Vedanta Resources PLC & Anor v Lungowe & Ors [2019] UKSC 20

Zambian villagers sued Vedanta, a UK-domiciled parent company, and its Zambian subsidiary KCM for toxic mine emissions. The Supreme Court upheld English jurisdiction, finding a triable issue on parent company liability and real risk that substantial justice was unobtainable in Zambia.

Facts

Some 1,826 Zambian citizens from rural farming communities in the Chingola District brought claims against Vedanta Resources plc (a UK-incorporated parent company listed on the London Stock Exchange) and its Zambian subsidiary Konkola Copper Mines plc (KCM), the operator of the Nchanga Copper Mine. The claimants alleged that repeated toxic discharges from the Mine from 2005 onwards damaged their health, livestock, crops and watercourses, which were their sole source of water. The claims were pleaded in common law negligence and breach of Zambian statutory duty. Against Vedanta, liability was said to arise from the very high level of control and direction it exercised over KCM’s mining operations and compliance with health, safety and environmental standards.

Vedanta was served within the jurisdiction under article 4 of the Recast Brussels Regulation. KCM was served out of the jurisdiction pursuant to permission obtained under the ‘necessary or proper party’ gateway in CPR Practice Direction 6B, paragraph 3.1(3). Coulson J dismissed the defendants’ jurisdictional challenges, and the Court of Appeal upheld his decision.

Issues

The Supreme Court considered four issues:

• Whether it was an abuse of EU law to use article 4 of the Recast Brussels Regulation to establish jurisdiction against an anchor defendant for the purpose of attracting jurisdiction over a foreign defendant.
• Whether the claim against Vedanta disclosed a real triable issue (applying a summary judgment test).
• Whether England was the proper place in which to bring the claim against KCM.
• Whether there was a real risk that the claimants would not obtain substantial justice in Zambia.

Arguments

Appellants (Vedanta and KCM)

The appellants argued that pursuing Vedanta in England was an abuse of EU law, designed only to anchor jurisdiction against KCM, and that this point warranted a reference to the CJEU. They contended that the pleaded case against Vedanta disclosed no triable issue because Vedanta was merely an indirect owner of KCM and that recognising a parent company duty of care would amount to a novel and controversial extension of negligence requiring detailed analytical rigour. They argued Zambia was the proper place for trial, given the overwhelming connecting factors, and that the judge had failed to pay sufficient regard to judicial warnings about funding-based substantial justice findings, the requirement for cogent evidence, and considerations of comity.

Respondents (claimants)

The claimants argued that article 4 conferred a right to sue Vedanta in England, that Vedanta’s published materials and management conduct disclosed a real triable issue on duty of care, that England was the proper place given the risk of irreconcilable judgments, and that substantial justice was unobtainable in Zambia due to extreme poverty, unavailability of CFAs or legal aid, and the lack of sufficiently resourced and experienced legal teams.

Judgment

Proportionality

Lord Briggs (with whom the other Justices agreed) began by criticising the disproportionate manner in which jurisdiction challenges had been litigated, citing Spiliada, VTB Capital and Three Rivers, and noting that the appeal involved 8,945 pages of materials and 142 authorities for essentially one difficult point of law.

Abuse of EU law

The Court held that the claimants’ purpose in suing Vedanta was not solely to attract jurisdiction against KCM; they had a bona fide claim and a genuine desire to recover from Vedanta given concerns about KCM’s solvency. Following Owusu v Jackson, Freeport v Arnoldsson and CDC Hydrogen Peroxide, any abuse of EU law principle in the article 4 context must be narrowly construed, and the sole purpose test applied. No reference to the CJEU was necessary. Crucially, Lord Briggs observed that applying forum conveniens arguments as the basis for a derogation from article 4 would be impermissible under Owusu; the remedy lay in adjusting English forum conveniens jurisprudence.

Real triable issue against Vedanta

Lord Briggs held that the liability of parent companies is not a distinct category of negligence and requires no special legal test. Endorsing Sales LJ’s formulation in AAA v Unilever plc, he rejected the submission that Chandler v Cape plc had created a separate test. He declined to shoehorn parental liability into fixed categories, observing:

There is no limit to the models of management and control which may be put in place within a multinational group of companies.

