The National Human Rights Commission of India (NHRCI) was established on 12 October 1993 on the basis of the Protection of Human Rights Act (PHRA) as amended by the Protection of Human Rights (Amendment) Act No 43 of 2006. It is a quasi-judicial institution whose purpose is to protect and promote human rights, which are understood to be those rights relating to life, liberty, equality and dignity as enshrined in the Indian Constitution and in applicable international covenants (see s.2 (1)(d)). The duties of the Commission include inquiring into complaints ex officio or upon request, intervening in court proceedings relating to human rights, analysing legislative acts and making recommendations, studying international treaties and guiding their effective implementation, undertaking and promoting research, and raising awareness of human rights inter alia (see s.12 (a)-(j)). Section 21 of the PHRA further allows for the establishment of State Human Rights Commissions, which have largely the same mandate as the NHRCI with the exception of section 12 (f) regarding the study of international treaties (see also here). There are presently twenty-five state commissions. The National Human Rights Commission is headquartered in New Delhi.

This article analyses two types of actions in order to observe the extent to which the NHRCI has assumed its role in promoting access to remedy in business and human rights cases. According to the 2010 Edinburgh Declaration of the International Co-ordinating Committee of National Institutions for the Promotion and Protection of Human Rights (ICC), the participation of NHRIs in the remedial process may be either direct or indirect. As will be shown, the National Human Rights Commission of India has been quite shy in tackling issues of access to remedy whether directly or indirectly.

As to direct participation, the Commission is empowered to inquire into complaints alleging violations of human rights or negligence in the prevention of such violations by a public servant. It may do so either ex officio, on petition by a victim or following a court order (see s.12 (a)). While such an inquiry is ongoing, the NHRCI enjoys all the powers of a civil court trying a suit under the Code of Civil Procedure of 1908. Subsequent to reviewing the factors that inhibit the enjoyment of human rights, the Commission may recommend appropriate remedial measures (see s.12 (e)). The PHRA does not explicitly state whether the NHRCI may entertain complaints against companies. Yet the NHRCI’s 2012 Code of Ethics for the Indian Industry points out that there is no apparent reason not to extend the application of s.12 (a) to private persons (see here at page 28-29). This analysis nevertheless seems to be at odds with the practice of the Commission, which has been rather reluctant to exercise jurisdiction over companies. For instance, the NHRCI has carried out numerous investigations into allegations of child labour and bonded labour. These investigations were however carried out as a result of a Supreme Court order vesting the Commission with the power to oversee and monitor the implementation of the Bonded Labour System (Abolition) Act of 1976. The NHRCI has also intervened in cases relating to development-induced displacement, particularly in the cases of Special Economic Zones in India. It did not do so directly however. For example, upon receiving complaints about human rights violations concerning the POSCO project on Odisha, the Commission conducted a fact-finding mission and issued recommendations for the government on how to deal with the matter. Another way in which the Commission has tackled corporate human rights abuses is through its power as a civil court and through the intermediary of the State duty to protect. The NHRCI regularly directs local authorities to inspect businesses or enterprises against which complaints of human rights abuses have been made.[1] If the authorities’ report is unsatisfactory, the Commission may send its own inspectors to conduct a fact-finding mission. In some cases, the NHRCI directs the local authorities to pay relief. The Commission found that its sustained interventions in these cases usually leads to corrective action.[2] The NHRCI therefore seems to have rather opted for a back route to acting on business-related human rights complaints. It is nevertheless difficult to see why the Commission has shown this reluctance seeing as its mandate is rather permissive.  A more explicit mandate to deal with corporate human rights abuses would perhaps spur the NHRCI’s direct participation, which is overall quite lacking.

As to indirect participation, the National Human Rights Commission of India has had a visible presence in the sphere of business and human rights but less so in that of access to remedy. For instance, the NHRCI commissioned a study in April 2012 concerning the development of a Code of Ethics for the Indian Industry. The purpose of this study was to “[…] attempt to understand a range and quantity of ethical issues that reflect the interaction of profit-maximising behaviour with non-economic concerns […]”. Nevertheless, as far as access to remedy is concerned, this study contains nothing more than a reiteration of the UNGPs’ third pillar (see here at page 24). Nonetheless, the Commission has established a Core Group on Business, Environment and Human Rights, has convened no less than forty-three workshops on the elimination of bonded labour, and it has been nominated by the Commonwealth Forum of National Human Rights Institutions as the focal point for business and human rights matters. It also regularly convenes conferences on business and human rights (see for instance here and here). Most recently, following the conference on 2 July 2018, the NCHRI committed to engage with the Indian Ministry of Corporate Affairs in order to formulate a National Action Plan and to conduct a base line survey on business and human rights in the country.

In conclusion, the NHRCI has a wide mandate to protect and promote human rights but has yet to attain its full potential in ensuring access to effective remedy. It has not made full use of its complaint procedure, which could extend to cover human rights abuses by private parties. Furthermore, its role as a focal point for expertise on business and human rights seems to deal with access to remedy as a peripheral issue.

