Supreme Court rules Zambian villagers’ case against Vedanta must be heard in English courts
Source: Leigh Day
- Zambian villagers will have their case against KCM and Vedanta heard in the High Court in England
- Judgment also highlights that companies can be held accountable for claims made in their global policies and published materials
- Vedanta has an arguable duty of care to the claimants as the parent company of KCM
- SC rules there is a real risk that the claimants would not achieve justice in Zambian courts.
The Supreme Court has ruled today that a case brought by almost 2,000 Zambian villagers against Konkola Copper Mines (KCM) and its parent company Vedanta Resources Plc can be heard by the English courts. KCM is a Zambian company which is a subsidiary of UK-based Vedanta.
The full judgment is available here: https://www.supremecourt.uk/cases/docs/uksc-2017-0185-judgment.pdf
The claimants allege that as a result of the toxic effluent discharge from the Nchanga Copper Mine which is run by KCM they have suffered loss of livelihoods through damage to the land and waterways and health problems through having to consume and use polluted water. Now that jurisdiction has been determined their claims will be heard in the High Court at a date to be determined.
As part of the judgment today the Supreme Court also ruled that companies can be held to account for the commitments they make publicly regarding their subsidiaries and their commitments to the communities they serve.
The claimants, represented by law firm Leigh Day, have been fighting for four years to have their case heard in the English courts. They argued that they would not be able to achieve justice in the Zambian courts due to the lack of funding available for claimants in such claims and the lack of legal representatives with the necessary qualifications and experience to properly bring the case. The Supreme Court agreed with these arguments. The court also determined that there is a triable issue between the claimants and Vedanta, as well as KCM, and that Vedanta arguably owes a duty of care to the claimants as the parent company of KCM.
The court heard that Vedanta has published material claiming to have control and responsibility over KCM and material in which it asserted its responsibility for the establishment of appropriate group-wide environmental control and sustainability standards, for their implementation throughout the group by training, and for their monitoring and enforcement. The Supreme Court ruled that Vedanta must be held accountable for these publicly made statements and it therefore has a duty of care towards the claimants.
This ruling could have wider implications for companies who make public commitments relating to their responsibilities to communities and the environment and then fail to put these into practice.
Oliver Holland, solicitor at law firm Leigh Day representing the Zambians, said:
“After four years fighting for this case to be heard by the English courts we are delighted that our clients’ case can now go ahead in the UK where there is a real opportunity for justice.
“Our clients argued that as the UK-based parent company of KCM, Vedanta also had a duty of care towards them and should be held responsible for the damage they allege has been caused by the mine. Indeed in Vedanta’s own published materials the company claims to have control over the mine and to have responsibility for the proper standards of environmental control across its subsidiaries. The court has ruled today that Vedanta cannot merely pay lip service to these statements and must be held accountable for them.”
Martyn Day, senior partner at Leigh Day, added:
“I hope this judgment will send a strong message to other large multinationals that their CSR policies should not just be seen as a polish for their reputation but as important commitments that they must put into action.”
ENDS
Background
The Zambians first issued their claim against KCM and Vedanta in the High Court in August 2015. They allege that as a result of the toxic effluent discharge from the Nchanga Copper Mine (run by KCM) they have suffered loss of income through damage to the land and waterways on which they rely. They further contend that many are suffering from personal injuries as a result of having to consume and use polluted water. They are seeking damages, remediation and cessation to the alleged continual pollution that they say is gravely impacting their lives.
In order to bring the claims against Vedanta and KCM for damages relating to the alleged damage caused to their environment, livestock and health the issue of jurisdiction needed to be determined to decide which country should hear the case.
Following service of proceedings in August 2015 both KCM and Vedanta challenged the jurisdiction of the English Courts, filing applications which sought, among other things, a declaration that the court does not have jurisdiction to try the claims. In April 2016 the Technology and Construction Court heard submissions and evidence from all parties during a three day hearing. In May 2016 Coulson J found in favour of England as the most appropriate forum for the resolution of the claims allowing the claims to proceed against both Defendants.
Vedanta and KCM both appealed the first instance decisions and their appeals were heard over two days by the Court of Appeal in July 2017. TheCourt of Appeal upheld the entirety of Coulson J’s conclusions. The Defendants appealed to the Supreme Court and the case was heard on 14-15 January 2019 before Lady Hale, Lord Wilson, Lord Hodge, Lady Black, and Lord Briggs. Judgment was handed down on Wednesday 10 April 2019 with Lord Briggs giving the leading judgment to which the other panel members all agreed.
Now that jurisdiction has been determined the substantive claims by the Zambian villagers will be heard in the High Court.
