Last month, in Vedanta Resources PLC & Another v. Lungowe & Others, the UK Supreme Court allowed Zambian citizens to proceed with a claim in the UK against a UK-based mining company for environmental contamination allegedly caused by its Zambian subsidiary. As our colleague Lee McBride has recently written, this landmark decision will be of particular interest to multinational parent companies headquartered in the UK.
Vedanta should be of interest to Canadian multinationals as well, because the case mirrors an emerging trend in Canadian case law that has seen international plaintiffs permitted to proceed with claims against Canadian parent companies for the allegedly wrongful activity of their foreign subsidiaries.
While these recent cases dealt with claims of human rights abuses with respect to mining operations, the reasoning adopted by the Courts in these cases would likely equally apply to claims arising out of environmental damage caused in a foreign jurisdiction.
…The Canadian cases, which are summarized below, share a number of factors in common with Vedanta. In these cases, the claims:
- Involve direct claims of negligence against the parent company, alleging that they supervised, directed or acquiesced in the wrong committed;
- Argue that the home jurisdiction is not the appropriate forum, due to deficiencies in the domestic legal system; and
- Rely on public statements made by the parent corporation with respect to corporate social responsibility to link the parent company to the alleged foreign wrongs.
The summary of the Canadian cases is followed by some key take-aways for any business that operates internationally through subsidiaries. MORE