Group-wide policies, if accompanied by training, supervision and enforcement, or if the parent holds itself out as exercising such supervision, may give rise to a duty of care. The judge’s conclusion that the pleaded case and published Vedanta materials (including the ‘Embedding Sustainability’ report) disclosed an arguable case was supported by evidence and not vitiated by error of law. The question whether statutory duty was breached required substantially the same inquiry and made no separate difference.

Proper place

This was the most difficult issue. Lord Briggs held that the judge had erred in principle by following Leggatt J’s approach in OJSC VTB Bank v Parline Ltd, treating the risk of irreconcilable judgments as decisive where claimants chose to exercise their article 4 right to sue the anchor defendant in England. Where the anchor defendant (Vedanta) had offered to submit to the jurisdiction of Zambia, the risk of irreconcilable judgments arose only from the claimants’ choice. Article 4 does not confer a right to avoid that risk; if claimants within the EU must choose under article 8.1, there was no reason why the article 4 right should become a ‘trump card’ where the alternative forum lies outside the EU. Conducting the balance afresh, nearly all connecting factors pointed overwhelmingly to Zambia: the alleged wrongs, the affected land, the applicable law, the claimants’ locations and language, KCM’s witnesses, regulatory records, and Zambian enforceability of judgment against Vedanta. England was not the proper place.

Substantial justice

Nonetheless, the judge’s finding that there was a real risk — indeed a probability — that substantial justice would be unavailable in Zambia was upheld. The judge had properly considered that the claimants were in extreme poverty, legal aid was unavailable, CFAs were unlawful in Zambia, and while some lawyers might act on deferred payment, no Zambian legal team had the resources or experience to conduct complex group environmental litigation of this scale against an obdurate opponent. The judge had applied the correct legal test from Connelly v RTZ Corpn and Lubbe v Cape plc, had regard to comity and to the requirement for cogent evidence, and his detailed analysis of Zambian cases including Nyasulu v Konkola Copper Mines plc supported his conclusion. The judge stated:

I am not being asked to review the Zambian legal system. I simply have to reach a conclusion on a specific issue, based on the evidence before me.

Implications

The decision has significant implications for parent company liability in tort. It confirms there is no separate test for parent company liability: ordinary principles of negligence apply. A parent may owe a duty of care to those affected by a subsidiary’s activities where it takes over or jointly manages the relevant operation, gives relevant advice, implements group-wide policies through training, monitoring and enforcement, or holds itself out publicly as exercising such supervision. This opens a route for claimants affected by overseas subsidiaries of English-incorporated parents to sue in England.

On jurisdiction, the Court clarified the interplay between article 4 and the necessary or proper party gateway: claimants cannot automatically rely on the risk of irreconcilable judgments as a trump card to establish England as the proper place, particularly where the anchor defendant offers to submit to the foreign jurisdiction. This is an important adjustment to the forum conveniens jurisprudence following Owusu v Jackson.

However, where claimants face a real risk of being denied substantial justice in the otherwise natural forum — whether by reason of poverty, unavailable funding mechanisms, or inadequate legal resources — English jurisdiction may still be exercised. The decision emphasises that such findings require cogent evidence and due respect for comity, but are not precluded by those considerations.

The judgment matters to multinational groups headquartered in the UK, victims of overseas environmental and human rights harms, and practitioners conducting jurisdictional disputes. It also reinforces repeated judicial calls for proportionality in jurisdiction challenges, with Lord Briggs warning of potential costs sanctions on parties and advisors who ignore these requirements. The decision is closely tied to its facts and does not establish a general rule that parent companies are liable for subsidiaries’ activities, nor that English courts will routinely accept jurisdiction over foreign-based torts.

Verdict: The appeal was dismissed. Although the Supreme Court held that England was not the proper place in which to bring the claim, it upheld the judge’s finding that there was a real risk the claimants would not obtain substantial justice in Zambia, and accordingly the English courts had jurisdiction over both Vedanta and KCM.

Source: Vedanta Resources PLC & Anor v Lungowe & Ors [2019] UKSC 20