Posts Tagged Corporate social responsibility
Unilever. Court of Appeal summarily dismisses CSR jurisdiction against mother company, confirming High Court’s approach. Lex causae for proximity again left undiscussed.
Update 21 September 2018 further litigation on similar issues is underway in Gemfield [AAA and others v Gemfields Plc and Montepuez Ruby Mining Limitada]. See overview of issues here.
The Court of Appeal in  EWCA Civ 1532 has confirmed the High Court’s approach in  EWHC 371 (QB) AAA et al v Unilever and Unilever Tea Kenya ltd, holding that there is no good arguable case (the civil law notion of fumus boni iuris comes closes, as Bobek AG notes in Feniks) against Unilever, which could then be used to anchor the case in the English jurisdiction.
Pro memoria: jurisdiction against Unilever is clear, following Article 4 Brussels I Recast. That Regulation’s anchor mechanism however is not engaged for Article 7(1) does not apply against non-EU based defendants. It is residual English private international law that governs this issue.
Appellants appeal in relation to the High Court’s ruling that neither Unilever nor UTKL (the Kenyan subsidiary) owed the appellants a duty of care. Unilever has put in a respondent’s notice to argue that the judge should have found that there was no duty of care owed by Unilever on the additional ground that, contrary to her view, there was no proximity between Unilever and the appellants in respect of the damage suffered by them, according to the guidance in Chandler v Cape Plc. Unilever and UTKL also sought to challenge that part of the judgment in which the judge held that, if viable claims in tort existed against Unilever (as anchor defendant) and UTKL, England is the appropriate place for trial of those claims. Unilever also cross-appealed in relation to a previous case management decision by the judge, by which she declined an application by Unilever that the claim against it should be stayed on case management grounds, until after a trial had taken place in Kenya of the appellants claims against UTKL.
The legal analysis by Sales LJ takes a mere five paragraphs (para 35 onwards). Most of the judgment is taken up by an (equally succinct) overview of risk management policies within the group.
At 35 Sales LJ notes ‘Having set out the relevant factual background in relation to the proximity issue (i.e. whether the appellants have any properly arguable case against Unilever in the light of Chandler v Cape Plc and related authorities), the legal analysis can proceed much more shortly. It is common ground that principles of English law govern this part of the case.‘
– the ‘common ground’ presumably being lex loci incorporationis.
This is an interesting part of the judgment for I find it by no means certain that English law should govern this part of the case. In one of my chapters for professor Vinuales’ en Dr Lees’ forthcoming OUP book on comparative environmental law, I expand on that point.
The long and the short of the argument is that Unilever did not intervene in the affairs of its subsidiary in a more intensive way than a third party would have done. Reference at 37 is made to the contrasting examples given by Sir Geoffrey Vos in Okpabi, ‘One can imagine … circumstances where the necessary proximity could be established, even absent the kind of specific facts that existed in Vedanta … Such a case might include the situation, for example, where a parent required its subsidiaries or franchisees to manufacture or fabricate a product in a particular way, and actively enforced that requirement, which turned out to be harmful to health. One might suggest a food product that injured many, but was created according to a prescriptive recipe provided by the parent. …’
and, at 38, to the raison d’être of mother /daughter structures,
“… it would be surprising if a parent company were to go to the trouble of establishing a network of overseas subsidiaries with their own management structures it if intended itself to assume responsibility for the operations of each of those subsidiaries. The corporate structure itself tends to militate against the requisite proximity …
– subject evidently to proof of the opposite in the facts at issue (a test seemingly not met here).
(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 8, Heading 8.3.
2017 EWHC 89 (TCC), abuse, abuse of process, abuse of rights, Anchor defendant, article 7, case management, Chandler v Cape, Corporate social responsibility, CSR, Duty of care, environmental damage, FNC, Forum non conveniens, Gemfield, High Court, http://www.bailii.org/ew/cases/EWHC/QB/2017/371.html, http://www.bailii.org/ew/cases/EWHC/TCC/2017/89.html, Lex causae, lex fori, Locus damni, Locus delicti commissi, Nigeria, Okpabi v Shell, Owusu, piercing the veil, procedural law, Rome II, Shell, Unilever,  EWCA Civ 525,  EWHC 371 (QB),  EWCA Civ 1532
Chevron /Ecuador: Ontario Court of Appeal emphasises third parties in piercing the corporate veil issues.
In Chevron Corp v Yaiguaje, the Canadian Supreme Court as I reported at the time confirmed the country’s flexible approach to the jurisdictional stage of recognition and enforcement actions. Following that ruling both parties files for summary judgment, evidently advocating a different outcome.
