Vedanta Resources PLC v Lungowe, [2019] UKSC 20

Removing straitjackets, and widening the potential scope of parent company liability for a subsidiary's actions

Can the parent company of a multinational group owe a duty of care to a third party for the actions of a foreign operating subsidiary? There remains no definitive answer at the time of writing. However, the UK Supreme Court ("UKSC") recently found that, in certain circumstances, it would be reasonable for UK courts to determine the question at trial.

This post concerns the UKSC's recent decision in Vedanta Resources PLC v Lungowe,1 a group action under Part 19 of the UK's Civil Procedure Rules.2 The decision ends a long jurisdictional challenge to the pursuit of a transnational tort claim in the UK. It matters in Canada because, at the time of writing, at least two transnational tort claims are before our courts too.3 While the decision in Vedanta is not binding in Canada, UK precedents, particularly decisions of the UK Supreme Court, continue to be well received and respected.4

The group members are Zambians living in rural farming communities in Zambia. Vedanta is a UK corporation, and is the publicly traded parent of a multinational group. Through the group, Vedanta has interests in mineral and hydrocarbon production in four continents.5 In Zambia, Vedanta has an interest in the Nchanga Copper Mine ("Nchanga").

The Nchanga interest is held through Vedanta's operating subsidiary, Konkola Copper Mines plc ("KCM"). KCM is not a 100% subsidiary of Vedanta. The Zambian government has a significant minority interest in it. Notwithstanding, Vedanta has published disclosure documents effectively stating that Vedanta's ultimate control of KCM is not to be regarded as any less than complete.6

The group sued Vedanta and KCM in 2015. They allege damage to their health and farming activities caused by repeated toxic discharges from Nchanga into the watercourses the group members use for drinking and irrigation. The claims against Vedanta and KCM include a claim in negligence. The essence of the group's claim against Vedanta is that "it exercised a sufficiently high level of supervision and control of the activities [at Nchanga], with sufficient knowledge of the propensity of those activities to cause toxic escapes into surrounding watercourses, as to incur a duty of care to the group".7

To sue KCM in England, the plaintiffs were required to show a triable issue against Vedanta. Under the UK's Civil Procedure Rules, if there was a triable...