This case serves as a useful reminder to global product manufacturers of the basis upon which a court may find they are liable for the conduct of their subsidiaries. Although, the court made clear that there is no special category of parent company liability, it emphasised that a parent company that manages its subsidiary, or gives it prescriptive instructions on relevant issues, may be found to have assumed a duty of care.
In AAA and others v Unilever PLC and Unilever Tea Kenya Limited, the Appellants sued Unilever and UTKL, Unilever’s Kenyan subsidiary, for the injuries they had suffered following violence by intruders to the tea plantation in Kenya, where they worked in 2007. At first instance, the case was dismissed because the judge found no duty of care was owed due to a lack of foreseeability. However, the judge did find that there was a sufficient connection between the activities of Unilever and the damage suffered by the claimants to establish Unilever as an “anchor defendant”, which would allow claims for a tort that occurred abroad to be heard in England.
On appeal, the Appellants asserted that England and Wales was the correct forum for the dispute to be heard, arguing that the damage they suffered was foreseeable by Unilever and UTKL. The Respondents cross-appealed on the basis that there was no duty of care as there was no proximity between the parties.
The Court of Appeal sided with Unilever and UTKL. They noted that the starting point was that the two companies have separate legal personality and noted that a claimant must establish that the parent company owes them a duty of care, like any third party. They stated that “there is no special doctrine in the law of tort of legal responsibility on the part of a parent company in relation to the activities of its subsidiary, vis-à-vis persons affected by those activities.”
Although there is no distinct duty of care owed by parent companies, in some cases the unique relationship between a parent company and its subsidiary mean that a duty of care should be imposed. There are broadly two types: (1) the parent effectively manages the subsidiary; or (2) the parent has given advice to the subsidiary on how to manage a risk.
The Appellants accepted that their claim was not within the first category but sought to argue it came with the second class. They pointed to evidence that they suggested represented advice given by Unilever to UTKL on the management of risks, in particular political unrest and violence in Kenya. However, the Court of Appeal concluded that UTKL had developed and operated its own approach to risk management and the 2007 crisis. The Court dismissed the appeal and found that there was no basis upon which to impose a duty of care. Therefore, the case could not be heard in England.