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The Supreme Court has given judgment in a high-profile appeal which raises important issues regarding jurisdiction and the potential liability of parent companies in respect of damage caused by their subsidiaries.

This appeal concerned claims brought by 1,826 Zambian citizens who allege that they have suffered damage as a result of toxic discharges from one of the world’s largest copper mines. The mine is owned and operated by the second defendant, Konkola Copper Mines plc (“KCM”), a Zambian company. The first defendant is KCM’s ultimate parent company, Vedanta Resources plc (“Vedanta”), which is domiciled in England. The claimants allege that both Vedanta and KCM are liable under Zambian law for negligence and breach of statutory duty, Vedanta’s alleged negligence being based on an alleged failure to exercise reasonable care in monitoring and controlling KCM.

The claimants served the proceedings on Vedanta within the jurisdiction, relying on Vedanta’s English domicile and article 4 of the Recast Brussels Regulation. The claimants obtained permission to serve KCM out of the jurisdiction, on the basis that it is a “necessary or proper party” to the proceedings against Vedanta. KCM and Vedanta challenged the jurisdiction of the English courts. Before the Supreme Court, they contended:

  1. that the claimants’ reliance on article 4 to establish jurisdiction over Vedanta as anchor defendant constituted an abuse of EU law;
  2. that there was no real triable issue against Vedanta, primarily on the basis that Vedanta would not owe the claimants an arguable duty of care under English law (it had been found at first instance that it is arguable that the principles of the Zambian law of negligence correspond to those of English law);
  3. that Zambia, not England, was the proper place in which to bring the claims; and
  4. that the Judge had been wrong to find that, even if Zambia would otherwise be the proper place, there was a real risk that that the claimants would not be able to obtain substantial justice there.

The Supreme Court dismissed KCM’s and Vedanta’s appeals. It held:

  1. that there was no abuse of EU law, and that the claimants are entitled to rely on article 4 to establish jurisdiction in respect of Vedanta;
  2. that Vedanta would arguably owe the claimants a duty of care, on the basis of the principles articulated in Dorset Yacht Co Ltd v Home Office [1970] AC 1004 (and that the breach of statutory duty claims are also arguable);
  3. that Zambia would be the proper place for the hearing of the claims, Vedanta having offered to submit to the jurisdiction of the Zambian courts; but
  4. that the Judge had been entitled to find that there was a real risk that the claimants would not be able to obtain substantial justice in Zambia, since (i) legal aid would not be available, conditional fee agreements are illegal, and the claimants are too poor to fund legal representation; and (ii) Zambia lacks legal teams of sufficient size and experience to pursue mass claims of this nature effectively.

The effect of the judgment is that the claimants’ claims against both Vedanta and KCM can proceed in England. The judgment has significant wider implications, in view of the large number of English-domiciled companies which operate through overseas subsidiaries around the world.

The judgment is available here.

Timothy Otty QC and George Molyneaux acted pro bono (instructed by Omnia Strategy LLP) for the International Commission of Jurists and the Corporate Responsibility (CORE) Coalition Ltd, which intervened in the appeal with the permission of the Supreme Court.

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