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17 Feb 2021

Professor Doug Cassel, Notre Dame Law School

UK Supreme Court in Okpabi Clarifies Parent Company Duty of Care Toward Persons Allegedly Harmed by Subsidiaries

In Okpabi v. Royal Dutch Shell [2021] UKSC 3 (February 12), the UK Supreme Court reaffirmed that a British parent company may in certain circumstances owe a duty of care, for purposes of liability in a suit for negligence, toward persons affected by the operations of its foreign subsidiary. Specifically, the Court found a real issue to be tried as to whether Shell owed a duty of care to persons affected by spills from its subsidiary’s oil pipeline in Nigeria.

The Court’s ruling opens a path to “piercing the corporate veil.” Whether the parent owes a duty of care is not constrained by formalities, such as the separate corporate identities of parent and subsidiary. The Court clarified that a parental duty of care turns instead on business realities, such as whether the parent shares de facto management of a particular activity (e.g., pipeline safety) with its subsidiary.

Okpabi is important both for claimants and for multinational companies -- not only those headquartered in the UK, but also in common law jurisdictions that may follow British precedent...