1. INTRODUCTION
Widespread environmental degradation and the resulting harm to human communities caused by business operations of large corporate entities are a depressing and well-known reality. Exceptionally disastrous and transboundary incidents, such as the Deepwater Horizon oil spill in the Gulf of Mexico,Footnote 1 can attract global media attention and lead to legal scrutiny, revealing the persistent problem of poor safety standards and violation of environmental laws and regulations, which seems to permeate corporate culture.Footnote 2 Even more widespread environmental threats that are of a truly planetary scale, such as climate change, are also increasingly linked to large corporate entities, which had early knowledge of the risks posed by their activities and had opportunities to mitigate those risks, but repeatedly failed to do so or, even worse, tried to mislead the public by spreading misinformation campaigns and lobbying regulators against taking action.Footnote 3
However, while the activities leading or contributing to large-scale environmental damage come under ever-increasing legal scrutiny in developed countries, the same activities can easily go unchecked in developing countries, potentially leaving the most vulnerable groups of local communities unprotected. Such communities may be unable to pursue litigation because of a lack of funds or experienced lawyers. They may often be employed by, and thus be dependent on, the polluting entity. As if this were not enough, the operations of the polluting entity may be controlled not by a local branch but from an office of its parent company located thousands of miles away. Without any means of protecting themselves in the local courts, the affected communities may thus have only one viable option: to seek justice in the courts of the home state of the parent company.
On 10 April 2019 the Supreme Court of the United Kingdom (UK) delivered judgment in exactly such a case, Vedanta v. Lungowe,Footnote 4 which concerns the liability of an English company for environmental damage caused by its foreign subsidiary in Zambia. The decision confirmed that English parent companies could owe a duty of care to foreign claimants affected by operations of their subsidiaries abroad and that the English courts could have jurisdiction to hear such cases, even when a foreign court is a more appropriate forum for the trial. This finding is likely to have a significant impact as many English companies have numerous subsidiaries abroad, and the latter have been involved in multiple cases of environmental damage in the host states. The decision could, therefore, give an impetus to future claims being brought in the English courts. Furthermore, apart from its relevance to corporate environmental liability in general, the decision opens some interesting possibilities for climate change liability litigation against English parent companies and their foreign subsidiaries, as their cumulative greenhouse gas (GHG) emissions are likely to be considerably higher than when taken separately, arguably making prospective claims against them more viable.
Section 2 of this article discusses the case and the reasoning of the English courts in determining jurisdiction. Section 3 considers the transnational significance of the case by positioning it in the context of similar litigation in England and abroad. Section 4 analyzes the relevance of the decision for prospective claims against English companies and their foreign subsidiaries for contributing to climate change. Section 5 concludes by summarizing some long-term implications of the decision.
2. CIRCUMSTANCES OF THE CASE
For many years the Nchanga Copper Mine in the Chingola District of Zambia – allegedly the second largest in the world and the largest private employer in the country – has been discharging toxic emissions into the watercourses used by exceptionally poor members of local rural farming communities for drinking, irrigation and other essential purposes.Footnote 5 The owner of the mine is Konkola Copper Mines Plc (KCM), a public company incorporated in Zambia and a subsidiary of Vedanta Resources Plc (Vedanta) – a multinational group incorporated and domiciled in England.Footnote 6 KCM is not fully owned by Vedanta as the Zambian government has a significant minority stake.Footnote 7 However, according to materials published by Vedanta, the ultimate control of KCM is not ‘to be regarded as any less than it would be if wholly owned’.Footnote 8
In 2015 a group of 1,826 Zambian citizens initiated proceedings against both KCM and Vedanta before the High Court (Technology and Construction Court (TCC)) of England and Wales, alleging personal injury, damage to property, and loss of income, amenity and enjoyment of land as a result of environmental damage caused by discharges from the mine since 2005.Footnote 9 KCM was sued as the operator of the Nchanga Copper Mine.Footnote 10 Vedanta was sued because it maintained high control and direction over the mining operations of KCM and the latter had to comply with health, safety and environmental standards established by Vedanta.Footnote 11 The claims were based on the common law of negligence, nuisance, trespass, and breach of statutory duty in accordance with Zambian law.Footnote 12
2.1. Jurisdiction
Both Vedanta and KCM challenged the jurisdiction of the English courts. They asserted that the case did not disclose a real justiciable issue against Vedanta because it could not ‘be shown to have done anything in relation to the operation of the Mine sufficient either to give rise to a common law duty of care in favour of the claimants, or a statutory liability as a participant in breaches of Zambian environmental protection, mining and public health legislation’.Footnote 13 Furthermore, the defendants argued that even if a real justiciable issue were disclosed against Vedanta, the case should be dismissed for being an abuse of European Union (EU) law ‘because the claimants [were] using a claim against Vedanta in England purely as a vehicle for attracting English jurisdiction against their real target defendant, KCM,Footnote 14 by means of the necessary or proper party gateway’ under the Civil Procedure Rules (CPR).Footnote 15
The necessary or proper party gateway is provided under paragraph 3.1(3) of Practice Direction 6B of the CPR, giving the English courts the power to authorize service of process to parties outside the jurisdiction when:
(3) A claim is made against a person (‘the defendant’) on whom the claim form has been or will be served (otherwise than in reliance on this paragraph) and –
(a) there is between the claimant and the defendant a real issue which it is reasonable for the court to try; and
(b) the claimant wishes to serve the claim form on another person who is a necessary or proper party to that claim.
