Mass tort case alert: Supreme Court grants permission to appeal in Shell case

​The Supreme Court has granted permission to appeal in this important mass tort case on parent company liability and jurisdiction. Chris Owen and Adam Bristow consider the impact of that decision and its interaction with the Vedanta and Unilever cases.

The Supreme Court has recently accepted the claimants’ application for permission to appeal the Court of Appeal judgment in Okpabi and others v Royal Dutch Shell Plc and another [2018] EWCA Civ 191. The Court of Appeal had upheld the High Court’s decision that the English courts do not have jurisdiction to hear environmental tort claims against the UK listed first defendant (RDS), and its Nigerian subsidiary, (SPDC), a joint venture with Nigerian shareholders and the Nigerian government (see our article). This was on the basis that the claimants had failed to demonstrate an arguable duty of care as between RDS and the claimants.

The Supreme Court’s decision to grant permission to appeal means that, in the opinion of the Justices, the claimants' appeal raises an arguable point of law of general public importance which ought to be considered by the Supreme Court.

The decision whether to grant permission to appeal in the Shell case had been stayed pending the Supreme Court’s decision in the Vedanta case. The Supreme Court gave its judgment in that case in April this year, upholding the English courts’ jurisdiction to hear claims against Vedanta and its Zambian subsidiary for the acts of that subsidiary in Zambia (see our article). The Vedanta case confirmed that a duty of care can exist between a parent company and third parties affected by the operations of its subsidiaries. The decision in Vedanta appears to widen the circumstances in which an arguable parent company duty of care can be made out.

It has been a busy few weeks for the Supreme Court in parent company liability cases. This latest decision in Shell follows hot on the heels of the recent Supreme Court decision refusing permission to appeal in the Unilever case, in which 218 Kenyan nationals were attempting to bring mass tort claims against Unilever Plc and its Kenyan subsidiary, Unilever Tea Kenya Limited (UTKL), the owner of a tea plantation in Kenya, at which the claimants allegedly suffered ethnic violence at the hands of third-party criminals (see our article on the Supreme Court refusal, and our article on the Court of Appeal judgment).

The contrasting response of the Supreme Court to the claimants’ permission applications in Shell and Unilever raises questions about its rationale. The Supreme Court in Vedanta emphasised that the existence of a parent company duty of care is a fact-specific analysis, to be undertaken on a standalone basis in each case. We suspect that the distinct fact patterns of the Shell and Unilever cases influenced the Supreme Court’s contrasting decisions. In particular, while the claimants in Shell are claiming in respect of direct acts by SPDC, the claimants in Unilever are claiming in respect of omissions by UTKL / indirect acts by third parties. Perhaps the Supreme Court considered that the Unilever case fact pattern was less likely to raise arguable points of law as to the scope of parent company duties of care, given the more indirect relationship and losses between the claimants and defendants in that case.

The Supreme Court in Vedanta refused to be drawn on laying down prescriptive principles or an exhaustive list of factors and circumstances in which an arguable parent company duty of care might arise. It will be interesting to see if the Supreme Court maintains this approach in the Shell case, in which the Court of Appeal previously attempted to categorise the different types of corporate control that could give rise to a parent company duty of care.

In terms of next developments:

  • The Supreme Court will make a final determination on jurisdiction in the Shell case in due course. The hearing is yet to be listed, although we would not expect this to be until 2020.
  • The Vedanta case will now proceed to substantive trial - the trial is yet to be listed, although we understand a case management conference (being a formal procedural hearing to determine the steps and timetable to trial) is scheduled to take place in December 2019.

Developments in both these cases will be closely watched and have significant implications for the issue of when a parent company can be held liable for acts of its subsidiaries.

This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.