A recent case has illustrated the potential impact which group litigation / class actions based on so called parent company liability (i.e. the liability of parent companies for the acts of their foreign subsidiaries) can have on international businesses. 

In Bravo and ors v Amerisur Resources plc, a Claimant group obtained a freezing order over Amerisur’s assets based on a claim arising from the alleged wrongs of Amerisur at a time when Amerisur was in the process of being acquired by a third party. Although the interim injunction did not thwart the transaction, it is not difficult to see how it could have done so in slightly different circumstances. As such the scope of parent company liability is a relevant not just in the context of claims based upon it, but in the context of other aspects of business, notably acquisitions.

A class action, an acquisition, and a freezing order

On 30 December 2019, a group of 15 farmers in Putamayo in the Republic of Colombia brought a claim in the English High Court against Amerisur Resources plc (Amerisur), a UK listed oil and gas exploration and production business. It is alleged (we assume, as the claim form gives no further details) that Amerisur is responsible for the actions of its Colombian subsidiary Amerisur Exploración Colombia Limited, and that it is therefore liable for the environmental contamination and pollution which has been caused. Amerisur is currently the sole defendant.

The claim was brought while Amerisur was in the process of being acquired by Chile-based oil and natural gas exploration and production company, GeoPark Limited (GeoPark). The Claimants’ argued that, following the acquisition, GeoPark intended to fold Amerisur’s business into its own, with the risk of Amerisur ceasing to exist or being stripped of its assets such that the Claimants could have been left with no route to recovery if successful.

On 9 January 2020, the Claimants successfully applied for an interim freezing order in respect of Amerisur’s assets in the sum of GBP3,178,600 million. The Court was satisfied that GeoPark’s planned business review of Amerisur created a risk of dissipation. The sum of GBP3,178,600 million reflected an assessment of the potential damages owed to 87 claimants, each of whom the judge determined had a good arguable case for damages for non-economic loss (i.e. personal injury) of about GBP5,700 thousand, with an additional (not-yet quantified) estimate of GBP6,000 in damages for economic loss. The frozen sum also included GBP2,5 million in estimated costs. On 3 February 2020, 165 additional claimants were added to the claim with the sum covered by the freezing order increasing to account for the additional claimants to GBP4,462,600 million.

The return date hearing of the freezing order, at which it will be determined whether the injunction should become final, appears to have taken place on 19 March 2020. At the time of this article’s publication, no judgment has been made publicly available.

While the claim did not stop the sale of Amerisur to GeoPark (which subsequently completed), the imposition of the freezing order will require GeoPark to maintain assets in the UK in accordance with the terms of the freezing order. Depending on the length of time it takes to resolve the claim, this could affect GeoPark’s post-acquisition plans for Amerisur’s UK operations.

In other circumstances, similar claims could have a more disruptive effect on these types of transactions. In a private acquisition context, the impact of such claims, if issued at this stage of the acquisition process, will depend on the contractual protections negotiated between the parties in the acquisition agreement, for example:

  • any warranties and indemnities in areas such as litigation, disputes and environmental matters; and
  • any rights available to a buyer to withdraw from an acquisition once it has been agreed but before it has completed (for example, the right to terminate the agreement for the occurrence of unforeseen events having a material impact on the target business).

Parent company liability – subsidiary and supply chain risks

The Amerisur claim is one of a growing number of cases being brought against English-domiciled companies in relation to (amongst other things) environmental harm and/or personal injury caused to third parties as a result of the alleged acts or omissions of foreign subsidiaries, following the UK Supreme Court decision in Vedanta. In Vedanta Resources PLC and another v Lungowe and others1 the Supreme Court confirmed that:

  • a duty of care can exist between a parent company and those affected by the operations of its subsidiaries;
  • the existence of that duty is likely to be a question of fact in each case; and
  • the existence of a duty may be suitable for determination at a summary hearing (such as a jurisdiction challenge), but this will depend on the circumstances of the case.

It is important to note that the principles clarified by the Supreme Court in Vedanta are not restricted to the parent/subsidiary relationship. Other cases are emerging that demonstrate the potential for the same legal principles to apply in a supply chain context, for example, a threatened claim against British American Tobacco was reported at the end of 2019. This follows claims in other jurisdictions where similar legal principles are being applied in the supply chain context, for example, Jabir and others v KiK Textilien und Non-Food GmbH in Germany relating to death and personal injury caused by a factory fire in Pakistan and Das v George Weston Limited in Canada relating to the Rana Plaza factory collapse in Bangladesh. A recent claim against Maran UK also demonstrates the potential for these legal principles to be applied beyond the parent/subsidiary or supply chain context to the disposal of corporate assets. These cases form part of a trend seen not just in the UK but also in the US, France, Germany, the Netherlands, South Africa, Thailand, and Brazil, amongst others. It is an international issue of which all multinationals, wherever their ultimate parent is domiciled, need to be aware.

Corporate risk

As the Amerisur claim illustrates, potential parent company liability is a particularly important issue in the context of acquisitions. These claims could have a significant detrimental effect on transactions and the future operations of an acquired business. It is a risk which should be an increased focus of due diligence, and also one which should be the specific focus of any warranties and indemnities included in the transaction documents.

Businesses are also well advised to give active consideration to their own (and any business partners’/ targets’) global footprint and any “Vedanta-style” litigation risk this may generate. There may be a particular exposure to that in any interim period where two businesses are in the process of aligning policies, processes and their outward-looking representations. In that context businesses should consider:

  • Statements made in public reports, including, in particular, human rights and sustainability reports, about what they mandate and/or achieve for the group, supply chain and/or companies they have invested in and whether this will still be accurate in a post-acquisition environment.
  • The operation of framework policies or codes of conduct (including supplier codes of conduct) and how these will be operationalised post-acquisition. For example, will training at a local level be required and/or do the newly acquired companies operate in special circumstances meaning that framework policies or codes are inappropriate, and need further local application.
  • How due diligence and/or audit regimes already in place in acquired companies feed into the overall risk management system. Red flags may include:
  • Local and transnational advocacy which mentions a target group, or particular sectors and/or geographies in which a target operates;
  • Operations, sourcing, production and processing in high risk and/or conflict or post-conflict zones; and
  • The presence of vulnerable groups and local or community opposition.


Claims like the Amerisur case, which follow cases like Vedanta, will be an increasingly prominent feature of the global litigation landscape in the coming years. They represent a significant risk to all multi-national corporates, both in the context of acquired risk (as in Amerisur) and more generally.

The trend towards this type of litigation will mean that it is an area of law that will evolve quickly. The exact direction of travel of that evolution is uncertain but cases in the UK demonstrate that claims seek to establish liability of parent companies through the their direct subsidiaries but also through more distant actors such as subsidiaries’ employees, suppliers and related third parties. We await with interest the decision of the Supreme Court in Okpabi and others v Royal Dutch Shell Plc and another2 James. However, the impact which these cases are already having must not be underestimated. 

1 [2019] UKSC 2
2 [2018] EWCA Civ 191

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