The Ontario Court of Appeal have now held in 2018 ONCA 472 Yaiguaje v. Chevron Corporation that there are stringent requirements for piercing the corporate veil (i.e. by execution on Chevron Canada’s shares and assets to satisfy the Ecuadorian judgment) and that these are not met in casu.
Of particular note is Hourigan JA’s argument at 61 that ‘the appellants’ proposed interpretation of the [Canadian Corporation’s] Act would also have a significant policy impact on how corporations carry on business in Canada. Corporations have stakeholders. Creditors, shareholders, and employees, among others, rely on the corporate separateness doctrine that is long-established in our jurisprudence and that is a deliberate policy choice made in the [Act]. Those stakeholders have a reasonable expectation that when they do business with a Canadian corporation, they need only consider the liabilities of that corporation and not the liabilities of some related corporation.’ (emphasis added by me, GAVC)
Blake, Cassels and Graydon have further review here. Note that the issue is one of a specific technical nature: it only relates to veil piercing once the recognition and enforcement of a foreign ruling is sought.
(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 8.
2018 ONCA 472, Amazon, assets, Canada, Chevron, Chevron Corp v Yaiguaje (, Chevron Ecuador, Chevron Texaco, Corporate social responsibility, Corporate veil, CSR, Ecuador, Enforcement, Forum non conveniens, https://www.canlii.org/en/on/onca/doc/2018/2018onca472/2018onca472.html?resultIndex=9, Jurisdiction, Kiobel, Recognition and enforcement, Rule of law
For background to this week’s SCOTUS ruling in Jesner v Arab Bank see my earlier posting. Bastian Brunk has early reflection here, with good summary of the Court’s majority (as well as dissenting) opinion.
Human rights litigation under ATS is not dead. Yet it is clear it is not going to be routine, either. I find the judgment not surprising. While one could certainly from a political point of view bemoan that ATS is not providing the avenue to hold corporate excess to account, SCOTUS have a point when
- they emphasise the foreign policy intentions of the ATS when it was originally drafted. Hence the need not to ignore the same foreign policy implications 2 centuries on. Hence also my stance on JASTA.
- they highlight the continuing de lega lata situation on corporate culpability under international law: the default position remains that corporations are not subjects of public international law. Yes there are hard-core exceptions – and these may be further developing. And yes, plenty over the past 20 years have tried to change that status quo. Finally the Court could have flagged more of those attempts that raise serious doubt over the position. However it is hardly the role of the US Supreme Court single-handedly to force the hand of the league of nations.
- separation of powers in the US, too, demands Congress intervene should it want the Statute’s causes of action to be broadened.
All in all a ruling very much in Montesquieu’s spirit. Students of public international law in particular should read the judgment with care: there is plenty in there to chew over.
(Handbook of) EU Private international law, 2nd ed. 2016, Chapter 8, Heading 8.2.
Alien Tort Statute, ATS, Corporate culpability, Corporate social responsibility, CSR, https://www.supremecourt.gov/opinions/17pdf/16-499_1a7d.pdf, https://www.supremecourt.gov/Search.aspx?FileName=/docketfiles/16-499.htm, ICSID, Jesner v. Arab Bank, Kiobel, SCOTUS, Urbaser, USSC
Update 16 May 2018 Vedanta have been given permission to appeal to the Supreme Court.
Update 7 March For a great supplement simply refer to Penelope Bergkamp’s post in which she discusses the wider issues of parent liablity v veil piercing etc.
The Court of Appeal, referring powerfully ia to VTB, has confirmed (albeit with dissenting opinion) lack of the English courts jurisdiction in  EWCA Civ 191 Okpabi et al v Shell. I reviewed the High Court’s decision in same here. Plenty of the High Court’s considerations. e.g. (pro inspiratio) joinder under Brussels I Recast, and the optionally distributive lex causae rule under Article 7 Rome II, do not feature in the Court of Appeal’s approach.
The crucial take-away from the judgment is that the English courts do not believe that headquarter instructed mandatory compliance, equates control. This runs along the lines of Scheindlin USDJ’s approach in Apartheid.
(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 8, Heading 8.3.