[1]           National Human Rights Commission, ‘Business and Human Rights: The Work of the National Human Rights Commission of India on the State’s Duty to Protect’

[2]           National Human Rights Commission, ‘Business and Human Rights: The Work of the National Human Rights Commission of India on the State’s Duty to Protect’

Editor's note: Alexandru Rares Tofan recently graduated with an LLM in Transnational Law from King’s College London where he focused on international human rights law, transnational litigation and international law. He is currently an intern with the Doing Business Right project at the Asser Institute in The Hague. He previously worked as a research assistant at the Transnational Law Institute in London on several projects pertaining to human rights, labour law and transnational corporate conduct.

Introduction

In 2014, three Eritrean refugees commenced a representative action in British Columbia against the transnational mining company ‘Nevsun Resources’, pleading both private law torts and violations of customary international law. They alleged that they were subjected to forced labour, slavery, torture, and crimes against humanity while working at an Eritrean gold mine jointly owned by Nevsun (60%) and by the Eritrean State (40%). The representative action was brought on behalf of over a thousand people who had been drafted into the Eritrean National Service Programme (NSP) and subsequently forced to work at the Bisha Mine. The NSP is a governmental apparatus of indefinite and mandatory conscription that is fraught with allegations of forced labour and other human rights abuses. It was established under the authoritarian regime of President Isaias Afwerki who has been ruling Eritrea ever since the country gained independence from Ethiopia in 1993. As Nevsun is incorporated under the laws of British Columbia, the plaintiffs sought relief in the courts of the Canadian province. Notwithstanding the defendant’s attempts to have the proceeding stayed or dismissed, the action was allowed to go through both by the Supreme Court of British Columbia (BCSC) and the Court of Appeals (BCCA). On 14 June 2018, the Supreme Court of Canada granted Nevsun leave to appeal with a tentative hearing date set on 23 January 2019.

This proceeding raises complex issues of transnational law. The plaintiffs are seeking redress in a jurisdiction that is neither the locus delicti nor their country of nationality. Rather, the claimants argue that peremptory norms of customary international law create a private law cause of action and a right to recover damages under Canadian law. In point of fact, the plaintiffs have called attention to several delicate questions. Firstly, can claims of damages arising out of the alleged breach of jus cogens norms form the basis of a civil proceeding? And are corporations bound by these international law norms for that matter? The case is further layered by the involvement of the State of Eritrea. Since Nevsun is argued to be derivatively liable, a finding of guilt on its part would mean that the Canadian courts would be judging the acts of another state. This engages the act of state doctrine, which demands judicial abstention from adjudication of matters touching upon the conduct of foreign states.

Nevsun filed four interlocutory applications seeking to have the claim stayed, dismissed or struck out. This article traces the development of this case through the first three objections to jurisdiction raised by Nevsun and dismissed by the provincial courts: forum non conveniens, the act of state doctrine and the lack of corporate liability under customary international law.  A fourth application argued that the plaintiffs’ claims are not appropriately brought as a representative action (i.e. class action). This application was granted by the Supreme Court of British Columbia and was not appealed by the plaintiffs.[1]

Forum Non Conveniens

The first objection to the jurisdiction of the Canadian courts raised by Nevsun is forum non conveniens.[2] This common law doctrine enables a court that has jurisdiction over a case to dismiss or stay the proceeding if a more appropriate forum is available. The onus generally falls on the defendant who has to prove that the alternate forum is comparatively more appropriate and therefore preferable. Nevsun applied for a stay of proceedings pursuant to Rule 21-8 (2) and S. 11 of the Court Jurisdiction and Proceedings Transfer Act (CJPTA), alleging that the Eritrean courts are a more appropriate forum for this action.[3] It argued that Eritrea is the jurisdiction that has the closest connection with the action, and that the comparative convenience and expense for the parties and their witnesses overwhelmingly favours proceeding in Eritrea. Contrarily, the plaintiffs argued that the case should proceed in British Columbia because there is a real risk that justice will not be delivered in Eritrea.[4] They claimed that the plaintiffs would face severe barriers to justice there given their status as deserters, the lack of an independent judiciary and the absence of an implemented constitution inter alia.  They further pointed out that Eritrea is a dictatorial, one-party state where the rule of law is not in force. The plaintiffs ultimately alleged that Nevsun is attempting to avoid all judicial scrutiny by having the case tried in the very country that purportedly violated their human rights.

