the deployment of security forces, multilayered briberization, and protection money that also funds Maoist outfits, in yet another unending war that is fundamentally a resource war around mineral and metal production—primarily steel and aluminum as well as coal and water. In this article, Damodaran and Padel examine the mining operations in Central India where Vedanta Resources, a corporation that has become symbolic of neoliberal capitalism in India today, brings huge new foreign investments in to exploit India’s resources under the logic of emerging markets. About a quarter of postcolonial India’s scheduled tribe population has been displaced by development projects, often through foreign loans and investments.

A Case Study on Vedanta Alumina Ltd (VAL) Orissa India: State and FDI versus Democracy?

Abstract Foreign investment in extractive industries in the developing economies has seldom remained free from various types of controversies. Vedanta Aluminum Ltd (VAL) integrated aluminum project in Orissa is an important project for Vedanta Resources Plc. The project suffered major setbacks as the Indian government withdrew the permission for bauxite mining in Niyamgiri and issued a show cause notice under Environment protection act in 2010 for undertaking construction activity without obtaining environmental clearance for its alumina expansion project at Lanjigarh in Kalahandi district in Orissa. This case illustrates how a decentralized policy and bureaucracy in a country like India deal with myriad problems of resource curse together with attendant consequences, despite the fact that as compared to several developing nations India has a better track record of legislative framework, an experienced bureaucracy and a regulatory framework. There are institutional rigidities and limits of public policy formulation and implementation which adversely affect a diverse range of stakeholders: essentially because economic growth priorities override all feasible considerations of protecting and furthering stakeholder interests. India is not the only state which has undergone such an ordeal, many developing countries have suffered as well from their relative inability to deal with the issues of resource curse; but this case study assumes further significance because based on the actual final decisions a future road map in terms of a realistic public policy both for domestic investors as also foreign investors in extractive industries will be decided.