2017 EWHC 89 (TCC), abuse, abuse of process, abuse of rights, Anchor defendant, article 7, case management, Corporate social responsibility, CSR, environmental damage, FNC, Forum non conveniens, High Court, http://www.bailii.org/ew/cases/EWCA/Civ/2018/191.html, http://www.bailii.org/ew/cases/EWHC/TCC/2017/89.html, Locus damni, Locus delicti commissi, Nigeria, Okpabi v Shell, Owusu, Rome II, Shell,  EWCA Civ 191
I reviewed the High Court’s decision in Lungowe here. In  EWCA Civ 1528 the Court of Appeal has now confirmed jurisdiction against the non-UK based defendants on largely the same, if slightly more structured and expanded arguments as the High Court. (Per Owusu, jurisdiction against the UK-based defendant is undeniable; the non-UK defendants need to be joined on the basis of residual English conflicts law).
Ekaterina Aristova has analysis of Simon LJ’s leading judgment here – I am happy to refer. Of particular note is the much more reserved approach of the Court of Appeal on the merits issue of the claim. As I noted in my review of Okpabi v Shell at the High Court, in that case Fraser J looked in serious detail into the issue of merits: not, I believe, justified at the jurisdictional stage. Appeal against Fraser J’s finding will be heard by the Court of Appeal.
European private international law, second ed. 2016, Chapter 8, Headings 18.104.22.168., 8.3.2
abuse, anchor, Anchor defendant, Chandler v Cape, Corporate social responsibility, CSR, environmental damage, Forum non conveniens, High Court, http://www.bailii.org/ew/cases/EWCA/Civ/2017/1528.html, http://www.bailii.org/ew/cases/EWHC/TCC/2016/975.html, lungowe v vedanta, parent company liability, piercing the veil, Pollution, Regulation 1215/2012, Shell,  EWHC 975 (TCC),  EWCA Civ 1528
I have reported before (search tag ‘CSR’ or ‘ATS) on the personal jurisdiction cases in US litigation. The United States Supreme Court this morning held in Bristol-Meyers Squibb, BMS for short. For background see earlier reporting in this post. California was held not to have jurisdiction for claims brought by non-residents. In her dissenting Opinion justice Sotomayor notes the important impact of the ruling, suggesting that a corporation that engages in a nationwide course of conduct cannot now be held accountable in a state court by a group of injured people unless all of those people were injured in the forum State. Precedent evidently includes Bauman.
Judgment and opinion include many interesting takes on personal jurisdiction and how it should be managed.
Kenneth Argentieri and Yuanyou (Sunny) Yang have an interesting suggestion here, that ‘plaintiffs will continue to develop creative arguments to obtain jurisdiction over defendants in their preferred jurisdictions, for example, by arguing that a corporation’s registration to do business in a state or designation of an agent to accept service in a state constitute consent to the jurisdiction in that state. Circuit and state courts are currently split on this issue, and the United States Supreme Court has not yet ruled on it.’ We are not a the end of the personal jurisdiciton road.
02-md-1499, Alien Tort Statute, Apartheid, BMS, Bristol Meyers, Colonialism, Comity, Corporate social responsibility, CSR, Daimler, DaimlerChrysler, DaimlerChrysler v Bauman, Extraterritoriality, Germany, http://opiniojuris.org/wp-content/uploads/17-Apr-SDNY-Opinion.pdf, https://www.supremecourt.gov/opinions/16pdf/16-466_1qm1.pdf, Human rights, In re South African Apartheid Litigation, Jurisdiction, Kiobel, Lungisile Ntsebeza et al v Ford General motors and IBM, Namibia, Piercing the corporate veil, Regulation 1215/2012, Rio Tinto, SC, SCOTUS, Tort, United States Supreme Court, USSC
A quick note to tickle the interest of the BIT community out there: I have come across a suggestion that recent initiatives on supply chain liability (for the notion see my earlier reblog of Penelope Bergkamp’s piece) may run counter the protection of foreign investment under Bilateral investment treaties. The analysis at issue is directed at Queensland’s chain of responsibility laws. While it is clearly a law firm’s marketing pitch (heyho, we all have to make rain somehow), the issue is real: supply chain liability laws can I suppose under circumstances qualify as regulatory takings just as any other new law.
Or can they?
- Wahl AG in Workplace Relations Commission: Member States procedural autonomy in light of primacy of EU law. 21/09/2018
- Federal Arbitration Act Preempts Florida State Statute Which Prohibits Out-of-State Resolution of Construction Claims Involving Florida Real Property 21/09/2018
- Inversiones v Cancun. The Dutch Supreme Court on counterclaims and locus damni for diluted shareholdings. 20/09/2018
- Prize time! 9th Grand Prix Jean Bastin 2019 17/09/2018
- Jurisdiction re prospectus liability. CJEU reiterates Universal Music in Löber v Barclays. Unfortunately fails to identify the exact locus damni and leaves locus delicti commissi unaddressed. 14/09/2018
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