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Can a business be held liable for the unlawful conduct of local security forces acting to protect the business interest?5th May 2020 Business Crime
Many businesses with operations outside the UK rely upon local state security forces to protect their operations. This happens all over the world. What if those security forces cause harm to the local population, acting in the course of protecting the business interest?
The Court of Appeal of England and Wales has upheld the High Court’s decision in the case of Kadie Kalma and others v African Minerals limited and others. I will call the defendants AML. The finding sets out the circumstances in which a company can be held liable for this kind of harm.
What happened? 142 individuals alleged that they had been harmed by the Sierra Leonean Police (the SLP) during two incidents of unrest related to the defendants’ mining operation. There were beatings, there were shootings and one person died. Although this happened in Sierra Leone, the case was heard in England because the head office for one of the defendants was in London at a relevant time.
In short, the High Court found the defendants were not liable for what the SLP did and the Court of Appeal upheld that verdict.
At trial, the claimants argued AML could be held responsible on the basis:
(i) That AML was vicariously liable,
(ii) Was an accessory to a “common design” with the SLP,
(iii) Procured the SLP to commit the acts,
(iv) Breached a duty of care in failing to prevent the SLP from committing the acts or
(v) Breached a non-delegable duty in respect of the “extra-hazardous” activity the SLP undertook.
The arguments were all rejected at trial, largely because the connection could not be regarded as a ‘quasi-employment’ relationship. However, AML were criticised for not following the “recognised minimum standards” set out in the Voluntary Principles on Security and Human Rights (the VPs) designed to reduce the risk of incidents like this at mining sites.
The appeal was in respect of two of the original heads of claim, namely:
(i) Whether AML were accessories and
(ii) Whether the respondents had negligently breached a duty of care to the appellants in failing to take adequate steps to prevent the SLP from harming the appellants.
Accessory liability arises where a defendant acts in a way that furthers the commission of a tort by a third party and does so in pursuance of a common design. In this case, the appellants said the common design was the suppression of protests and disruption around the mine by unlawful means. At trial, the judge decided AML did not direct or procure the unlawful acts and rejected the notion of common purpose. The appellants said accessory liability could be inferred through AML’s provision of money, food, accommodation etc. to the SLP and AML should have known how the SLP would conduct themselves, which would suit AML’s purpose.
The Court of Appeal rejected the argument. The trial found that AML had to provide money, food etc. to the SLP to enable them to protect the mine and its personnel. In that sense, the resources could be said to further the keeping of the peace.
Furthermore, the fact that it was foreseeable that the SLP might use excessive force did not mean that this was the respondents’ intention. There is a difference between common purpose – the keeping of the peace – and a situation where someone provides assistance to a party in the knowledge that the party is going to act unlawfully.
So far as duty of care is concerned, the appellants challenged several factual aspects of the decision at trial. Firstly, that AML’s involvement amounted to ‘pure omissions’, rather than omission and positive acts. Secondly, that AML did not create a dangerous situation. Suffice it to say for the purposes of this article, the Court of Appeal dismissed these arguments; deciding that liability would not attach in this case to omissions and it was the SLP and not AML who had created the danger.
Interestingly, the appellants also argued that if the situation was indeed ‘pure omission’, a ‘free-standing’ duty of care still arose. The Court of Appeal did not need to, but did consider this by referring to the ‘Caparo duty of care test’. Was the damage foreseeable? Was there a proximate relationship and would the imposition of the duty be a fair, just and reasonable outcome? The Court of Appeal found that it was reasonably foreseeable, but found against the appellants with regard to the other two elements.
In reaching these conclusions, did the Court of Appeal interfere with any findings of fact at trial? In short, no. It was a complex trial on the facts, but the Court of Appeal will only interfere with a finding of fact where that finding is “critical” and “has no basis in the evidence, or where the judge’s decision “cannot reasonably be explained or justified” or is based on a demonstrable misunderstanding of relevant evidence, or a failure to consider that evidence”. None of those applied here.
So the decision helps us understand ‘common design’ and ‘duty of care’ in relation to pure omissions and the creation of the source of danger. As a bonus, it dealt with application of the Caparo test where a third party causes the harm (distinctions arising in the UK Supreme Court case of Vedanta Resources + Lungowe are not dealt with here).
Does it mean that mining companies can resource the local law enforcement, help to train them etc. and then stand back when the personnel use excessive force? Well, it certainly means that the relationship needs to be settled with care if the requisite common design and duty of care is not going to be created. However, this case was very fact specific. If AML had been seen to participate, encourage or engage in a way which directly or indirectly ‘endorsed’ the tortious acts, the High Court at trial would have had little difficulty in recognising that duty of care and the creation of something more than mere omission. Quite separately, there are commercial consequences for companies operating on the rough edge of human rights compliance; not only in relation to local factors, but also in a wider operational sense when tendering for international contracts or seeking to engage with governments. In fact, the development of an engagement toolkit comprising of risk assessments, protocols, training etc. can help avoid problems in the first place. It provides an effective defence in the event of litigation and can be a very effective marketing tool, quite apart from the human rights benefits it brings. Importantly, the absence of those measures makes it much easier for a rogue element within the company to create the requisite duty of care echoing right through the operation.
Evan Wright is a partner in the Business Crime and Regulatory Department at JMW Solicitors.