The courts agreed with the plaintiffs.[5] The BCSC found that although the practical and logistical difficulties of hearing the claims in Canada were considerable, there was a real risk that the plaintiffs would not get a fair trial in Eritrea. The court’s ratio decidendi was thus based on a balancing of the various criteria contained in the CJPTA. It weighed the expense, inconvenience and other difficulties of proceeding in Canada against the chance that the plaintiffs may not get a trial at all. The court here relied on various expert witnesses and secondary reports,[6] which corroborated the plaintiffs’ fears that they cannot return to Eritrea and obtain a fair trial against Nevsun in that forum. The expert testimony of Mr Ghebremichael who formerly served as a judge in Eritrea stands out here. He asserted that any judge hearing this case and ruling in favour of the plaintiffs would be placing her career and personal safety in jeopardy. The secondary reports from various NGOs and the US Department of State were also unanimous in concluding that the plaintiffs would face real consequences if they attempted to return to Eritrea. The BCSC thus concluded that there are serious allegations made as to the integrity of the Eritrean judicial system and that ‘it would defy common sense’ not to find that there is a real risk of an unfair trial.[7]

The Court of Appeals of British Columbia did not find fault with the BCSC’s rationale.[8] It nevertheless highlighted the fact that it all boiled down to the onus.[9] The court held that it was Nevsun’s task to prove that it would be fairer and more efficient to depart from the normal state of affairs where jurisdiction is exercised by the courts having territorial competence and where the plaintiffs are entitled to select a forum. The BCCA concluded that ‘[...] the chambers judge did not err in principle, misapprehend or fail to take into account material evidence or reach an unreasonable decision in concluding that Nevsun had not met this onus, nor in concluding that a ‘real risk’ of an unfair trial, should it occur in Eritrea, had been shown.’[10] In upholding the BCSC’s dismissal of the forum application, the Court of Appeals agreed that the difficulties of mounting a trial in British Columbia are substantial. It nonetheless stressed that these difficulties are unrelated to the fairness of the trial or the independence of the courts. This, paired with the grave nature of the allegations, lessened the bearing of the comparative inconvenience and expense. As Lord Bingham stated in Connelly (A.P) v RTZ Corp. Plc (No. 2), the interests of justice tend to weigh in favour of the less appropriate but fair and impartial forum rather than the one where justice seems unlikely to be done.[11] The forum application was therefore dismissed and the case was allowed to proceed in British Columbia.

Act of State Doctrine

In the second interlocutory application, Nevsun motioned that the plaintiffs’ claim should be dismissed because it depended on the Canadian courts inquiring into the legality of the conduct of a foreign sovereign state.[12] Nevsun pleaded the act of state doctrine (AOS), which is a judicial rule barring the courts of one country from sitting in judgment of the acts of the government of another when these acts are done within its own territory.[13] On this basis, Nevsun argued that the court lacked subject matter jurisdiction pursuant to Rule 21-8(1)(a) and (b) or, alternatively, that the claim disclosed no reasonable cause of action pursuant to Rule 9-5 of the Supreme Court Civil Rules (SCCR).  Nevsun further argued that this doctrine applies despite the action not imputing blame directly on Eritrea. It claimed that the case rests on the courts finding that the actions of the Eritrean state amount to crimes against humanity and are contrary to international law. On the other hand, the plaintiffs argued that it is uncertain whether this doctrine forms part of the common law of Canada.[14] They pointed out in this regard that the act of state doctrine has never been applied by a Canadian court. In the alternative, the plaintiffs held that several limitations apply including the public policy, Kirkpatrick and the commercial activity limitations. They lastly emphasised the non-engagement of this doctrine in cases involving allegations of serious human rights violations.

The British Columbia courts dismissed Nevsun’s application.[15] They held that the act of state doctrine is not engaged in the case at hand and that, even if it were, the public policy and Kirkpatrick limitations would apply. The BCSC began its reasoning by acknowledging that this doctrine does form part of the common law of the country despite its lack of usage and clarity. In stating this, the BCSC relied on the 2015 case of United Mexican States v British Columbia (Labour Relations Board) where Justice Harris specifically referred to the doctrine. The court further reasoned that the well-established existence of this doctrine in jurisdictions such as England and Australia exerts a pull towards its recognition in Canada as well. The real weight of the court’s analysis nevertheless fell on considering whether the doctrine was engaged, whether its limitations apply and on the propriety of dismissing an action without providing the plaintiffs the opportunity to prove their case.

Both the BCSC and the BCCA denied the applicability of the act of state doctrine.[16] They reasoned that the plaintiffs’ claims do not purport to challenge the legality or validity of a foreign states’ laws. Rather, the courts reckoned that the plaintiffs are only seeking redress for acts of Nevsun that do not form part of Eritrean legislation or official policy. In other words, these acts are indeed linked to wrongs alleged to have occurred in Eritrea but the lawfulness, validity, effect of, or motives underlying, sovereign acts of Eritrea need not be analysed.[17] The courts emphasised that if the occurrence of these acts was proven as a matter of fact, the only other step in the court’s analysis would be ascertaining Nevsun’s complicity. The court therefore concluded that the AOS doctrine is not engaged and, even if it is, its limitations would apply to the same effect. The court here refers specifically to the public policy, Kirkpatrick and the commercial activity limitations.

Firstly, the public policy limitation refers to the grave nature of the wrongs, which would be unjustifiable regardless of their inclusion in any legislation or official policy. The acts alleged here are contrary to both jus cogens norms and fundamental values of Canadian law. The gravity of the acts thus limits the prohibition on adjudication stemming from the AOS doctrine. Secondly, the Kirkpatrick limitation refers to the distinction between mentioning acts of state as an existential matter and, on the other hand, inquiring into them for the purposes of adjudicating upon their legal effectiveness. The courts emphasised that the plaintiffs’ claim merely requires the alleged conduct to be proven as an existential matter. The only remaining step after that would be ascertaining the complicity of Nevsun. The Kirkpatrick limitation would thus also limit the application of the AOS doctrine. Thirdly, the commercial nature of the activity could act as a constraint on the prohibition on adjudication. Nevertheless, the BCSC stated that the pleadings and evidentiary record are insufficient to determine the applicability of this limitation. The BCCA concurred and added that the applicability of the two other limitations makes this inquiry unnecessary.

