Trend Of Environmental Litigation Against Holding Corporations On The Increase

Environmental litigation against holding corporations for environmental damage caused by their subsidiaries abroad, globally, is increasing.

This case was first published on Commercial Risk Online.

In England, these claims have origins in employers liability claims of the 1990s, when the workers of foreign subsidiaries began suing holding corporations in the English courts for alleged health and safety breaches. The English courts have since been presented with several environmental claims, including those arising from alleged toxic waste contamination in Ivory Coast and oil pollution in Nigeria.

For a claimant, the advantages of suing holding corporations in their home jurisdictions speak for themselves. Foreign subsidiaries may lack the assets or insurance protection to finance large environmental remediation schemes. Claims in developed jurisdictions also have the added attractions of experienced lawyers, environmental experts and readily available litigation funding.

For the holding corporations which become defendants to such claims, they may face new and previously unforeseen environmental exposures. In particular:

As the claims are made directly against the holding corporation, they threaten the careful distribution of liability which multinational corporate structures are often intended to achieve. The multijurisdictional nature of the claims means that they may fall between the cracks of the corporation's environmental liability insurance arrangements. The claims carry heavy exposures and stratospheric legal costs. In 2010, it was reported that the English firm representing the Ivory Coast claimants sought legal costs of £105m following settlement of the claim. The Lungowe case

In 2014, a Zambian government report found that effluent discharged into surface water from the Nchanga copper mine contained material quantities of toxic metals and other substances. Such discharges gave rise to a potential liability in tort and under the Zambian Mines and Minerals Act 2008, Environment Management Act 2011, Environmental Protection and Pollution Control Act 1990 and Public Health Act 1930.

At the relevant time, the mine was owned and operated by KCM, a Zambian corporation in which the Zambian government was a minority shareholder. The majority shareholder was Vedanta, a multinational holding corporation domiciled in England.

In 2015, a group of about 2,000 Zambian villagers issued proceedings against KCM and Vedanta in the English High...