Intrusive Judicial Inquiry into Parent Company Liability
Lord Bingham’s statement in the House of Lords highlights the level of scrutiny that a parent company may face in transnational tort claims. Courts assess whether the parent company played an active role in controlling the subsidiary’s operations, particularly in matters of health, safety, and environmental standards. This includes an inquiry into:
Corporate Oversight – The extent to which the parent company exercised control over subsidiaries.
Knowledge and Responsibility – What the parent company’s directors and employees knew or ought to have known about the subsidiary’s activities.
Decision-Making and Action – Whether the parent company took positive steps to ensure compliance or failed to act, leading to harm.
Documentary Evidence – Courts examine internal company records, including:
Board meeting minutes
Reports from directors and employees
Correspondence related to oversight of the subsidiary
Jurisdiction and Access to Justice
The House of Lords upheld jurisdiction in the UK by applying the Connelly principle, which states that English courts should hear cases if there is a real risk that justice would not be accessible in the foreign jurisdiction. This was based on:
The complexity of the litigation, making it difficult to fund and pursue in South Africa.
The need for extensive corporate records, which were primarily located in the UK parent company’s offices.
Precedents in Parent Company Liability
By 2001, English courts had ruled on three key cases affirming parent company liability, establishing that:
The legal principle was not controversial.
UK courts should retain jurisdiction under forum non conveniens grounds when justice could not be obtained abroad.
Impact on Transnational Litigation
This judicial approach set an important precedent, paving the way for future cases like Chandler v Cape (2012) and Okpabi v Shell (2021), reinforcing the principle that parent companies may owe a duty of care to individuals harmed by the actions of their foreign subsidiaries.