High Court strikes out group claims in light of parallel claims overseas: good news for parent company liability claims?

The High Court has struck out the claims of over 200,000 claimants against two companies in a group of companies (domiciled in England and Australia respectively) arising out of an incident in Brazil. The court struck out the claims as an abuse of process in light of concurrent proceedings and compensation schemes in Brazil: Municipio de Mariana v BHP Group plc [2020] EWHC 2930 (TCC).

Whilst set in a non-financial context, this decision is relevant and comforting to UK-domiciled financial institutions who might be considered to be at risk of claims being brought which allege a duty of care in relation to the actions of their foreign subsidiaries or branches. The Supreme Court in Vedanta Resources PLC & Anor v Lungowe & Ors [2019] UKSC 20 considered whether the implementation of group-wide policies was arguably sufficient to found a duty of care owed by a parent company to third parties. The Supreme Court noted that group-wide policies do not of themselves give rise to such a duty of care to third parties, but they may do so if the parent company: (a) does not merely proclaim them, but takes active steps, by training, supervision and enforcement, to see that they are implemented by the relevant subsidiaries; and (b) in the published materials, holds itself out as exercising that degree of supervision and control of its subsidiaries, even if it does not do so.

The High Court’s decision therefore provides some comfort to UK financial institutions exposed to such parent liability claims. The decision confirms that the English courts will, in appropriate cases, be prepared to take a robust approach in striking out such parent liability claims filed in the English courts against a UK-domiciled parent company on the grounds that such claims are a clear abuse of process especially: (a) where there is no compelling evidence of difficulties in bringing the claim in the relevant foreign jurisdiction; and (b) there is a concurrent claim in the relevant foreign jurisdiction which relates to the same issues and involves many of the claimants who are seeking the same compensation for the same alleged damages.

For a more detailed discussion of the High Court’s decision, please see our litigation blog post.

Note: In January 2021, the High Court refused the claimants' application for permission to appeal to the Court of Appeal. 

In March 2021, the Court of Appeal refused the claimant's application for permission to appeal.

In June 2021, a hearing took place in the Court of Appeal in relation to the claimant's application to reopen its previous application for permission to appeal.

In July 2021, the Court of Appeal granted permission to appeal. The Court of Appeal hearing has been fixed for 4 April 2022.