On Friday, 13 October 2017 the UK Court of Appeal handed down its long anticipated decision in Lungowe and others v. Vedanta Resources Plc and Konkola Copper Mines Plc  EWCA Civ 1528 (“Vedanta”). The appeal was brought by UK-based Vedanta Resources Plc (“Vedanta Resources”) and its Zambian subsidiary Konkola Copper Mines (“KCM”), against a decision dismissing certain jurisdictional challenges brought by each of Vedanta Resources and KCM.
The underlying claim was brought by a group of Zambian Villagers alleging that harmful effluent from the appellants’ Zambian copper mining operations had been discharged into the local environment, including waterways that were of critical importance to the livelihood of the claimants, and to their physical, economic and social wellbeing. Rejecting the appeal, the Court of Appeal found that the claim could proceed against the appellants in the UK.
The Vedanta litigation is a critical avenue for the claimants to pursue effective remedy as envisioned by the UN Guiding Principles on Business and Human Rights (“UNGPs”) and represents a significant development in the emerging doctrine of parent liability.
Accessing Human Rights Remedies against Companies – the Importance of Tort Claims
The UNGPs are structured around three pillars: first, the State duty to protect against human rights; second, the corporate responsibility to respect human rights; and third, the need for greater access to effective remedy for victims of human rights abuses. The UNGPs do not provide any enforcement mechanism, and with the exception of the obligation of non-state actors to comply with international criminal law, there are no direct international law obligations on corporate actors to respect human rights.
Conventional tort litigation can provide an avenue for private parties to bring suit against multinational corporations in domestic courts based on conduct which violates international human rights (“IHR”) standards. Given the dearth of direct IHR obligations on corporate actors, pursuing human rights breaches in the form of domestic tort claims remains one of the few avenues for those impacted by human rights violations to obtain effective remedy.
While it may be preferable to bring a claim based on human rights abuses in the jurisdiction in which the underlying events occurred, where a domestic court in a host jurisdiction is unwilling or unable to provide a judicial avenue for redress, plaintiffs may seek to bring claims in the home state of a corporate actor. Although the future of corporate liability under the Alien Tort Statute in the US remains uncertain pending the outcome of the Supreme Court’s decision in Jesner at al v Arab Bank Plc No 16-499, there are promising developments in the case law in Canada (Choc v Hudbay Minerals Inc  ONSC 1414), the Netherlands (Akpan v Royal Dutch Shell PLC Arrondissementsrechtbank Den Haag, 30 January 2013 Case No C/09/337050/HA ZA 09-1580) and the UK (AAA and Anor v Unilever PLC and Anor  EWHC 371) where courts have been willing to assume jurisdiction over cases where harms the subject of the claim have occurred outside the home state. Vedanta represents the latest development in this global body of case law
The Court of Appeal’s decision to accept jurisdiction over this case is undoubtedly significant and represents a clear statement on the non-applicability of forum non conveniens in the EU where a claim is in a court in which the defendant is domiciled, confirming the widely accepted interpretation of Owusu v Jackson (case c-281/02)  QB 801 to that effect.
However, in addition to allowing the case to proceed in the UK, and perhaps more significantly, Simon LJ made a number of remarks in Vedanta indicating the Court’s receptiveness to a potential duty of care owed by a parent company to those affected by acts of its subsidiaries.
Parent Duty of Care Owed to those Affected by Acts of Subsidiaries
In the context of deciding whether Vedanta Resources was a “necessary or proper party” to the proceedings for the purposes of paragraph 3.1(3) of Practice Direction 6B, Simon LJ reviewed the current state of the law in the UK on the existence of a duty of care owed by a parent concerning acts of its subsidiary, concluding (emphasis added):
 It seems to me that certain propositions can be derived from these cases which may be material to the question of whether a duty is owed by a parent company to those affected by the operations of a subsidiary. (1) The starting point is the three-part test of foreseeability, proximity and reasonableness. (2) A duty may be owed by a parent company to the employee of a subsidiary, or a party directly affected by the operations of that subsidiary, in certain circumstances. (3) Those circumstances may arise where the parent company (a) has taken direct responsibility for devising a material health and safety policy the adequacy of which is the subject of the claim, or (b) controls the operations which give rise to the claim. (4) Chandler v. Cape Plc and Thompson v. The Renwick Group Plc describe some of the circumstances in which the three-part test may, or may not, be satisfied so as to impose on a parent company responsibility for the health and safety of a subsidiary’s employee. (5) The first of the four indicia in Chandler v. Cape Plc , requires not simply that the businesses of the parent and the subsidiary are in the relevant respect the same, but that the parent is well placed, because of its knowledge and expertise to protect the employees of the subsidiary. If both parent and subsidiary have similar knowledge and expertise and they jointly take decisions about mine safety, which the subsidiary implements, both companies may (depending on the circumstances) owe a duty of care to those affected by those decisions. (6) Such a duty may be owed in analogous situations, not only to employees of the subsidiary but to those affected by the operations of the subsidiary. (7) The evidence sufficient to establish the duty may not be available at the early stages of the case. Much will depend on whether, in the words of Wright J [in Connelly v RTZ Corporation Plc  CLC 533], the pleading represents the actuality.
That a duty may be owed not only to the employees of a subsidiary, but also to those affected by its operations in analogous situations has significant implications, particularly for practitioners seeking to find avenues for access to effective remedy as set out in Pillar III of the UNGPs via domestic tort law.
While the scope of any such emerging duty remains theoretical and will depend in large part on the facts of a particular case, Simon LJ went on to note that the fact that no such duty had been found in the jurisprudence to date was not of itself a bar to such a duty being established in the future, stating that:
 [Counsel for the appellants] also pointed out that there had been no reported case in which a parent company had been held to owe a duty of care to a person affected by the operation of a subsidiary. That may be true, but it does not render such a claim unarguable. If it were otherwise the law would never change.
Trends in the Jurisprudence – Scope for Supply Chain Liability
Acceptance of the corporate responsibility to respect human rights enshrined in Pillar II of the UNGPs and the need for access to effective remedy in Pillar III have developed alongside an escalating trend toward the recognition of a duty of care based on control or superior knowledge in recent case law. Vedanta affirms the emergent doctrine of parent liability established in Chandler v Cape Plc  EWCA Civ 525 and Thompson v The Renwick Group Plc  EWCA Civ 635 and introduces the possibility that a parent may owe a duty not only to the employees of a subsidiary, but beyond.
Simon LJ’s obiter remarks in Vedanta confirm that liability may extend where there is direct responsibility or control over the human rights impacts of another corporate entity. This trend in the jurisprudence, which aligns with the principles set out in the UNGPs, could potentially extend beyond the corporate group and into the supply chain. While liability will ultimately turn on whether “the pleading reflects the actuality”, on the current state of the case law, a parent company with active control over its global operations is increasingly less likely to be in a position to exclude liability through complex corporate structures and reliance on separate corporate personality.
The development of a global body of case law in this area has been slow, given that most claims of this nature settle. The significance of Simon LJ’s obiter remarks lie in the fact that should Vedanta settle, or should the claimants fail on the facts, future claimants may take confidence that such a duty of care may exist, that the law is open to extension of the parent duty of care, and that UK courts are willing to take an expansive approach to jurisdiction in line with trends in the global jurisprudence.
The British Institute of International and Comparative Law (BIICL) and Norton Rose Fulbright are currently undertaking a research project on the law and practice of Human Rights Due Diligence in Supply Chains.