On 14 February 2018, a UK Court of Appeal dismissed the Okpabi v Royal Dutch Shell (RDS or Shell) appeal on the basis that RDS could not be held legally responsible for the actions of its Nigerian subsidiary, the Shell Petroleum Development Company of Nigeria (SPDC)...This decision is highly concerning for two main reasons. Firstly, it denies the Ogale and Bille communities an opportunity for justice in a case where the chances of obtaining meaningful reparation in Nigeria are virtually non-existent.  Secondly, it backtracks on prior UK court decisions on parent company liability...

The Court of Appeal dismissed the claims based on the absence of evidence to demonstrate operational control of Shell over its subsidiary...Such a high evidentiary burden on claimants alleging parent company liability at such an early stage in the proceedings is unjust and unrealistic...

UK courts have gradually advanced useful parent company liability principles, with Chandler v Cape plc being the strongest precedent yet.  However, the Court of Appeal disregarded principles established in this case...[I]t is not the active engagement of a parent company in the abuse, but its failure to act to prevent it when it could that results in serious harm.  Unfortunately, the Court of Appeal chose to backtrack on this important point.

The view expressed by the Court of Appeal that a parent company duty of care may only arise in cases of active control or enforcement would promote a “hands off” approach to the human rights impacts of subsidiaries...Should it stand, the Court of Appeal’s ruling would have the exact opposite effect of discouraging parent companies from concerning themselves with, and taking action to avoid, the adverse human rights impacts of their subsidiaries...