OPINION: UK leads way in holding corporations to account for rights abuses

British court rulings reflect global movement towards greater accountability for multinational corporations

By Oliver Holland and Liberty Bridge, a partner and solicitor at Leigh Day

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For Zambian farmers, Nigerian fisherman and Bangladeshi shipyard workers, recent judgments from the UK courts have provided clarity that multinational companies can be held accountable for the harm caused to individuals by their operations. Claims that are based on whether a UK company can owe a duty of care to a foreign claimant even where damage has been caused by a third party is a rapidly evolving area of law – there is a global movement towards greater accountability for multinational corporations and these recent judgments show the UK courts are leading the way.

In the past the idea that companies owed a duty of care to local communities was not a boardroom concern. Now, corporate social responsibility policies may give rise to liability for environmental and human rights abuses and provide evidence of both proximity and control – whether or not there is a direct relationship between a company and a victim.

The case that led the way for greater accountability was Vedanta v Lungowe, a case concerning the alleged pollution of waterways in the Copperbelt region of Zambia. After a hard fought battle all the way to the UK Supreme Court, the judgment held that the Claimants had a right to bring a case in the English courts against the UK domiciled parent company and their Zambian subsidiary. The Court found that a duty of care was clearly arguable due to the proclaimed control of the parent company over their subsidiary. A key principle from this judgment was the idea that a company can be held accountable for any proclamations of oversight and control whether or not that is in fact a reality.

(Editor’s note: In January, without admission of liability, Vedanta agreed to settle all claims brought against it by more than 2,500 Zambians following pollution by a copper mine run by its subsidiary Konkola Copper Mines Plc)

Following Vedanta, claims brought on behalf of two Nigerian communities in Okpabi & Bille v Royal Dutch Shell also reached the UK Supreme Court – here the Claimants allege that Royal Dutch Shell is jointly responsible with its Nigerian subsidiary company for oil spills that they say have devastated their communities.  The Supreme Court confirmed the principles in Vedanta and found that Royal Dutch Shell could owe a duty of care to the Claimants and therefore may be liable for the damage caused by the oil spills. The Court rejected the argument that because a company has a complicated corporate structure a duty of care is less likely to exist – if there is oversight and an element of control, there is an established duty of care. 

(Editor’s note: In February, Shell said the decision was “disappointing” and that its subsidiary SPDC “works hard” to clean up and prevent spills)