As a general rule a British based employer intending to employ overseas nationals in their own country will set up, or already own, a locally incorporated subsidiary which will be the employer. The UK parent company will therefore not generally have any direct contractual relationship with or liability to those employees.

This note is to draw attention to a possible development which may result in UK parent companies in such a situation having some direct liability to employees of an overseas subsdiary.

The case is Lubbe and ors v Cape Plc, [2000] UKHL 41, House of Lords on 20th July 2000 (reported at [2000] 1WLR1545). In that case over 3,000 plaintiffs claim damages for personal injuries (and in some cases death) allegedly suffered as the result of exposure to asbestos and related products in South Africa. In some cases the exposure is said to have occurred in the course of the plaintiff's employment, in others as a result of living in a contaminated area.

In the case in July 2000 the House of Lords overruled an earlier Court of Appeal decision (Lubbe and ors v Cape Plc, [1999] EWCA Civ 2107, Court of Appeal on 24th August 1999). The House of Lords gave the claimants permission to bring an action in England against Cape PLC as the parent company of the South African operating subsidiaries. An important consideration was that to stay proceedings in England, where legal representation and legal aid are available, in favour of the South African forum where they are not would deny the plaintiffs any realistic prospect of pursuing their claims to trial.

When this note was first prepared in May 2001 it was understood that the case was likely to be heard in Spring 2002. However in the event it was settled out of court without a hearing. On 12th March 2003, Cape plc and Gencor Ltd, which took over many of Cape’s asbestos operations in 1979, signed settlement agreements totalling £10.7 million2 (approximately $16.5 million) with lawyers representing the injured South Africans (see note on the website of the International Ban Asbestos Secretariat website "Cape plc to compensate foreigh plaintiffs", 15th March 2003 and notes on Leigh Day & Co, solicitors, website "South Africa").

For other relevant notes in this program see also Overseas employment generally and/or at Health and Safety at work/asbestos .