Based on these provisions, the claimants obtained an order to serve process against KCM as the necessary or proper party to the proceedings against Vedanta, the first defendant, which was domiciled in England. According to the practice direction, the court reserves discretion under CPR 6.37(3) to deny permission to serve outside the jurisdiction unless it is satisfied that England is the proper place for the trial. In order to properly exercise this discretion, the High Court addressed the following five questions:Footnote 16
(a) Does the claimants’ claim against KCM have a real prospect of success?
(b) If so, is there a real issue between the claimants and Vedanta?
(c) Is it reasonable for the court to try that issue?
(d) Is KCM a necessary or proper party to the claim against Vedanta?
(e) Is England the proper place in which to bring the claim?
After considering these questions, the High Court dismissed the applications of Vedanta and KCM against hearing the case in England by finding in favour of the claimants on the question of a real issue against the anchor defendant, Vedanta.Footnote 17 Both the Court of AppealFootnote 18 and the Supreme CourtFootnote 19 upheld this decision.
2.2. Vedanta's Duty of Care
The Supreme Court's analysis included an assessment of whether Vedanta ‘exercised a sufficiently high level of supervision and control of the activities at the mine, with sufficient knowledge of the propensity of those activities to cause toxic escapes into surrounding watercourses, as to incur a duty of care to the claimants’.Footnote 20 Most importantly, the Court emphasized that establishing any relevant duty in a parent/subsidiary relationship ‘depends on the extent to which, and the way in which, the parent availed itself of the opportunity to take over, intervene in, control, supervise or advise the management of the relevant operations (including land use) of the subsidiary’.Footnote 21 In this case the Court concluded from the materials submitted by the claimants that Vedanta did in fact assert ‘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’.Footnote 22
2.3. Access to Justice
Both the High Court and the Court of Appeal found that, although Zambia was the proper place to bring the claim, ‘there was a real risk that the claimants would not obtain substantial justice in the Zambian jurisdiction’.Footnote 23 The Supreme Court, therefore, held:
Even if the court concludes … that a foreign jurisdiction is the proper place in which the case should be tried, the court may nonetheless permit (or refuse to set aside) service of English proceedings on the foreign defendant if satisfied, by cogent evidence, that there is a real risk that substantial justice will not be obtainable in that foreign jurisdiction.Footnote 24
The Supreme Court further stated that the question of whether substantial justice is obtainable requires careful analysis of distinctive evidence.Footnote 25 In this case, it considered the availability of resources, both financial and technical expertise, to effectively litigate a case of such complexity to be the determining factor in assessing whether substantial justice was attainable for the claimants in the foreign jurisdiction.Footnote 26 The evidence assessed included cases concerning environmental damage and the testimony of the claimants and Zambian lawyers.Footnote 27
On the question of funding, the High Court had made the following finding, which was deemed relevant by the Supreme Court:
The claimants have been described as being considerably below the average income earners in Zambia. Given that Zambia is one of the world's poorest countries, where the vast majority live at subsistence levels …, the claimants would not be able to afford any legal representation.Footnote 28
The High Court relied on the case of Lubbe v. Cape Plc,Footnote 29 involving litigants from South Africa, in which the House of Lords found that the ‘lack of the means, in South Africa, to prosecute [the] claims to a conclusion provides a compelling ground … for refusing to stay the proceedings’.Footnote 30 In Vedanta, the High Court compared the legal systems and economic situations in both South Africa and Zambia, and concluded that there was compelling evidence that access to justice would be unavailable to the claimants who were worse off than their South African counterparts in Lubbe:
South Africa is the largest economy in southern Africa. It is a country where [Conditional Fee Agreements (CFAs)] are lawful. In addition, it has one of the most developed legal systems in the world. Yet despite all of that, the House of Lords concluded that the claimants would not obtain access to justice there. The general evidence in that case about South Africa contrasts starkly with the evidence here about Zambia, which is one of the world's poorest countries. CFAs are not lawful there. And on any view the legal system in Zambia is not well developed: indeed, in 2012 Zambia was the subject of a report by the Bureau for Institutional Reform and Democracy, which highlighted the dearth of lawyers in Zambia, and the consequences for its citizens.Footnote 31
Based on the analysis of the decided cases and witness testimony, the High Court found that it was impossible for the claimants to obtain legal aid, and that there was a dearth of lawyers in Chingola, the town where the alleged pollution occurred; furthermore, the lawyers lacked the relevant expertise to prosecute a case of this magnitude.Footnote 32
Finally, the Supreme Court was persuaded that ‘the track record in Zambia of litigation of this kind … could not give an aspiring litigant in a group action dealing with environmental issues any confidence that these cases would be appropriately managed and resolved’.Footnote 33 The Supreme Court highlighted two decided cases, namely, Benson Shamilimo and 41 Others v. Nitrogen Chemicals of Zambia Ltd Footnote 34 and Nyasulu and 2,000 Others v. KCM.Footnote 35 In Shamilimo, concerning claims by a group of persons who were allegedly exposed to radiation, the claimants could not establish a causal link between ‘their illnesses (which were proved) and the exposure to radiation (which was also proved)’.Footnote 36 The UK Supreme Court agreed with the finding of the High Court that the claimants failed to prove causation because they ‘could not fund the necessary expert evidence to prove it’.Footnote 37 In Nyasulu, a claim for damages arising from the discharge of effluent into the Mushishima Stream leading to pollution of the water source which feeds into the Kafue river, the claimants were awarded damages by the High Court.Footnote 38 On appeal to the Supreme Court of Zambia, the damages awarded to 1,989 claimants were set aside on the ground of lack of medical evidence to prove that the claimants had suffered any loss.Footnote 39 The UK Supreme Court agreed with the High Court that ‘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’.Footnote 40
The decision in Vedanta thus expands the grounds that would limit the capacity of claimants to obtain substantial justice, including lack of technical expertise in addition to the lack of funding referred to in Lubbe. Notably, though, in both Lubbe and Vedanta the courts emphasized the need for evidence to demonstrate the unique circumstances of the particular cases in order to avoid creating a blanket precedent that lack of access to legal aid and financing would prevent claimants from obtaining access to justice in a foreign jurisdiction. The Court applied the test of appropriate forum stated in the case of Spiliada Maritime Corporation v. Cansulex Ltd. Footnote 41
3. THE TRANSNATIONAL SIGNIFICANCE OF THE DECISION
The decision in Vedanta is an important precedent for providing access to justice for foreign claimants in transnational corporate liability litigation.Footnote 42 Given the global presence of English companies, and the fact that their foreign subsidiaries have been involved in multiple cases of environmental damage in the host statesFootnote 43 – including large-scale disasters such as the Mariana dam disaster in BrazilFootnote 44 – Vedanta could give an impetus to future claims brought in the English courts. The litigation following the Mariana dam disaster is one of the most recent examples of an instance where this could happen. The disaster resulted not only in proceedings against the subsidiary and both its parents in Brazil, but also proceedings in Australia and England. In Australia, shareholders filed a lawsuit against BHP Billiton, claiming that the company knew about the safety risks prior to the disaster but failed to take any action to prevent it. In England, more than 240,000 claimants, including Brazilian municipalities and indigenous communities, filed a lawsuit against BHP Billiton seeking compensation for damages caused by the collapse of the dam.Footnote 45
3.1. Suing Parent Companies in Their Home State
Depending on the circumstances, suing a parent company in its home state for the activities of its foreign subsidiaries may be advantageous or even vital for the claimants’ success. For example, the parent company may have the financial resources that are unavailable to the subsidiary to satisfy the claim. Thus, one of the concerns in Vedanta was that KCM would not have sufficient funds to cover the damages because of its uncertain financial position, with the High Court concluding that ‘there is a real risk that, without Vedanta's support, [KCM] may have insufficient resources to meet the claims’.Footnote 46 Other financial considerations, such as the cost of litigation, and more favourable civil procedural arrangements can also render the home country a more attractive forum for litigation. These considerations can be decisive in determining that the claimants would not obtain substantial access to justice in the courts of the host state, as seen in Vedanta as well as other environmental cases, including the above-mentioned Lubbe and Connelly v. RTZ Plc.Footnote 47
