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Commentary: UK: Court ruling expands scope of parent company liability for human rights impacts of foreign subsidiaries

Author: Peter Hood & Julianne Hughes-Jennett, Business and Human Rights Journal, Published on: 27 November 2017

"How Should English Domiciled Multinationals Manage their Human Rights Risk in Light of the Judgment in Lungowe v Vedanta?", 26 Nov 2017

...[T]he doctrines of separate corporate personality and forum non conveniens insulated English domiciled parent companies from liability for the actions of their foreign subsidiaries.  However, developments in English and European law have progressively undermined the foundations of these doctrines...Last week, the Court of Appeal handed down its judgment in Lungowe and Ors. v Vedanta Resources Plc and Konkola Copper Mines Plc. This will come to be seen as a landmark case in relation to parent company liability and jurisdiction and has deep significance for how English domiciled multinationals manage their human rights risk.

...The Court confirmed that a parent company does not automatically owe a duty of care to someone affected by the actions of its subsidiary. The Claimant must do more to prove that a duty of care arises... The Court expressly confirmed that the law has developed so that a parent company’s duty of care can extend to non-employees affected by the operations of the subsidiary. Together, this expands the scope of parent company liability and will likely encourage more claims of this kind. 

...In order to fulfil their responsibilities under [...] the UN Guiding Principles, they [English domiciled multinationals] are required to take responsibility for human rights risks throughout their group and supply chain... [Pushing] responsibility for human rights due diligence down to the operating subsidiary level [...] will likely be more effective in reducing the risk of an adverse human rights impact in the first place.

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Related companies: Konkola Copper Mines (joint venture Vedanta Resources, Zambia Copper Investments & ZCCM Investments) Vedanta Resources