Vedanta Resources plc v Lungowe
A parent company may owe a duty of care to people affected by its subsidiary's operations if it has taken responsibility for the relevant activities, so the claim could be tried in England.
Facts
About 1,800 Zambian villagers claimed that their health and farming had been harmed by toxic discharges from a copper mine operated by Konkola Copper Mines, a Zambian company. Konkola was a subsidiary of Vedanta Resources, a company based in England. The villagers sued both companies in England, arguing that Vedanta owed them a duty of care because of its control over the subsidiary's environmental practices. The companies argued that the claim should be heard in Zambia.
Legal principle
The Supreme Court held that the claim against Vedanta disclosed a real issue to be tried, and that it could proceed in England. Lord Briggs said that the liability of a parent company in negligence for the activities of its subsidiary is not a distinct category of liability, and that it depends on the extent to which the parent took over, intervened in, controlled, supervised or advised on the management of the relevant operations of the subsidiary. A parent may incur liability where it has published group wide policies and taken active steps to see that they are implemented. Although Zambia would otherwise be the proper place for the trial, the claimants could not obtain substantial justice there, because of a lack of funding and legal representation.
Related cases on separate legal personality and the corporate veil
- Adams v Cape Industries plc [1990] Ch 433
- Chandler v Cape plc [2012] EWCA Civ 525, [2012] 1 WLR 3111
- Re Darby, ex p Brougham [1911] 1 KB 95
- DHN Food Distributors Ltd v Tower Hamlets London Borough Council [1976] 1 WLR 852
- Gilford Motor Co Ltd v Horne [1933] Ch 935
- Jones v Lipman [1962] 1 WLR 832
- Lee v Lee's Air Farming Ltd [1961] AC 12
- Macaura v Northern Assurance Co Ltd [1925] AC 619
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