Similarly, the lack of legal expertise in the host state – as in Vedanta – can also be a decisive factor. In Zambia this lack of expertise is also observable among trial courts, as demonstrated by Martha Mutizhe Kangwa and 27 Others v. Zambia Environmental Management Agency and 2 Others. Footnote 48 The claimants contended that the construction of a cement factory would negatively affect the neighbouring farms by relying on expert testimony from a hydrologist, a mining engineer, and a veterinary surgeon.Footnote 49 The trial court rejected the testimony and dismissed the claim as it considered that these experts ‘were not experts in environmental issues, but experts in segments like mining, water, veterinary’.Footnote 50 On appeal, the Supreme Court held that the trial court had misunderstood environmental issues in dismissing the testimony, as all these segments were facets of the environment as defined by the repealed Environmental Protection and Pollution Control Act pursuant to which the claim was brought.Footnote 51 Nevertheless, the Supreme Court held that the trial court was entitled to accept or reject the expert testimony based on established principles of the law of evidence regarding the weight that a court could attach to evidence.Footnote 52
Meanwhile, yet another critical reason for pursuing litigation abroad is ineffective enforcement in the subsidiary's host state. The latter scenario is a persistent and acute problem in many developing countries,Footnote 53 as illustrated by Gbemre v. Shell Nigeria.Footnote 54Gbemre was remarkable in several ways, most notably because, among other things, it was the very first case to raise the issue of climate change in an African court. The claimant alleged that the oil production activities (gas flaring) of the defendants, Shell Petroleum Development Company of Nigeria Ltd (SPDC) and the Nigerian National Petroleum Corporation, adversely affected his life and health as well as the local environment, thus violating his rights to life and dignity enshrined in the Nigerian Constitution and the African Charter on Human and Peoples’ Rights.Footnote 55 The Federal High Court of Nigeria was persuaded by the claimant's arguments.Footnote 56 However, the decision was never enforced and did not halt the practice of gas flaring in Nigeria.Footnote 57
Understandably, home state courts dealing with transnational cases where the host state's legal system allegedly suffers from a lack of expertise or effective enforcement will exercise particular caution in order to avoid raising ‘serious issues of comity and exorbitant jurisdiction’Footnote 58 and thus refuse to hear such claims. However, the scenarios referred to above also demonstrate that victims of corporate abuse, particularly those from developing countries, may face a poor choice between having their case against both the parent and the subsidiary companies heard in the courts of the home state or possibly not having it heard at all.Footnote 59
3.2. Transnational Corporate Liability for Environmental Damage
In today's globalized world, multinational corporations (MNCs) have become ‘both legally ubiquitous and yet legally invisible’Footnote 60 as a result of their presence in multiple jurisdictions and legal separation between parent company and subsidiary.Footnote 61 At the time of writing, numbers of such corporations and their subsidiaries are reaching into six and seven digits, respectively.Footnote 62 Subsidiaries often operate and cause harm in developing countries with a weaker rule of law,Footnote 63 where vulnerable populations risk becoming hostage to business deals between MNCs and local governments.Footnote 64 Vulnerable groups are further hampered by rules such as forum non conveniens and arrangements such as the corporate veil, which play into the hands of MNCs.Footnote 65 These situations can lead to severe problems of social and environmental justiceFootnote 66 and even human rights violations.Footnote 67 In the absence of international law provisions to address extraterritorial abuses by MNCs,Footnote 68 and the near-universal absence of such legislation at the national level,Footnote 69 the decisions of home state courts on the liability of parent companies for harm caused by their foreign subsidiaries are vital. At the same time, such cases are highly fact-specific.Footnote 70