Full judgment and key paragraphs: Vedanta Resources PLC and another (Appellants) v Lungowe and others (Respondents)
Please find below some of the key paras of the Supreme Court judgment in relation to our clients’ case.
“Even where group-wide policies do not of themselves give rise to such a duty of care to third parties, they may do so if the parent does not merely proclaim them, but takes active steps, by training, supervision and enforcement, to see that they are implemented by relevant subsidiaries Similarly, it seems to me that the parent may incur the relevant responsibility to third parties if, in published materials, it holds itself out as exercising that degree of supervision and control of its subsidiaries, even if it does not in fact do so. In such circumstances its very omission may constitute the abdication of a responsibility which it has publicly undertaken.” [para 53]
“But I regard the published materials in which Vedanta may fairly be said to have asserted its own assumption of responsibility for the maintenance of proper standards of environmental control over the activities of its subsidiaries, and in particular the operations at the Mine, and not merely to have laid down but also implemented those standards by training, monitoring and enforcement, as sufficient on their own to show that it is well arguable that a sufficient level of intervention by Vedanta in the conduct of operations at the Mine may be demonstrable at trial, after full disclosure of the relevant internal documents of Vedanta and KCM, and of communications passing between them.” [Para 61]
“Mr Gibson sought to extract from the Unilever case and from HRH Emere Godwin Bebe Okpabi v Royal Dutch Shell plc [2018] EWCA Civ 191; [2018] Bus LR 1022, a general principle that a parent could never incur a duty of care in respect of the activities of a particular subsidiary merely by laying down group-wide policies and guidelines, and expecting the management of each subsidiary to comply with them. This is, he submitted, all that the evidence thus far deployed in the present case demonstrated about the Vedanta Group. Again, I am not persuaded that there is any such reliable limiting principle. Group guidelines about minimising the environmental impact of inherently dangerous activities, such as mining, may be shown to contain systemic errors which, when implemented as of course by a particular subsidiary, then cause harm to third parties. {Emphasis added} In the Chandler case, the subsidiary inherited (by taking over a business formerly carried on by the parent) a system for the manufacture of asbestos which created an inherently unsafe system of work for its employees, because it was carried on in factory buildings with open sides, from which harmful asbestos dust could, and did, escape. As a result, and after a full trial, the parent was found to have incurred a duty of care to the employees of its subsidiary, and the result would surely have been the same if the dust had escaped to neighbouring land where third parties worked, lived or enjoyed recreation. It is difficult to see why the parent’s responsibility would have been diminished if the unsafe system of work, namely the manufacture of asbestos in open-sided factories, had formed part of a group-wide policy and had been applied by asbestos manufacturing subsidiaries around the world.” [para 52]
“It is a sufficient example of the lack of foundation for this factual challenge on appeal to look at the appellants’ best two examples. In the Nyasulu case, 2,000 claimants joined in group litigation about a discharge from the Mine in 2006 into the Mushishima stream and thereby into the Kafue river. Medical reports evidencing personal injuries were put in evidence only in relation to 12 claimants. The trial judge found in favour of the claimants on liability, and was content to award general damages to all 2,000 claimants on the base of medical evidence about only 12 of them. In the Supreme Court ([2015] ZMSC 33) the judge was upheld on liability but the claim by the remaining 1,989 claimants was dismissed for want of medical evidence to prove that they had suffered any loss. At first sight this might appear to have been a disaster attributable to a difference of view between the first instance and appellate judges, but Coulson J was provided with evidence about how the case had been prepared, both from one of the claimants and from the lawyer who conducted the claimants’ defence of KCM’s appeal in the Supreme Court. The judge was entitled to conclude from that evidence that the reason why so few of the claimants had medical evidence deployed on their behalf was that this would have required funding from the claimants which they could not afford, for disbursements which the lawyers instructed would not have been able to pay for out of their own resources.” [Para 99]
“In Shamilimo v Nitrogen Chemicals of Zambia Ltd (2007/HP/0725), about radiation emissions, there was evidence which entitled Coulson J to find, as he did, that this claim failed on causation because the claimants could not fund the necessary expert evidence to prove it. In conclusion therefore, there was in relation to both those cases evidence from which the judge was entitled to conclude that they supported rather than detracted from his overall finding that funding and local legal resources were insufficient to enable the claimants to obtain substantial justice in Zambia. It is irrelevant whether an appellate court might, upon a review of the same evidence, reach a different conclusion, even with the assistance from the Attorney General of Zambia, for which the court is grateful.” [Para 100]
Martin Plaut 