The act of state objection was therefore dismissed and the action was allowed to proceed.

Customary International Law and Corporate Liability

In the third interlocutory application, Nevsun claimed that the prohibitions recognised under customary international law do not give rise to a private law cause of action for damages.[18] It argued that these portions of the plaintiffs’ Notice of Civil Claim should be struck out pursuant to Rule 9-5 SCCR as they disclose no reasonable claim, or are unnecessary. It further argued that the CIL prohibitions do not impose obligations on corporations and that holding otherwise would be contrary to fundamental principles of international law as well as settled Canadian criminal and tort law. Nevsun pointed out that these claims are plainly bad in law and that there is no reasonable prospect they could succeed at trial. For these reasons, they asserted that these allegations should be struck out in the interests of judicial efficiency and fairness. Contrarily, the plaintiffs argued that prohibitive rules of customary international law are to be incorporated into Canadian law in the absence of conflicting legislation as per the doctrine of adoption.[19] They further alleged that corporations do not enjoy blanket immunity from CIL but rather that there has been judicial recognition that corporations may be subject to rights and obligations under international law. Additionally, the plaintiffs argued that the conditions for recognising new international torts are met. They lastly asserted that these claims do have a reasonable chance of success and that they should therefore not be dismissed at this stage of the proceeding. The BCSC concluded that the CIL claims are arguable and that Nevsun has failed to establish that they have no reasonable likelihood of success.[20] It therefore dismissed Nevsun’s interlocutory application and allowed the claim to proceed to trial.

Several important considerations drove the courts’ reasoning. From the outset, the BCSC stated that settled case law demands an approach that is generous and that errs on the side of permitting novel but arguable claims. The crux of the matter nevertheless fell on whether the claims have a reasonable chance of success such that the plaintiffs should not be driven from the judgment seat on a preliminary application. Importantly, the court here did not need to decide whether these new torts should be recognised. At this stage of the proceeding, it merely had to establish that they were not bound to fail. Firstly, the court looked at the history of corporate liability under international law and accepted the plaintiffs’ submission that it is a complex and layered narrative as opposed to a clear-cut issue.[21] It also entertained Nevsun’s submissions as to the lack of international recognition of corporate liability and the alleged absence of a uniform state practice and opinio juris. Secondly, the BCSC considered the limited competence of the judiciary in law-making, which rather falls within the ambit of the legislature. In this sense, the court was mindful that its role is to only incrementally advance the law so as to keep it in step with evolving societal needs. Radical changes to the law, however desirable, must be left to the parliament. Yet the BCSC reasoned that the CIL application did not require it to decide on any of the substantive issues raised by the parties; it solely needed to decide whether the claims are arguable such that they have a reasonable chance of success at trial. Further, the BCSC held that the uncertainty of the law on this point makes it that much more important that these claims go to trial. The court here cited Justice Wilson in the Hunt v Carey Canada, Inc. case, which asserted that it is much more critical that an action be allowed to proceed when it reveals arguable, difficult or important points of law.

On appeal, the BCCA agreed that there are significant legal obstacles to these claims.[22] The court here particularly referred to legitimate concerns about comity and sovereign equality, and the role of the judiciary as opposed to the legislature. It nevertheless also stated that the recognition of a CIL norm against torture as the basis for a private law claim ‘[...] would [not] bring the entire system of international law crashing down [...]’.[23] In reaching this conclusion, the BCCA relied on the fact that no state is a party to this proceeding, that Eritrea is fully protected by state immunity and that these CIL norms at issue here are universally accepted. The court further emphasised that international law is in flux and that transnational law is developing especially in connection to human rights violations that escape current international mechanisms. It also observed here that other jurisdictions have been willing to hold corporate actors accountable for violations of jus cogens norms. [24]

On these considerations, the BCCA concluded that the BCSC had not erred in dismissing Nevsun’s CIL application.[25] The court therefore held that the claims should proceed in British Columbia as pleaded.

