Class action tourism on the rise

"Class Action Tourism" is a trend for litigation that we are seeing becomingly increasingly prevalent. It involves a claim by a number of individuals against the entity in a group (often the parent company) in a litigant-friendly jurisdiction (usually where there is funding available for litigants) and where the defendant has a presence sufficient to establish the jurisdiction of the courts.

There have already been a number of high-profile claims in this area before the English Courts.  A recent example was the claim brought in the London courts against Shell on behalf of the Bodo Community relating to environmental damage in Nigeria, which settled in February 2015 for US$50 million. Other companies targeted include Anglo-American in relation to workers who contracted silicosis and silico-tuberculosis at a mine in South Africa; Trafigura in relation to 30,000 locals affected by toxic waste dumping in the Ivory Coast; and Africa Barrick Gold in relation to deaths and injuries of villagers allegedly caused by use of excessive force by mine security and police at a mine in Tanzania. 

There have already been a number of high-profile claims in this area before the English Courts.

We are seeing NGOs and class action law firms (such as Leigh Day in the UK) encouraging and facilitating these claims. They are often threatened, using the prospect of adverse publicity, with a view to extracting a high-value settlement at an early stage.

Often the claims relate to events which have taken place elsewhere (e.g. Africa, Asia) and involve allegations of environmental damage or injury to the claimants and their property/the local area.

Energy and mining companies are a particular target for these claims, because they are often structured with a holding company (such as a UK listed plc) and a local operating subsidiary. Despite the fact that parent companies may have no involvement in the day-to-day operations or the events which give rise to the claims, they are being targeted on the basis of their involvement in setting group policies and procedures in areas such as health, safety and environment.

It is important that companies are aware of the prospect of these claims in order to seek to reduce the risk.

Claims are also being made for infringement of Claimants' human rights, either as one aspect of a civil class action and/or as a complaint made to the National Contact Point regarding breaches of international human rights standards (the 2011 OECD Guidelines for Multinational Enterprises). 

It is important that companies are aware of the prospect of these claims in order to seek to reduce the risk. For instance, statements are often made in annual reports and other public documents about the way in which a group and its health, safety and environment policies are managed. These are then later used to support a claim against the parent company by those allegedly affected by events in the jurisdiction in which a subsidiary operates. It is also important to have robust internal monitoring and reporting requirements on human rights compliance in place.