The Reform and A Role For Company Law

The Reform and A Role For Company Law Lungowe vs Vedanta - Subsidiary KCM Ltd. in Zambia; - High Court - extended Chandler factors to Zambian citizens; - Court of Appeal - duty could arise: - Group policies; Actions of company. - Supreme Court agreed; - Duty rests on actions of parent; - Left open corporate models the duty could be applied in; - Group policies could establish a duty. OKPABI V Shell - King Okpabi, the customary ruler of the Ogale community: "Shell spoiled our water and destroyed our livelihoods. It is now spending millions to protect itself and tell the world that it has no responsibilities towards the people of Ogale, rather than addressing the wrong it did to us." - High Court - Chandler factors not applicable; - SPDC held operational license; - Parent company (Royal Dutch Shell) did not merely hold company; - RDS would have only superficial knowledge of subsidiary's actions mandatory policies not enough. - Affirmed High Court decision; - LJ Sales - dissent: - Clearly mismanagement by SPDC; - RDC facing reputational and financial risks as a result; - Demonstrated practical assumption of control; - Sir Goeffrey Vos - policies did not indicate control; - But in some circumstances, they could (harmful products). AAA v Unilever - Post-election violence in Kenya; - Workers on tea plantation run by Unilever subsidiary were murdered, raped and assaulted; - Sued parent company for damages; AAA v Unilever - Court of Appeal - 'One Unilever Operating Framework' policy not sufficient nexus; - Managing Director statements persuasive; - Unilever had no expertise in subsidiary's business; REFORM  Unclear what level of control + whether group policies on own sufficient;  Group policies can certainly be persuasive;  While jurisprudential approaches are innovative, not comprehensive solution;  Could this duty be applicable in climate litigation? Ekwurzel et al. 'The rise in global atmospheric CO2, surface temperature, and sea level from emissions traced to major carbon producers', Climatic Change (2017) 144(4) 579-570 The Second Wave - Federal Displacement A federal court U.S. judge tosses climate lawsuits by California cities, but says science is sound.... two California cities seeking to make oil companies pay for worsening sea-level rise and other climate change impacts. Tort May Be Unsuited For Climate Claims: 1. Impacts of climate change are diffuse (causation); 2. Still not possible to link specific impacts to specific emissions (but attribution studies are more accurate); 3. If these hurdles are overcome, would parent company be insulated from liability? The Need For Reform - Outcomes of post-Chandler cases vary for claimants; - Depends on 'control' exercised by parent; - Shouldn't parent liability simply reflect the economic relationship of a corporate group? Reform Options - Amend or remove limited liability in certain circumstances; - Another (better) option establish 'enterprise liability'; - Liability by parent company for harms caused by subsidiaries. Why Is This Important For Climate Change? 1. If tort hurdles can be overcome, could parent carbon major be liable for climate harms experienced in the global South? 2. Environmental and social justice is climate justice. Climate Resilient Societies Resilience: 1. Ability to withstand and recover from shocks; 2. To anticipate and plan for future shocks; 3. Communities need wealth, equality and access to natural and social resources to build resilience. A Role For Company Law? - Company law and companies have a role to play; - Previously company law acted as a barrier to climate action; - Company law reform can transform that from a barrier to a bridge.