In the context of deciding whether Vedanta Resources was a “necessary or proper party” to the proceedings for the purposes of paragraph 3.1(3) of Practice Direction 6B, Simon LJ reviewed the current state of the law in the UK on the existence of a duty of care owed by a parent concerning acts of its subsidiary, concluding (emphasis added):
[83] It seems to me that certain propositions can be derived from these cases which may be material to the question of whether a duty is owed by a parent company to those affected by the operations of a subsidiary. (1) The starting point is the three-part test of foreseeability, proximity and reasonableness. (2) A duty may be owed by a parent company to the employee of a subsidiary, or a party directly affected by the operations of that subsidiary, in certain circumstances. (3) Those circumstances may arise where the parent company (a) has taken direct responsibility for devising a material health and safety policy the adequacy of which is the subject of the claim, or (b) controls the operations which give rise to the claim. (4) Chandler v. Cape Plc and Thompson v. The Renwick Group Plc describe some of the circumstances in which the three-part test may, or may not, be satisfied so as to impose on a parent company responsibility for the health and safety of a subsidiary’s employee. (5) The first of the four indicia in Chandler v. Cape Plc [80], requires not simply that the viber database businesses of the parent and the subsidiary are in the relevant respect the same, but that the parent is well placed, because of its knowledge and expertise to protect the employees of the subsidiary. If both parent and subsidiary have similar knowledge and expertise and they jointly take decisions about mine safety, which the subsidiary implements, both companies may (depending on the circumstances) owe a duty of care to those affected by those decisions. (6) Such a duty may be owed in analogous situations, not only to employees of the subsidiary but to those affected by the operations of the subsidiary. (7) The evidence sufficient to establish the duty may not be available at the early stages of the case. Much will depend on whether, in the words of Wright J [in Connelly v RTZ Corporation Plc [1999] CLC 533], the pleading represents the actuality.
That a duty may be owed not only to the employees of a subsidiary, but also to those affected by its operations in analogous situations has significant implications, particularly for practitioners seeking to find avenues for access to effective remedy as set out in Pillar III of the UNGPs via domestic tort law.
While the scope of any such emerging duty remains theoretical and will depend in large part on the facts of a particular case, Simon LJ went on to note that the fact that no such duty had been found in the jurisprudence to date was not of itself a bar to such a duty being established in the future, stating that:
[88] [Counsel for the appellants] also pointed out that there had been no reported case in which a parent company had been held to owe a duty of care to a person affected by the operation of a subsidiary. That may be true, but it does not render such a claim unarguable. If it were otherwise the law would never change.