Conclusion

The Araya v Nevsun case plays into a discussion that goes to the very nature of transnational and international law, and their place in national courts. As Lord Lloyd Jones aptly observes in the UK case of Belhaj v Straw,[26] the evolution of public international law beyond a mere inter-state system of law has brought with it a corresponding shift in international public policy. This is reflected in the growing willingness on the part of national courts to address and investigate the conduct of foreign states and issues of public international law.[27] Mindful of this wider context, the Court of Appeals of British Columbia began its judgment in the Araya case by asking one overarching question - should the Canadian courts participate in the incremental development of transnational law or should they remain on the traditional path of judicial abstention from adjudication of matters touching on the conduct of foreign states?[28] This question is now before the Supreme Court of Canada, which is presented with an important chance to offer guidance on the role of national courts in this regard.[29]

On the other hand, one should be mindful of what this case means in terms of access to justice in business and human rights disputes. The plaintiffs filed the initial notice of civil claim in 2014 and four years later they have only incrementally approached redress. The Canadian Supreme Court’s judgment will not come before the second half of 2019 at which point, if successful, the plaintiffs are facing several more years litigating the merits of the case.  The elusive nature of accountability and remedy in this type of cases is nevertheless not a novelty.[30] As the UN High Commissioner for Human Rights affirmed in a 2016 report, those seeking to use judicial mechanisms to obtain a remedy for corporate human rights abuses face numerous challenges. These claims often fail to proceed to judgment and, when they do, they encounter a system of domestic law that is patchy, unpredictable, often ineffective and fragile.[31] The Canadian courts’ approach in this case is relatively amicable to the claimants and opens the door for a stricter interpretation of the traditional hurdles to jurisdiction in business and human rights cases. Nonetheless, the Araya v Nevsun case illustrates the fact that victims seeking redress for corporate human rights abuses face an uphill battle.

[1]           Araya v Nevsun Resources Ltd., 2017 BCCA 401 [hereinafter ‘BCCA Judgment’] [17].

[2]           Araya v Nevsun Resources Ltd., 2016 BCSC 1856 [hereinafter ‘BCSC Judgment’] [6].

[3]           Ibid [227].

[4]           Ibid [236].

[5]           Ibid [337]-[339].

[6]           These secondary reports were issued by various governmental and non-governmental organisations such as the United Nations Commissions of Inquiry, the United States Department of State, the European Asylum Support Office, Human Rights Watch, Amnesty International and the Danish Immigration Service. See BCSC Judgment (n 2) [8].

[7]           BCSC Judgment (n 2) [286].

[8]           BCCA Judgment (n 1) [120], [122].

[9]           Ibid [119].

[10]          Ibid.

[11]          Ibid [120].

[12]          BCSC Judgment (n 2) [360]-[362].

[13]          Ibid [349]; see also Underhill v. Hernandez, 168 U.S. 250 (1897) at 252.

[14]          BCSC Judgment (n 2) [363]-[364].

[15]          Ibid [419]-[422].

[16]          Ibid [360]-[362]; BCCA Judgment (n 1) [165] ff.

[17]          BCCA Judgment (n 1) [167].

[18]          BCSC Judgment (n 2) [424].

[19]          Ibid [444], [449]; see also R. v Hape, 2007 SCC 31125 [36].

[20]          BCSC Judgment (n 2) [483]-[485].

[21]          Ibid [468] ff.

[22]          BCCA Judgment (n 1) [196].

[23]          Ibid.

[24]          Ibid [189]-[197].

[25]          Ibid.

[26]          Belhaj v. Straw [2014] EWCA Civ 1394, aff’d [2017] UKSC 3 [115]; see also BCCA Judgment (n 1) [1].

[27]          Belhaj v. Straw (n 26) [115].

[28]          BCCA Judgment (n 1) [1]-[2].

[29]          Ibid [177].

[30]          UN General Assembly, ‘Improving Accountability and Access to Remedy for Victims of Business-Related Human Rights Abuse - Report of the United Nations High Commissioner for Human Rights’ (2016) A/HRC/32/19, para. 2.

[31]          Ibid para. 4.

 Editor’s note: Maisie Biggs recently graduated with a MSc in Global Crime, Justice and Security from the University of Edinburgh and holds a LLB from University College London. She is currently an intern with the Doing Business Right project at the Asser Institute in The Hague. She previously worked for International Justice Mission in South Asia and the Centre for Research on Multinational Corporations (SOMO) in Amsterdam.

“No one who comes to these courts asking for justice should come in vain. The right to come here is not confined to Englishmen. It extends to any friendly foreigner. He can seek the aid of our courts if he desires to do so. You may call this ‘forum shopping’ if you please, but if the forum is England, it is a good place to shop in both for the quality of the goods and the speed of service.”

Lord Denning in The Atlantic Star [1973] 1 QB 364 (CA) 381–2

The United Kingdom Supreme Court today has handed down Vedanta Resources PLC and another (Appellants) v Lungowe and others (Respondents) [2019] UKSC 20, a significant judgement concerning parent company liability and the determination of jurisdiction for these claims. Practically, it now means for the first time a UK company will face trial and potentially accountability in their home jurisdiction for environmental harms associated with operations of foreign subsidiaries. 

This is a closely-watched jurisdiction case concerning a UK parent company’s liability arising out of the actions of its foreign subsidiary. The claimants are 1826 Zambian citizens from the Chingola region of the Copperbelt Province. This group action is against UK-domiciled Vedanta Resources PLC and its subsidiary KCM, a second defendant which is incorporated in Zambia. The original claims concern discharges from the KCM-owned Nchanga mine since 2005 which have allegedly caused pollution and environmental damage leading to personal injury, damage to property and loss of income, amenity and enjoyment of land. 

