In a decision likely to give comfort to parent energy companies, the English Court of Appeal has confirmed (by a majority of 2:1) that the parent company of the Shell Group owed no duty of care to approximately 42,500 Nigerian claimants in respect of serious historic and ongoing environmental damage caused by pipeline leaks in the Niger Delta -Okpabi and others v Royal Dutch Shell Plc and another [2018] EWCA Civ 191.

Parent company duty of care will usually be considered as a matter of jurisdiction and so the question is whether claimants have a “real prospect of success” on establishing a duty of care. If the UK parent company owes no duty of care, it follows that the English courts will decline jurisdiction, over both the parent company and its overseas subsidiary (the UK parent having been used to anchor the claim in the English courts). At the heart of the Court of Appeal’s reasoning is the test it recently set out for the imposition of a duty of care in mining operations in Zambia in Lungowe v Vedanta [2017] EWCA (Civ) 1528 (relying on Chandler v Cape Plc and Thompson v The Renwick Group plc): the test of foreseeability, proximity and reasonableness. These cases outline the special circumstances where a parent will owe a duty to those affected by the actions of its subsidiary, including where the parent (i) controls the operations giving rise to the claim, (ii) has taken direct responsibility for devising a health and safety policy the adequacy of which is the subject of the claim, and (iii) has similar knowledge to its subsidiary and jointly takes decisions, which the subsidiary implements.