On 10 April 2019, the Supreme Court of the United Kingdom delivered its highly-anticipated decision in the case of Vedanta v. Lungowe (Lungowe v. Vedanta in the lower courts). The Supreme Court unanimously decided the case should proceed in English courts, dismissing the appellants’ arguments against English courts assuming jurisdiction. This marks an important next step in an ongoing series of cases, wherein foreign victims of human rights and environmental harms sue corporations and their foreign subsidiaries in the domestic courts of the companies’ European home States. Next to Lungowe, the series includes Okpabi v. Shell that I discussed previously on this blog, AAA v. Unilever and Akpan v. Shell, discussed here.

This post examines how the Supreme Court has provided some important clarifications on both the substantive and jurisdictional rules that govern these cases, thus making it somewhat easier for claimants to argue duties of care on parent companies. It also shows the Court’s emphasis on access to justice compared to the lower courts may be laudable in the abstract, but is unlikely to increase access to justice in practice…

Nadia Bernaz, Associate Professor of Law and Governance at Wageningen University in the Netherlands, analyses the UK Supreme Court's landmark decision., 18 April 2019

…The Supreme Court’s decision delivered by Lord Briggs focused primarily on the jurisdiction issue and the appropriateness of England as a forum…

…The main issue here was whether England was the ‘proper place to bring the claim’, as per the third part of the necessary and proper party test (para. 66). This requires Courts to balance the factors that connect the case with England – i.e., the case against the parent company over which English courts have mandatory jurisdiction – against the factors that connect the case to Zambia – i.e., the domicile of the claimants, the defendants and the locality of the harmful acts…

…This meant that in principle, England was not the proper place to try the case against KCM.

[One] point, however, is of substantive law: duty of care litigation based on Chandler is still very much alive in English courts. In para. 53 the Court even appears to extend the situations where a parent company may be under a duty of care. Whereas under Chandler claimants need to demonstrate that parent companies actually exercised control over their subsidiaries, Lord Briggs mentions that duties of care can also exist when parent companies claim they have control, but do not exercise it in practice…

From an academic perspective, more emphasis on access to justice as a relevant issue in these cases is positive... 

It remains to be seen how Lungowe will proceed from now. From the perspective of an academic observer, it would be good to finally see another case litigated on the merits. The case may also get settled before it moves on to the merits. Even if that happens, the Supreme Court decision in Lungowe will remain important for future foreign direct liability cases.