Following the initiation of this claim, in 2015 Vedanta and KCM challenged the jurisdiction of the English courts, however Coulson J dismissed their applications. The Court of Appeal then upheld the dismissal of those applications, so the defendants appealed to the Supreme Court. (See our previous blog on the case here).

The Supreme Court today denied the appeal by Vedanta Resources and KCM, and allowed the claim to proceed to merits in England. The Court made it clear the real risk that the claimants would not obtain access to substantial justice in Zambia was the deciding factor in the case. The Court denied there was an abuse of EU law by the claimants using Vedanta as a jurisdictional hook to sue both the parent company and subsidiary in England, and the claimants succeeded in demonstrating there was a “real triable issue”, nonetheless Zambia was held to be the “proper place” for the case. However, because the Court supported the finding of the first instance judge regarding the risks faced by claimants in accessing substantial justice in Zambia, the appeal was denied, and the case can proceed in England. 

This is a significant judgement, as it now means for the first time a UK company will face trial and potentially accountability in their home jurisdiction for environmental harms associated with operations of foreign subsidiaries. Lord Briggs delivered the judgement on four major issues: the potential for abuse of EU law; whether there was a real triable issue against Vedanta; whether England is the proper place for these proceedings; and whether there was a real risk that substantial justice would not be obtainable in that foreign jurisdiction. 

Why is this significant? For those following this case, and the appeals of Okpabi & Ors v Royal Dutch Shell Plc & Anor (Rev 1) [2018] EWCA Civ 191 and AAA & Ors v Unilever Plc & Anor [2018] EWCA Civ 1532 in the English courts, there are two major findings in this judgement that will likely impact future cases concerning parent company liability. Firstly, the reasoning behind the finding of a “real triable issue” between a foreign claimant and UK parent company, and secondly the primacy the Supreme Court placed on the significance of access to justice as a jurisdictional hook for claims in England.

A. Finding of a “real triable issue” between a foreign claimant and UK parent company

Previous major cases decided in lower courts have fallen at this hurdle. The courts in Okpabi and AAA v Unilever both allowed jurisdictional appeals because they determined there was no real triable issue between the claimants and the UK parent company. In this case, Lord Briggs characterised the test as simply “whether Vedanta sufficiently intervened in the management of the Mine owned by its subsidiary KCM to have incurred, itself (rather than by vicarious liability), a common law duty of care to the claimants [44].”

Four major developments allowed this to happen; firstly, claimants can more heavily rely on the potential of future disclosure of internal defendant documents; secondly, the Chandler criteria ought not to be a ‘straitjacket’ for finding a parent company exercised control; thirdly, that the size of a company’s operation does not dilute a duty of care, and finally that group-wide policies and guidelines alleging group control are potentially sufficient as a basis to argue a triable case of parent company control. Interestingly, all of these points (without explicitly saying so) went against the Court of Appeal’s judgement in Okpabi. 

1. The potential for evidence to emerge upon disclosure

The finding of a “real triable issue” has been a challenge in past cases because particular facts must be determined before the disclosure of the defence’s documents, and there runs a risk of a ‘mini-trial’ ensuing based on limited evidence. This may be of interest to lawyers and courts in other jurisdictions which do not have the same disclosure requirements: the English courts have had to establish how to best ascertain the likelihood of a duty of care based on only publicly-available documents. 

In past, claimants were told they could not base their claim on merely the potential for more evidence to emerge upon disclosure. Lord Justice Simon previously found in Okpabi in the Court of Appeal that “[a]lthough, the claimants make a further point that [the presented evidence] is illustrative of what may emerge on disclosure, the difficulty is that jurisdiction is founded on a properly arguable cause of action and not on what may (or may not) become a properly arguable cause of action [122].” Sir Geoffrey Vos agreed, saying “I might mention in closing that I thought throughout the hearing of the appeal that the court had a responsibility in a case of this kind not to strive to find a reason to allow jurisdiction [208].”

Lord Briggs was very clear on this point: 

“[The question whether the] level of intervention in the management of the Mine [was] requisite to give rise to a duty of care upon Vedanta to persons living, farming and working in the vicinity… is a pure question of fact. I make no apology for having suggested during argument that it is blindingly obvious that the proof of that particular pudding would depend heavily upon the contents of documents internal to each of the defendant companies, and upon correspondence and other documents passing between them, currently unavailable to the claimants, but in due course disclosable [44].”

This confirms Lord Justice Simon’s (interestingly different from his stance in Okpabi) finding when considering this case in the Court of Appeal. He held that at the early stage of a case the unavailability of sufficient evidence ought not be a barrier, rather “much will depend on whether (…) the pleading represents the actuality [83].”

Defendants in these cases have been pushing for the evidentiary bar to be raised, while judges have bemoaned the rising piles of evidence for only preliminary hearings. This decision should lower both the bar and the piles. Section 3 (below) will address the alternative publicly available evidence the courts may now look to.