Thus, in contrast to Vedanta, the English courts dismissed Okpabi v. Shell,Footnote 71 a case concerning oil pollution in Nigeria, which has affected wide areas of land across the Niger Delta and local waterways, disrupting the lives of a considerable number of people. The claimants – about 42,500 Nigerian citizens – sued Royal Dutch Shell Plc (RDS), an Anglo-Dutch company, and its local subsidiary SPDC, responsible for onshore oil operations in Nigeria, in the English courts.Footnote 72 The claimants sought damages arising from ‘serious and ongoing pollution and environmental damage caused by oil spills emanating from the defendants’ oil pipelines and associated infrastructure’.Footnote 73 The High Court ruled that the claims could not proceed in the English courts because there was no justiciable issue against the parent company as its control over the subsidiary's activities was insufficient to establish a duty of care vis-à-vis the claimants.Footnote 74 On appeal, Lord Justice Sales was of the opinion that the claimants ‘[had] shown at this stage that they have a good arguable case that RDS owed them a duty of care at the material times and that it breached that duty of care, resulting in losses to the claimants of a kind in respect of which damages are recoverable’.Footnote 75 The majority of the Court of Appeal, though, upheld the decision of the High Court.Footnote 76 The majority decision, however, is open to criticism for taking ‘a highly restrictive approach for the imposition of the duty of care on English-domiciled parent companies in relation to the overseas activities of their subsidiaries’, as well as for imposing ‘an unreasonably high burden on the claimants to establish an arguable case on the duty of care at the jurisdictional stage of proceedings’.Footnote 77 As of March 2020, the case is pending in the Supreme Court.
So far, however, none of the English cases involving a parent company's duty of care have been decided on the merits. Nonetheless, Vedanta confirmed that English parent companies could owe a duty of care to foreign claimants affected by the operations of their subsidiaries in the host states, and that the English courts could have jurisdiction to hear such cases even when a foreign court is seemingly a more appropriate place for the trial. This development also reflects a growing trend for home state courts in agreeing to hear claims against parent companies and their foreign subsidiaries and, even more importantly, holding the parent companies liable in some of these cases.Footnote 78 The most notable example of this trend is Akpan v. Shell, in which the Dutch courts held that they had jurisdiction over claims brought by Nigerian citizens against the RDS and SPDC for oil spills from an oil well operated by the latter.Footnote 79 Overall, this might well be considered part of a broader global trend towards corporate liability for various types of harm, including human rights violations.Footnote 80
At the same time, this trend contrasts with developments in the United States (US), which may seem a particularly lucrative jurisdiction when it comes to transnational liability claims against corporations.Footnote 81 The US is home state to a vast number of the world's largest MNCs, and its legal system allows the pursuit of different avenues of claims in federal or state courts.Footnote 82 The Alien Tort Statute (ATS)Footnote 83 – a provision unique to the US which explicitly grants US courts jurisdiction to hear civil cases brought by non-US nationals for torts committed in violation of customary international law or treaties ratified by the USFootnote 84 – appears to fill an extremely important and broad legislative gap.
These lucrative possibilities, however, very rarely materialize in reality. The application of the ATS has been subject to restrictive interpretation by the US Supreme Court, limiting the jurisdiction of the US courts when dealing with transnational claims brought under the Act. Kiobel v. Shell concerned widespread human rights violations carried out by the Nigerian military, and supported by Shell, against the Ogoni people who were protesting against environmental pollution caused by SPDC.Footnote 85 The US Supreme Court ruled that the claim did not ‘touch and concern the territory of the [US] with sufficient force’ and the ‘mere corporate presence’ of the company in the US was insufficient to establish jurisdiction.Footnote 86
