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Court of Appeal revisits the question of the duties of parent companies

Published 12 July 2018

The question of whether an employee of a subsidiary company may pursue its parent company, which was considered by the Court of Appeal in Thompson v The Renwick Group plc (DAC Beachcroft Insurance Adviser, May 2014) and in Chandler v Cape plc, was considered once again in the case of AAA & Others v Unilever plc and Unilever Tea Kenya Limited. Judgment in the case was handed down on 4 July 2018.

The claimants were injured in an outbreak of violence which followed the general election in Kenya in 2007. They were employed by Unilever Tea Kenya Limited (UTKL), and lived on its plantation. UTKL managed its business locally and had prepared its own crisis and emergency management policy which included policies in case of political unrest. The policy had been prepared without advice from its parent company, Unilever plc (U).

The claimants sought to pursue both UTLK and U in the Courts of England and Wales rather than in Kenyan Courts.

The court considered judgments, including Chandler, and determined that the parent company had not taken over the management of UTKL or management of its crisis and emergency policies. Importantly UTKL had not devised the policies jointly with its parent company and U had not given advice to UTKL about how it should manage the risks arising from political unrest. UTKL was responsible for devising its own policy which it had followed without recourse to its parent company.

The judgment in the case not only prevents the claimants from pursuing U but also places them in a position where there is no 'anchor' defendant whose inclusion in the claims allowed them to pursue legal action in in England and Wales.

It is tempting for claimants to seek to pursue a parent company in addition to a subsidiary in circumstances where the subsidiary has insufficient assets to satisfy any judgment or where the subsidiary is not within the jurisdiction of the English and Welsh Courts Such attempts should be considered with care. The line of cases reviewed above provide clear guidance on when inclusion of the parent company is permissible and when the English and Welsh Courts will accept jurisdiction.

The jurisdiction in which claims are heard will often have a significant impact on their outcome and defendants, and their insurers, should reflect on whether to seek to strike out claims against parent companies in cases such as these.

Authors

David Williams

Leeds

+44 (0)113 251 4844

dwilliams@dacbeachcroft.com

Key Contacts

David Williams

Leeds

+44 (0)113 251 4844

dwilliams@dacbeachcroft.com

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