Recognising a Duty of Care to Prevent Harm for Corporate Controllers: A Normative Analysis

This paper examines the circumstances under which a duty of care arises in connection to harm caused by a company for persons other than the body corporate itself. It provides an original doctrinal analysis of the Supreme Court rulings in Vedanta and Okpabi and demonstrates that the key to understanding the nature of the duty of care of parent companies lies in the proper interpretation of the concept of assumption of responsibility. By elucidating the logical implications of the Supreme Court rulings and framing the normative issues by reference to contractualist theories of morality, this article demonstrates that the principle underpinning parent company liability must apply to all company controllers. These include natural person controlling shareholders, directors and other controlling parties such as companies in a supply chain relationship. It is argued that there should be a rebuttable presumption that controlling shareholders owe such duty of care and that for directors such duty automatically arises by virtue of their obligation to exercise control over the company. This novel normative argument results in a radical reconceptualisation of this complex area of law that would afford increased protection to the victims of corporate torts while remaining rooted in established common law principles.

Speaker; Dr Andreas Kokkinis, Birmingham Law School.

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