2. Rejection of a Chandler ‘straitjacket’

Lord Briggs did not take the view that this parent company liability is a novel category of common law negligence liability requiring specific criteria, rather “there is nothing special or conclusive about the bare parent/subsidiary relationship, it is apparent that the general principles which determine whether A owes a duty of care to C in respect of the harmful activities of B are not novel at all [54].” He positively cited Home Office v Dorset Yacht Co Ltd [1970] UKHL 2 as a circumstance in which it had previously been appropriate to find this duty of care. This is a reversal of previous English judgements that have pushed toward more stringent (and difficult to prove without private documentation) criteria for determining a duty of care in these types of cases. 

This case, and Okpabi, AAA v Unilever, and Thompson v The Renwick Group Plc [2014] EWCA Civ 635, all draw from the judgement of Lady Justice Arden in Chandler v Cape Plc [2012] EWCA Civ 525. In this case Arden concluded that there were “appropriate circumstances [80]” in which liability may be imposed on a parent company for a subsidiary's employees’ health and safety. Four of these that were relevant for this case included:

“(1) the businesses of the parent and subsidiary are in a relevant respect the same; (2) the parent has, or ought to have, superior knowledge on some relevant aspect of health and safety in the particular industry; (3) the subsidiary's system of work is unsafe as the parent company knew, or ought to have known; and (4) the parent knew or ought to have foreseen that the subsidiary or its employees would rely on its using that superior knowledge for the employees’ protection. For the purposes of (4) it is not necessary to show that the parent is in the practice of intervening in the health and safety policies of the subsidiary. The court will look at the relationship between the companies more widely. [80]”

She makes it clear however, that this is not a restrictive list. She positively quoted Lord Oliver in Caparo Industries Plc v. Dickman [1990] 2 AC 605:

"'Proximity' is, no doubt a convenient expression so long as it is realised that it is no more than a label which embraces not a definable concept but merely a description of circumstances in which, pragmatically, the courts conclude that a duty of care exists [page 633]."

What had happened however, is that these criteria have hardened throughout Thompson, AAA v Unilever and Okpabi as courts determine how to find evidence of parent company control. Briggs found that one of the few mistakes of the trial judge was “imposing a straitjacket derived from the Chandler case. [60]” Rather, since there is “no limit to the models of management and control which may be put in place within a multinational group of companies… I would be reluctant to seek to shoehorn all cases of the parent’s liability into specific categories of that kind, helpful though they will no doubt often be for the purposes of analysis. [51]” 

As acknowledged by Briggs, analysis and consistency will probably lead to the Chandler criteria (and subsequent iterations) continue to be used as a stepping-off point, however future first-instance judges should no longer view themselves bound to accept these as the only means of determining the likelihood of a duty of care arising. 

3. The size of a company’s operations does not dilute a duty of care

Briggs‘s judgement reflects Sale’s dissent in Okpabi, in which he disagreed that the scale of a company’s operations should necessarily be a factor precluding the finding of control or proximity. Looking by analogy at the Chandler case, Briggs said it was “difficult to see” why making a bad practice part of group-wide policy would diminish the responsibility of a parent “if the unsafe system of work, namely the manufacture of asbestos in open-sided factories, had formed part of a group-wide policy and had been applied by asbestos manufacturing subsidiaries around the world. [52]”

In Okpabi, while dismissing the claimant’s appeal, Lord Justice Simon endorsed the warning of Justice Cardozo in Ultramares Corpn v Touche (1932) 174 NE 441 against the danger of exposing defendants to “a liability in an indeterminate amount for an indeterminate time to an indeterminate class (p. 44).” According to the first instance judge in the Okpabi case, applying Cardozo’s reasoning meant that the sheer size of Royal Dutch Shell mitigated against finding liability: “In my judgment, that is the antithesis to proximity or neighbourhood. There are 1,366 other companies in the Shell Group, and the service and operating companies amongst that number perform activities in 101 different countries [114].” However, Lord Justice Sales dissented on this point: 

“I do not think that the simple matter of the sheer size of the Shell group can be an answer to the present claim: why should the parent of a large group escape liability just because of the size of the group, if the criteria for imposing a duty of care are satisfied for a number of companies in the group, while the parent of a smaller group (e.g. with one subsidiary) has a duty of care imposed on it when precisely the same criteria are satisfied in relation to its subsidiary? [172]”

This point links with the next concerning how much stock should be placed in publicly accessible group-wide policies and guidelines. 

4. Public-facing group-wide policies and guidelines alleging group control are potentially sufficient as a basis to argue a case of parent company control 

At paragraph [61], Briggs pointed to Vedanta’s published documents concerning their standards of environmental control over the actions of subsidiaries, and how they implemented these standards, as sufficient evidence that a duty of care may be demonstrable at trial.  There has been dissent in past cases regarding the evidentiary importance of public-facing group-wide policies and guidelines, including policies making CSR-style promises of environmental and human rights compliance. 

Lord Briggs firmly rejected the suggestion that there was a general principle that group-wide policies and guidelines would never cause a parent to incur a duty of care in respect of the activities of a particular subsidiary [52]. He gave the example of group guidelines that may contain systemic errors, which in turn cause subsidiaries to cause environmental damage when implemented.

