Symposium on Vedanta Resources Plc vs Lungowe

Carlos Lopez is a Senior Legal Adviser with the International Commission of Jurists

The UK Supreme Court’s judgment in Vedanta Resources Plc v Lungowe et al, handed down on 10 April, has generated considerable interest, and also raised many questions, across a broad range of legal practitioners and academicians on the legal and policy implications of the Court’s findings. In allowing the complaint to proceed against Vedanta Resources Plc and its Zambian subsidiary Konkola Copper Mines (KCM), the judgment effectively settles an already long battle concerning the jurisdiction of UK courts at least as relates to the question of the area of parent-subsidiary relationship and duty of care applicable in that case.

The two companies – Vedanta and KCM-are alleged by the affected victims to be responsible for the discharge of toxic waste from the Nchanga Mine operated by KCM, which is said to have caused severe damage to health and livelihood of persons from local communities living in the Chingola District.

The International Commission of Jurists (ICJ) is among the Human rights and environmental organizations that have welcome the ruling as a crucial step in holding multinational business enterprises such as Vedanta accountable for their alleged role in massive pollution and harm to health and livelihood of many people. The ICJ and the CORE Coalition had also submitted an amicus curiae in this case.

The ICJ has invited a group of experts and practitioners to participate in this symposium to discuss about the significance and likely impact of the judgment in law and policy making; the prospects for success in other similar cases; and consequences for companies’ practices, policies and litigation strategies.

There are several parts of the judgment that deserve close attention and detailed analysis, including the Courts’ stern warning against voluminous pleadings at a stage where what is under question are precise questions of law.

Perhaps the most consequential finding, and the one most likely to receive wide attention, is in relation to the duties and responsibilities of the parent company Vedanta vis a vis the communities living in the vicinity of its subsidiary operations in Zambia. To avoid UK Courts jurisdiction over the claim, both Vedanta and KCM asserted that there was no real triable issue against Vedanta, which was, it was said, “merely an indirect owner of KCM, and no more than that.” (para. 17)

This case involved an “anchor defendant”, Vedanta, a UK company subject to UK jurisdiction, and a “foreign defendant”, KCM, brought into the proceedings as the “necessary and proper party” according to English procedural law. Without an arguable case against Vedanta, there would be no jurisdiction over KCM.

But the Supreme Court held that there was an arguable case against Vedanta, which the Courts should be able to address in a trial on the merits. That arguable case rested on the application of what was said to be an old principle involving the duty of care, where Vedanta could be shown to have intervened in or controlled relevant activities of KCM. The Court found that there was sufficient evidence deriving from Vedanta’s own reporting on its implementation of group-wide policies on environmental management.

The Supreme Court stressed that “[i]t 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.” The Court made reference to Dorset Yacht Co Ltd v Home Office [1970] AC 1004, in which the negligent discharge by the Home Office of its responsibility to supervise boys in a youth detention centre led to seven of them escaping and causing serious damage to moored yachts in the vicinity. Claimants and interveners ICJ and CORE had also argued in the same direction, making reference to the same jurisprudence and other comparative jurisprudence and international standards.

The duty of care standard so formulated may put an end to a long-standing dispute on its applicability regarding communities impacted by subsidiaries operations. But its implications, including its impact on encouraging or not parent companies’ “hands off” approach in respect to the operations to subsidiaries, or its possible application to the relationship between buyer companies and their supplier companies, are not entirely clear. Anil Yilmaz, Douglas Cassel and Robert McCorquodale will pursue this line of analysis in this symposium.

Another aspect that deserves close scrutiny is the Court’s discussion and findings about the “proper forum” for the claim and the likelihood that claimants will have access to substantial justice in Zambia. The Court found that the proper place for the claims would be Zambia, but the risk that claimants would not have access to substantial justice in that forum convinced the Court to decide England was finally the proper forum. Gabrielle Holly says this should be seen as a cautionary note that may limit the prospects for some future claimants.

The UK Supreme Court found that Zambia in principle would have been the proper place for the claim to be tried due to the many connections that existed between KCM, claimants and events and that forum; and the fact that Vedanta itself had agreed to submit to Zambia’s jurisdiction. But the Court agreed with the lower courts that – in the case at issue- there would be insufficient resources for the claimants to bring and prove their claims in a group legal action in Zambia.

Although the final outcome was favourable to the claimants, the path of analysis undertaken by the Court may generate some concern. The Court certainly had to consider the position of KCM as a foreign defendant over which UK jurisdiction is not, in principle, clear. But its reasoning suggests the doctrine of forum conveniens is back through the back door –as applicable to foreign defendants. Whether the court was right to follow this path, what are the possible implications and what alternatives are available is something that will also be addressed in this symposium by Gabrielle Holly, Lucas Roorda and Claire Bright.