Parent company liability after Lungowe v Vedanta Resources plc: implications for the duty of care in supply chain liability claims

Thesis

UK-domiciled multinational companies have increasingly resorted to the complete or partial outsourcing of production to overseas suppliers. Despite the prevalence of exploitative and unsafe labour practices in their global supply chains, domestic and international laws effectively isolate multinational companies from accountability for their transnational harms, leaving many victims without remediation.

In the seminal decision of Lungowe v Vedanta Resources [2019] UKSC 20, the UK Supreme Court confirmed that UK-domiciled parent companies can owe direct duties of care to the local stakeholders of their foreign subsidiaries. While Vedanta was resolved at the jurisdictional stage, the Supreme Court clarified and developed the substantive issue of when a parental duty of care can exist. The court emphasised that there is no special doctrine of parent company liability: rather than ownership, the primary determinant of the existence of a duty is the degree of control and supervision that the parent exercised. This threshold can be satisfied where a corporate group is vertically integrated.

The principal argument of this thesis is that the Vedanta framework therefore provides scope for the imposition of liability in buyer-driven (commodity) chains where a high degree of control and supervision is exercised by a lead purchasing company over a harm-causing supplier. This thesis focuses on the circumstances in which a direct duty of care can arise in the supply chain context. The judicial recognition of supply chain liability in appropriate circumstances can ensure that lead firms internalise social harms that were reasonably foreseeable to them and that they had sufficient control over to have prevented. In turn, this precedential development has the potential to improve access to remedies for victims of corporate harms without introducing novel concepts into the common law of negligence.

Authors: Schwede, L

• DOI: 10.5287/ora-xqkp6xgjn
• Type of award: MPhil
• Level of award: Masters
• Awarding institution: University of Oxford
• Language: English
• Keywords: parent company liability; supply chain liability; duty of care; corporate accountability; tort law; negligence
• Subjects: Tort liability of corporations