The Court of Appeal addressed whether it is possible for a duty of care to be found between Vedanta and those affected by the actions of KCM, such that there is a real issue between the claimants and Vedanta.
In answering this question, the Court examined a number of cases which applied the three-part test for establishing a duty of care set out in Caparo Industries Plc v Dickman  2 AC 605 (the three stages being: (i) proximity; (ii) foreseeability; and (iii) reasonableness) and concluded that a parent company would owe a duty of care to those directly affected by its subsidiary if the claimant could demonstrate “additional circumstances”, for example, that the parent company took direct responsibility for drafting and devising the policies the adequacy of which was the subject of the claim; or the parent company controlled the operations which give rise to the claim. Each of the cases stressed that a duty of care was more likely to arise where the parent company had “superior knowledge” or expertise about the operations of its subsidiary.
The most widely cited case in this area is Chandler v Cape Plc  EWCA (Civ) 525, in which the parent company was found to have assumed a duty of care towards the employees of its subsidiary (who had been exposed to asbestos) because of the parent company’s “state of knowledge” about the factory in which these employees worked and “its superior knowledge about the nature and management of asbestos risks”1 associated with its subsidiary’s operations.
By contrast, in Thompson v The Renwick Group Plc  EWCA Civ 635, no duty of care was found between a parent company and the employees of its subsidiary, as there was no evidence that the parent company in question carried on any business apart from holding shares in its subsidiaries, and so it was not “better placed because of its superior knowledge or expertise, to protect the employees of subsidiary companies”.
In Vedanta, although the parent argued it neither owned the mine licence nor controlled the “material operation” of the mine, it was held that the claimants’ case on duty of care was arguable on the basis that Vedanta had:
- published a sustainability report which emphasised how the Board of the parent company had oversight over its subsidiaries;
- entered into a management and shareholders agreement under which it was obligated to provide various services to KCM, including employee training;
- provided health, safety and environmental training across its group companies;
- provided financial support to KCM;
- released various public statements emphasising its commitment to address environmental risks and technical shortcomings in KCM’s mining infrastructure; and
- exercised control over KCM, as evidenced by a former employee.
The Court stressed that it would not engage in a mini-trial on duty of care. This leaves open the possibility that during the trial on the substantive issues, the court may find that Vedanta did not owe a duty of care to the claimants. This is an example of an English court finding that there is a real issue to be tried between non-UK claimants and a parent company at an early stage, where the evidence may not always be available.