The US Supreme Court has placed an even greater restriction on the application of the ATS to claims against foreign entities in a recent non-environmental case, Jesner v. Arab Bank,Footnote 87 which expressly excludes foreign companies from ATS liability on political grounds.Footnote 88 The Court did not address the question whether this exclusion applies also to US companies,Footnote 89 which is highly relevant with regard to certain types of extraterritorial environmental harm caused by US companies on US soil – most notably, contribution to climate change.Footnote 90 However, in terms of the foreign subsidiaries of US companies, Jesner seems to foreclose the possibility of suit under the ATS unless claimants are able to convince the courts that the parent companies are directly liable for the conduct of their subsidiaries.Footnote 91 Even in the latter scenario, claimants would be likely to find it difficult to succeed because of the reluctance of US courts to pierce the corporate veil.Footnote 92
A restrictive approach of the US courts to extraterritorial claims is observable also in non-ATS cases, where the courts can refuse, on various grounds, to exercise jurisdiction over claims in respect of the responsibility of US transnational companies for their activities abroad.Footnote 93 Notable examples of this trend are two high-profile environmental cases concerning large-scale pollution originating from subsidiaries of US-based companies in IndiaFootnote 94 and Ecuador and Peru,Footnote 95 respectively. The claims were dismissed by the US courts on forum non conveniens grounds despite compelling evidence that the courts in these countries were inadequately prepared to process the claims.Footnote 96 In dismissing these claims on procedural grounds, the US courts seemed to adhere more to political issuesFootnote 97 than to considerations of justice. While these developments do not necessarily mean that transnational environmental and human rights claims in the US have reached a dead end,Footnote 98 they may indeed render the English and Dutch courts and those of other nations which have demonstrated their willingness to hear such claims a more attractive forum for transnational litigation against MNCs in the long term.Footnote 99
4. IMPLICATIONS FOR POTENTIAL CLIMATE CHANGE LIABILITY CLAIMS
Apart from claims concerning corporate liability for conventional environmental damage, Vedanta is also potentially relevant for prospective claims against English mining and fossil fuel producing companies and other companies and their foreign subsidiaries for their contribution to global GHG emissions and, consequently, climate change. In Okpabi, the Court of Appeal referred to the duty to ‘reduce global warming’ as an ‘abstract … concep[t] of moral responsibility’ as distinguishable from a ‘duty owed to a particular person or class of persons’.Footnote 100 Such a definition, however, appears to ignore the fact that the duty of the government to address climate change has already been recognized by a number of foreign courts, including the US Supreme Court,Footnote 101 the Supreme Court of Colombia,Footnote 102 the Supreme Court of the Netherlands,Footnote 103 and lower courts in other countries around the world.Footnote 104 Notably, a governmental duty of care with regard to climate change is fairly obvious as the cause of action stems from both national and international law requirements for states to address climate change.Footnote 105 Similar developments are potentially possible in the case of private emitters,Footnote 106 although determining the scope of their liability may be more difficult.
For instance, the US case of American Electric Power Co. v. Connecticut Footnote 107 was brought by a group of states against several electric power corporations that owned and operated fossil fuel-fired powerplants across the US. The Supreme Court held that the federal Clean Air Act, granting the US Environmental Protection Agency (EPA) the power to set emission standards (following the Supreme Court's decision in Massachusetts v. EPA), displaces federal common law nuisance claims for domestic GHG emissions. In another US case, Native Village of Kivalina v. ExxonMobil Corp.,Footnote 108 the Inupiat Eskimo village of Kivalina in Alaska sought to recover financial compensation from a group of the world's largest fossil fuel producers in respect of its forced relocation following the erosion of sea ice around the village. The Ninth Circuit expanded this displacement rule to cover claims for damages based on oil producers’ past emissions. Nonetheless, the outcome in these early US cases is not necessarily indicative of impending developments either in the US or elsewhere, and some examples below suggest that such claims could potentially go beyond the procedural stage, with the decision in Vedanta opening some interesting new perspectives.
