Supreme Court rules that Zambians can seek damages from UK company for alleged human rights abuses by Zambian subsidiary

Significant developments continue in the field of human rights-based litigation in the UK.  On 10 April 2019, the Supreme Court issued its judgment in Lungowe and Ors. v. Vedanta Resources Plc and Konkola Copper Mines Plc, declaring  that a claim for negligence and breach of a statutory duty against a Zambian mining company and its English parent can be heard by the English courts.

The case concerns claims brought by 1,826 Zambian citizens against on the one hand a Zambia-based mining company, Konkola Copper Mines Plc (“KMC”), and on the other, its London-based parent, Vedanta Resources Plc (“Vedanta”).  The claimants allege that KCM’s mining activities have polluted water resources with toxic waste and that Vedanta, while not itself contributing to any environmental damage, incurred a duty of care to the claimants through its supervision and control of KMC’s mining activities.

In a high-profile decision, the Supreme Court accepted that English courts had jurisdiction over the case on the basis of Article 4.1 of the Brussels Regulation Recast, which provides that claimants may sue EU-domiciled defendants in their home country courts.  The Court relied on the decision of the European Court of Justice in Owusu v. Jackson  for support that proceedings under Article 4.1 cannot be stayed on grounds of forum non conveniens.

The Court noted that Zambia would normally have been the appropriate jurisdiction for the claims particularly since Vedanta had offered to submit to the jurisdiction of the Zambian courts.  However, the claimants risked being denied substantive justice in Zambia owing to the practical impossibility of obtaining legal funding or adequate representation.

The Court found an arguable case that Vedanta had assumed a duty of care to the claimants not only by issuing policy documents urging its subsidiary to prevent environmental damage but also by implementing those standards with the subsidiary through training, monitoring and enforcement.  The Court declined to place a limit on the types of activities that might demonstrate a parent company’s close involvement in its subsidiary’s activities.  The Court held that if the parent company takes over, intervenes in, controls, supervises or advises on the relevant operations of the subsidiary, it may become liable for the subsidiary’s activities.

The Vedanta decision thus serves as a warning to parent companies to assess carefully their involvement with subsidiaries from the perspective of duty of care and to consider potential exposure to human rights-based litigation in their home jurisdiction.

Companies are well advised to assess whether they have sufficient capacity and the requisite competent legal advice to avoid becoming targets of such actions.

As for forum non conveniens, the situation may change after Brexit.  When (or if) the UK leaves the European Union, it will no longer be subject to the jurisdiction of the European Court of Justice or the dictates of the Brussels Convention Recast.  As a result, English courts may revisit the doctrine of forum non conveniens to stay proceedings against English-domiciled defendants.