UK & Europe
Insurance & Reinsurance
Risk managers are advised to take a cautious approach as the UK Court of Appeal decision in the African Minerals case serves as a warning to companies engaging third parties when operating abroad, particularly in countries with poor human rights records. It also highlights the trend for such cases to be brought before the UK courts.
Kadie Kalma & Ors v African Minerals Ltd & Ors  concerned liability for human rights breaches by Sierra Leonean police following civil unrest at the defendants’ mine. In all, 142 claimants sought to hold AML (which owned and operated the mine) and co-defendants responsible for the police’s actions.
The Claimants argued that the Defendants were liable through vicarious liability, accessory liability and negligence. The High Court found that the Defendants had not been vicariously liable, had not intended the police to use excessive force (so there was no accessory liability by common design), and had not breached any duty of care.
The Claimants appealed, arguing that the Defendants had a common design with the local police, and by providing them with accommodation, money and vehicles, the judge should have inferred an intention on the part of the Defendants “to quash protest, if need be by the use of excessive violence”. In addition, the judge had been wrong to find there was no duty of care in negligence and wrong to consider whether each (hypothetical) breach had individually caused the harm. The Court of Appeal dismissed the claimants’ appeal.
The case represents another example where claimants have attempted to pursue their claims in the English courts for harm suffered overseas, due to the acts of their subsidiaries, or in this case third parties. The case illustrates the potential for claimants to attempt to impose liability on UK parent companies via accessory liability in tort.
The relationship between AML and the local police was important. When AML arrived at the mine, there was very little police presence. The mine assisted the police by providing accommodation, vehicles and money – and a close relationship formed between the two. Subsequently, 2010 and 2012 saw two public disorder incidents that were met with violence by the police, resulting in one civilian being killed and numerous others injured.
On both occasions the police used the Defendants’ vehicles. The Claimants claimed they had suffered at the hands of the Sierra Leonean police. The police force was not sued directly; instead the Claimants claimed the Defendants were responsible as they were directly involved in the violence, failed to prevent the violence and/or encouraged it.
At first instance, the judge held that the relationship between the Defendants and police was not akin to employment, thus there was no vicarious liability. There was no accessory liability (by way of common design), and the Defendants did not owe the Claimants a duty of care to prevent the police causing harm.
On appeal, the Claimants submitted that a common design could be inferred from the Defendants’ assistance to the police and that by supplying the accommodation, money and vehicles, the Defendants intended that the protest should be quashed, using excessive violence if needed.
The Court of Appeal found this was “unsustainable”. While providing resources to the police may have meant the defendants foresaw excessive violence might be used, this was not their intention; indeed, it could be said the resources were supplied “to restore and keep the peace”. Coulson LJ considered that “foresight is a very different thing from intent” and could not justify the defendants being found liable.
The provision of accommodation, money and vehicles was found not to be a breach of duty. The Court of Appeal described the case as one of “pure omissions”; the Defendants did not carry out “a relevant activity” so as to attract a duty or do “anything to cause the loss”. The crux of the case was about an omission, in that the Defendants had failed to protect the Claimants from police harm. The Court of Appeal agreed with the trial judge’s finding that the assistance the Defendants provided was not causative of the loss. Rather, the “fear, ill-discipline, anger and testosterone” of the Sierra Leonean police was to blame.
The decision represents a helpful outcome for defendant companies in limiting liability and indicates that using local police forces should not typically attach liability to the company for the force’s actions. However, risk managers must bear in mind this decision is fact-specific and a cautious approach should be taken by corporates when engaging third-party assistance, particularly when operating in countries with poor human rights records.
Although Kalma has some similarities with the Supreme Court decision in Vedanta, the Court of Appeal did not consider this case. The Supreme Court in Vedanta took a different approach, confirming that a parent company’s duty of care depends on the extent to which, and the way in which, the parent has controlled the management of the subsidiary.
It was noted that “Vedanta might fairly be said to have asserted its own assumption of responsibility for the maintenance of proper standards of environmental control” by its subsidiaries, which, together with the implementation of those standards by training, monitoring and enforcement, suggested it was at least arguable that a duty of care was owed. The present case was not decided in accordance with this line of authority.
Corporates should note that this litigation trend will likely continue, given the developing shift of focus from government acts to holding corporates responsible (in particular parent companies of overseas subsidiaries), as well as the increasing expectation on companies to protect human rights and the appetite of the claimant lobby to bring these claims, along with the activity of rights groups to raise the profile of such issues.
While risk managers need to remain vigilant, and will of course be conscious of the potential reputational risks involved, the Court of Appeal did note that it is the primary responsibility of the countries’ governments “to promote and protect human rights” and not the companies operating abroad.
The Claimants have sought leave to appeal to the Supreme Court, and this is supported by rights groups RAID and the UK Corporate Responsibility Coalition, which have officially lodged a letter with the UK Supreme Court under a rule that permits civil society groups to make submissions in the public interest to the court.
This article was first published in Commercial Risk on 27 July 2020.