Okpabi v Shell and Lungowe v Vedanta Dispel Three Myths
In less than two years, it is also the second Supreme Court ruling on the question of whether UK courts have jurisdiction to hear extraterritorial cases applying the tort law duty of care to multinational enterprises. In Okpabi v Shell, the Supreme Court reinforced the ruling of its previous case Lungowe v Vedanta. These jurisdictional cases not only clarified when UK courts have jurisdiction over a UK parent company for extraterritorial torts committed by its foreign subsidiaries, but they also provided authoritative guidelines as to how lower courts should decide on the merits of parental liability cases.
The jurisprudence on the tort law duty of care has established three myths that Okpabi v Shell and Lungowe v Vedanta dispelled: first, the myth that English courts would hardly ever assert jurisdiction on torts allegedly committed in foreign countries; second, the myth that parent companies may owe a duty of care towards the employees of a corporate group, but not towards third parties; third, the myth that it is only in a narrow category of cases that claimants could prove the existence of a parent company’s duty of care...
In both Okpabi v Shell and Lungowe v Vedanta, the Supreme Court emphasised that the number of circumstances in which a parent may owe a duty of care towards the victims of tort perpetrated by its subsidiaries are various and should not be limited. For example, the control exercised by a parent company over its subsidiary, the fact that a parent takes over the management of its subsidiary or group wide policies could all be relevant factors, but are not necessary elements, to establish the existence of a duty of care. It is yet to be seen how lower courts will take such factors into account when deciding on the merits of Okpabi v Shell and Lungowe v Vedanta.
However, it is clear that the approach taken by the Supreme Court opens the door to a wide variety of situations where a parent may owe a duty of care towards the tort victims injured or damaged by its subsidiaries.