Subsidiary's acts and parent company

The principle of limited liability will generally operate to protect a company’s members from liability for the company’s debts and obligations. The members’ liability is limited to the amount (if any) unpaid on their shares. However, there have been cases where a parent company has been held to be responsible for the acts of its subsidiary. In particular, in Chandler v Cape plc [2012] EWCA Civ 525, the Court of Appeal held that in certain circumstances a parent may be responsible for the health and safety of its subsidiary’s employees.

This was the argument raised in HRH Emere Godwin Bebe Okpabi & others v Royal Dutch Shell plc & anor [2017] EWHC 89 (TCC), where proceedings were brought against Royal Dutch Shell plc, the ultimate parent company of the Shell group. The claimants were Nigerian citizens who were claiming for damage allegedly caused by oil spills from Shell’s operations in the Niger delta. The claims were brought against the Nigerian subsidiary responsible for Shell’s operations in the region and also against its ultimate parent company, registered in England. One of the claimants’ central arguments was that the parent company was liable in tort for the acts or omissions of its Nigerian subsidiary.