First and foremost, a likely catalyst for a surge in climate change liability claims against private emitters can be found in the recent studies tracing GHG emissions to corporate entities that produce fossil fuels, including several English MNCs.Footnote 109 Hence, following two early high-profile cases against BP (one of the largest corporate contributors to global carbon dioxide emissions since the Industrial Revolution) in the US,Footnote 110 the company in recent years has faced a cascade of lawsuits brought by US cities and municipalities seeking compensation for climate change adaptation measures in the US courts, relying on the GHG emissions tracing studies referred to above.Footnote 111 Notably, these lawsuits focus not on the defendant's own GHG emissions (as in American Electric Power Co. and Kivalina), but rather on their sale of fossil fuels to those who eventually burn them.Footnote 112 BP is also under investigation in the Philippines for potential human rights violations resulting from climate change, with petitioners referring to the same studies.Footnote 113 The investigation culminated in the Commission's announcement during the UN climate negotiations in Madrid (Spain) in December 2019 that, based on the existing evidence, the carbon majors could be found liable for human rights violations arising from climate change.Footnote 114
Unlike the claims against governments, such claims typically deploy compensation strategies, focusing on harm caused by allegedly tortious activities of private polluters.Footnote 115 However, the circumstances of the proceedings referred to above are quite different from those in Vedanta where the pollution was local and KCM was the only identifiable polluter. Meanwhile, climate change liability claims concern GHG emissions – pollution of an exceptionally diffuse nature, caused by countless sources, and the causal chain between individual emissions and their contribution to climate change (particularly, extreme weather events attributed to such pollution) is still not fully explored.Footnote 116 As a result, claims against corporate emitters are most likely to face formidable challenges, given ‘a long latency period, diffuse harms affecting multiple victims, and diffuse origins from multiple tortfeasors’.Footnote 117 Unsurprisingly, both BP and other non-US companies have used this argument to challenge the lawsuits as well as the jurisdiction of the US courts, as these companies are not incorporated in the states in which they were sued.Footnote 118 The argument that these companies are not present in the US can be refuted fairly easily, as demonstrated by the Court in City of Oakland v. BP Plc:
BP does not operate in California but several of BP's subsidiaries do. These subsidiaries produce oil and natural gas in California, own or operate port facilities in California to receive crude oil, ship crude oil from Alaska to California, license the ARCO trademark to gasoline stations in California, and promote gasoline sales through credit card offers and gasoline discounts. Elsewhere in the United States, BP subsidiaries produce fossil fuels, own refineries and pipelines, and market gasoline through BP-branded stores.Footnote 119
Meanwhile, other challenges outlined above are countered typically by the findings in the studies referred to above in tracing the lion's share of cumulative worldwide GHG emissions to just 90 corporate entities (the so-called ‘carbon majors’)Footnote 120 and the developments in attribution science, quantifying the anthropogenic climate change and related impacts,Footnote 121 as well as evidence of deliberate public misinformation, perpetrated by the defendants, about the connection between burning fossil fuels and climate change.Footnote 122 The precedential value of other types of environmental or public health litigation (especially that relating to tobacco) against companies where claimants faced similar challenges is correctly pointed out as a strong argument to support such liability claims against corporate emitters.Footnote 123
Although it is yet to be determined how courts will treat all these findings in the context of corporate climate change liability, the experience from similar litigation abroad indicates that there is a possibility for such claims to move into the evidentiary phase. For example, in the German case of Lliuya v. RWE AG Footnote 124 the claim was brought by a Peruvian citizen in the District Court of Essen against German-based energy company RWE for reimbursement of climate change adaptation costs in the claimant's village in Peru. The Court dismissed the claim for lack of causality but, on appeal, the Higher State Court of Hamm reversed this decision, allowing the case to move forward into the evidentiary phase.Footnote 125 This stage involves the court reviewing expert evidence on RWE's emissions and their contribution to climate change, including its impact on the claimant. An even more recent example is Smith v. Fonterra Co-Operative Group Ltd Footnote 126 in New Zealand, where a representative of indigenous Māori communities are suing seven national companies that operate dairy farms, a power station, and an oil refinery, which are contributing significantly to GHG emissions in the country.Footnote 127 The New Zealand High Court, while rejecting the public nuisance and negligence claims, allowed the case to proceed to trial, underscoring that its novel nature warranted it to be addressed on the merits.Footnote 128 Neither of the two cases involve the parent/subsidiary relationship, although their procedural significance is still very relevant.Footnote 129
Furthermore, as seen from the recent legal action initiated by the French branch of the environmental non-governmental organization (NGO) Friends of the Earth against Total S.A., a French fossil fuel MNC, climate change liability claims against the operations of MNCs in the host state through foreign subsidiaries are also becoming an issue for home state courts to address. The French case involves a challenge to a large-scale oil project in Uganda operated by the MNC's local subsidiary.Footnote 130 It is particularly interesting as, under France's corporate duty of vigilance law, large French companies are obliged to publish annual plans addressing the adverse impact of their activities, and those of subsidiaries and suppliers, on people and the environment.Footnote 131 Although France's duty of care legislation is quite unique in the global corporate liability landscape, with climate change liability litigation experiencing a dramatic expansion over the last several years,Footnote 132 it may just be a matter of time before such claims become widespread.
