International casualty
In this chapter of our Annual Insurance Review 2023, we look at the main developments in 2022 and expected issues in 2023 for International casualty.
Key developments in 2022
2022 heralded major developments in the ESG-focused, cross-border group litigation landscape which liability insurers are now routinely navigating. The English courts are now firmly near the top when claimants are shopping for a forum. Multinational companies can no longer hide behind the corporate veil and parent liability/ duty of vigilance concepts are being developed to hold tortfeasors to account on a group basis.
Group claims in relation to environmental disasters/ legacy exposures are increasingly commonplace against multinational companies in relation to subsidiary operations. In particular, oil and mining corporates continue to be targeted both in the jurisdictions where the torts occurred and where the parent company is domiciled. Following the Supreme Court judgments in Vedanta and Okpabi in 2019 and 2021, the English courts are now much more amenable to permitting group claims to be brought by foreign litigants against multinationals, particularly where there are concerns that claimants will not have adequate access to justice/ compensation in their home jurisdiction.
The Court of Appeal's July 2022 judgment in Municipio de Mariana -v- BHP concerning claims arising from the 2015 Fundão Dam disaster in Brazil, goes even further. Notwithstanding parallel litigation and a compensation scheme in Brazil, group litigation valued at £10bn+, will nevertheless be allowed to proceed against BHP in the English courts (BHP having a dual listing in the UK and Australia). The BHP case was a ground-breaking development in establishing the English courts as a hub for environmental and mass tort claims.
Braskem has been targeted by litigation in both the Brazilian and Dutch courts, in relation to mass property damage allegedly caused by subsidence in the Maceió region, as the result of salt mining over four decades. Braskem has been targeted in the Netherlands on the basis that key decisions were taken at its European headquarters.
Claimant law firms and litigation funders are becoming more and more adept at formulating claims. The past five years have seen an uptick in the number of group litigation orders (GLOs) sought by foreign claimants, in particular from Africa and Latin America. US law firms continue to look to the UK as a new hub for mass tort litigation and at the end of 2022, group litigation against Johnson & Johnson in the English courts in relation to talc (following multi-billion-dollar litigation in the US), was announced.
We have already seen "modern slavery" allegations brought against Nestle in the US. In late 2021, it was announced that cocoa manufacturer, Olam (which supplies Cadbury, Nestle and others) will be targeted by group claims in the English courts in relation to child labour and unlawful, exploitative and dangerous working conditions in Ghana.
Whilst not imminent, we may be seeing a gradual shift towards a more "US-style" of "opt-out" class action in the English courts. With the advent of large-scale litigation such as BHP (thought to affect approximately 400,000 claimants) and "opt-out" representative actions for competition law damages claims, it remains to be seen whether the English court will further adapt legal mechanisms under English law for collective redress for other types of mass claim.
What to look out for in 2023
During 2023 we can expect more environmental/ climate/ biodiversity risk related litigation to be brought in the English courts and elsewhere in Europe. We will continue to see multinationals targeted by cases concerning their supply chains and/or decisions taken at group level which impact the environment. It follows that we will therefore also continue to see an uptick of group claims, as the global legal movement for collective redress gathers pace.
Written by Lucy Dyson.
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