Perhaps the most interesting part of this judgment is the potential Briggs explicitly pointed out of parent companies being held to their public commitments of social and environmental responsibility: 

 “Similarly, it seems to me that the parent may incur the relevant responsibility to third parties if, in published materials, it holds itself out as exercising that degree of supervision and control of its subsidiaries, even if it does not in fact do so. In such circumstances its very omission may constitute the abdication of a responsibility which it has publicly undertaken. [53].”

This is a strong turn away from Lord Justice Simon’s finding in Okpabi, which relegated evidence from this style of public-facing document as only “published for the purpose of informing shareholders and regulators about the Shell Group businesses. Such statements must be read in their proper context [120]… All this is as one might expect of best practices which are shared across a business operating internationally [121],” and so dismissing their evidential value as to finding a duty of care. 

Briggs now has re-defined that ‘proper context’. The implications of this passage for future litigation is potentially massive. Parent companies in many jurisdictions have made soft, PR-friendly commitments to environmental and social standards. On the face of this passage, communities impacted by the subsidiary of a UN Global Compact signatory could potentially sue them for failing to honour the public commitments made to undertake effective due diligence. 

B. Access to justice as the jurisdictional hook

The Court made it clear that the issue of access to justice for the claimants was not due to any deficiencies with the Zambian courts, which the Court considered completely capable of ensuring a just trial and handling a large group claim. Rather, the Court still found that access to justice in Zambia was jeopardised for a group tort claim for two reasons: the claimants had no prospect of funding the claims in Zambia because Zambian law does not permit conditional fee agreements, and (according to the evidence available to the first instance judge) no law firms in that jurisdiction have the requisite resources or experience to properly represent the group claim. 

The Supreme Court differed from the lower courts concerning the importance of Article 4.1 of the Recast Brussels Regulation (which confers a right on any claimant to sue an English domiciled defendant in English courts) when it comes to settling the jurisdictional question.[1] In these cases, to avoid the risk of conflicting judgements England will usually be a proper place to bring a claim for both the parent and the non-domiciled subsidiary. 

The lower courts, including the first instance judge, considered this mandatory provision a ‘trump card’ to which all other considerations regarding forum should cede, however the Supreme Court found this was not the case, rather it is one consideration among others to be considered [82].  Claimants have a choice when contemplating which jurisdiction they ought to bring a claim: whether to run the risk of irreconcilable judgements by having parallel proceedings in England and Zambia, or avoiding that risk by suing both defendants in the same proceedings and jurisdiction [83]. 

In this case, Vedanta agreed to submit to the jurisdiction of the Zambian courts, and all the other connecting factors (the location of the harm, nationality of claimants, location of documents and other evidence, competency of the courts and their knowledge of the applicable Zambian law) point to Zambia being “overwhelmingly the proper place for a claim to be tried” [85]. If this were the whole story then Article 4 would not be a trump card to anchor the case in England, and the weight would fall to Zambia being the most appropriate forum. If this were the whole story, the Court would have granted the appeal and declined jurisdiction to the claimants. However, because of the fore-mentioned overriding issues of access to justice, in this case England was determined to be the appropriate forum. This stance is consistent with previous positions of the court and English common law: the same exception to the forum non conveniens principle was demonstrated in The Vishva Ajay [1989] 2 Lloyd’s Rep 558 (QB) [560] in which the court denied to stay proceedings in England because of the possibility of substantial injustice in the natural forum (India). 

This is significant, because it shows the cognisance of the Court to the importance of material access to justice. This is a fundamental hurdle to claims by communities without the resources necessary to launch expensive, prolonged suits. Without appropriate fee-arrangements, these claims would not be brought, and accountability for harms perpetrated against the poorest communities would continue to be denied.

Conclusion

Today the UK’s highest court drew a bright red line between (ostensibly) soft CSR commitments and a company’s duty of care to abide by those commitments.  Whether courts take full advantage of the opportunity provided by the Supreme Court in this case remains to be seen, however on a number of fronts, there is now more reason for optimism for those seeking to hold parent companies accountable for extraterritorial harms. 

The previous restrictive approach taken by the courts regarding finding a ‘triable’ case during initial jurisdiction proceedings appears to have been broadened. The Court has however made it clear that the EU regulations regarding jurisdiction are not the catch-all previously envisioned, but rather the courts must weigh all the relevant issues before determining jurisdiction. This is not necessarily a bad thing for potential claimants: group tort claims are being brought to the UK not because of its sunny weather, but often rather because of the availability of fee arrangements that would allow for high-magnitude group claims (such as conditional fee agreements, as discussed in Lungowe and Ors. v Vedanta Resources Plc and Konkola Copper Mines Plc [2017] EWCA Civ 1528 at [125], [179]) against defendants capable of meeting the financial penalty. The Court has made it clear that even if the natural forum is capable of handling a claim in every other way, claimants may seek the service of English courts for the appropriate fee arrangements alone. 

Next is the real test, as for the first time a UK company will face trial and potentially accountability in the UK for the environmental harms associated with operations of its foreign subsidiary.  

[1] Article 4.1: “Subject to this Regulation, persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State”