In that regard, the Supreme Court decision in Vedanta offers an interesting opportunity, which is directly linked to the diffuse nature of GHG pollution and its cumulative effect. Foreign subsidiaries of the major emitting companies can produce significant emissions in the host states, yet the host states themselves may still not be large-scale emitters globally.Footnote 133 Hence, even if the courts of host states were to hold these emissions by the subsidiaries to be negligible in the face of global emissions,Footnote 134 the cumulative emissions of both the subsidiaries and their parent companies are likely to be considerably higher, with their quantity and even their approximated impacts much more palpable and calculable based on the attribution studies referred to above. In practice, this means that claims against the subsidiaries (smaller emitters) alone could be less effective, as demonstrated in Smith. The High Court in that case expressed concern that, as tortious liability is generally joint and several, it makes any defendant against whom a claim is made potentially ‘liable for the whole of a plaintiff's loss, notwithstanding the individual defendants’ minimal contribution to the global emissions that, combined, have caused climate change’.Footnote 135 Therefore, a prospective claim against both the foreign subsidiary and the parent company brought in the parent company's home state could be more viable.Footnote 136
Admittedly, such an approach would still not eliminate all the challenges. In Smith, for example, the High Court hypothesized that ‘[r]ecognising the duty claimed would give rise to issues of indeterminate liability on anyone’ and ‘the class of potential defendants is equally open-ended’.Footnote 137 The District Court in Oakland reasoned along very similar lines:
While these actions are brought against the first, second, fourth, sixth and ninth largest producers of fossil fuels, anyone who supplied fossil fuels with knowledge of the problem would be liable. … Everyone has contributed to the problem of global warming and everyone will suffer the consequences.Footnote 138
Of course, it would be wrong to view these challenges as insurmountable; for example, climate change is recognized as disproportionately affecting developing countries as well as vulnerable communities in developed countries, the contribution of which to global emissions is far lower than that of their counterparts,Footnote 139 thus highlighting a critical flaw in the reasoning of the District Court in Oakland. Furthermore, as the Ninth Circuit recently confirmed in the climate change case against the US federal government, Juliana v. United States, the presence of multiple links in the causal chain does not preclude it from establishing causation,Footnote 140 although the court dismissed the claim for the alleged lack of redressability.Footnote 141
Overall, arguments against allowing climate change liability cases against private emitters to be decided on the merits may be dictated more by political reasons rather than those of a legal or scientific natureFootnote 142 and it is no secret that claimants in such cases face an uphill battle. Therefore, there is no reason for them not to explore those options that could potentially alleviate the position. It is difficult to predict whether a prospective climate change liability claim based on Vedanta could succeed in England or elsewhere. However, the fact that it is possible, and that the Supreme Court's decision in Vedanta seemingly indicates that English courts could have jurisdiction to hear such claims, may open an entirely new chapter in climate change liability litigation against private GHG emitters.
5. CONCLUDING REMARKS
Just one month after the UK Supreme Court's decision in Vedanta, the Zambian government announced its plans to seize control of KCM's assets.Footnote 143 If these plans materialize, it would be questionable whether the case could progress to the merits stage. Ironically, this situation corroborates the Supreme Court's reflections on the ‘disproportionate way in which these jurisdiction issues have been litigated’.Footnote 144 Indeed, it took nearly four years of litigation, nearly 300 pages of written cases and nearly 9,000 pages of electronic documents,Footnote 145 as well as going all the way from the court of first instance to the Supreme Court, to resolve the question of jurisdiction, which may now be of little practical use for the claimants. Interestingly, in its considerations on whether Zambia would be a proper forum to try the matter, the High Court also anticipated a similar scenario when it theorized that Vedanta may liquidate KCM in order to avoid paying out claims if it lost the trial in Zambia.Footnote 146
Still, the relevance of the decision cannot be understated. While it may not necessarily open the floodgates for environmental and climate change claims against English companies given costs issues and other constraints, Vedanta is an important precedent for providing access to justice for foreign claimants in transnational corporate liability litigation.Footnote 147 In the wake of this decision, at least some English companies may revise their policies and responsibilities for the maintenance of standards of environmental control over the activities of their foreign subsidiaries to avoid prospective lawsuits. It can only be hoped that such revisions would require foreign subsidiaries to exercise due diligenceFootnote 148 and not, on the contrary, create an illusory distance between them and the parent company in order to shield the latter from liability. That said, it must also be acknowledged that even in the case of a successful outcome, litigation in the UK courts, or those of other developed countries, would not resolve the underlying problems faced by claimants in developing countries like Zambia or Nigeria. It would not bolster expertise within legal circles or enforcement in these countries. However, it can be critical in achieving justice – something indispensable to those, who for various reasons, have been forsaken by both their national institutions and the international community.
