See my previous blog – ‘How to bring a Cultural Heritage Loss Claim v. a Multinational Corporation in the High Court’.

While directors of a UK plc do not owe a specific, standalone fiduciary duty to consider, propose, or agree to early Mediation, they are bound by broader statutory and fiduciary duties under the Companies Act 2006.

These overarching duties heavily penalise directors who blindside or ignore early dispute resolution options in high-stakes human rights or environmental litigation.

So, how do existing UK fiduciary duties and civil court mandates intersect with an early Mediation decision in a transnational corporate accountability claim?

Rather than a direct ‘duty to mediate’, a director’s decision regarding Alternative Dispute Resolution is governed by two key statutory duties:

(i) Section 172 – ‘Duty to Promote the Success of the Company’.

All Directors are under a duty to act in good faith to promote the success of the company for the benefit of its members as a whole.

In doing so, they are legally required to consider long-term consequences, the company’s reputation, and the impact of operations on the community and the environment.

(ii) Section 174 – ‘Duty to Exercise Reasonable Care, Skill, and Diligence’.

All Directors must make informed, prudent risk assessments.

Refusing Mediation without a reasoned commercial basis can be construed as a failure of this duty.

In cases involving alleged ‘Land Grabs’ or environmental damage by foreign subsidiaries, landmark UK Supreme Court precedents like Vedanta v Lungowe and Okpabi v Royal Dutch Shell establish that UK parent companies can be held directly liable if they exercise sufficient operational oversight or dictate group-wide sustainability policies.

Because parent-liability risk is a realistic legal threat, Section 172 effectively forces a Board to consider early Mediation due to the following factors:

(i) ‘Reputational Harm’ – Public, multi-year High Court battles over indigenous exploitation cause severe damage to brand equity and institutional ESG metrics – i.e. quantifiable data points used by investors and companies to evaluate performance across Environmental, Social, and Governance criteria, which help measure a company’s sustainability practices, societal impact, and ethical leadership.

(ii) ‘Financial Drain’ – Transnational litigation involves extensive jurisdictional battles and massive disclosure costs.

(iii) ‘Shareholder Activism’ – Derivative actions can be brought against Directors by activist shareholders if the board’s hardline refusal to negotiate destroys corporate, i.e. ‘Shareholder Value’.

Anecdotally, having worked in the Headquarters Legal Department of a multi-national corporation when I was much younger! – ‘Shareholder Value’ was monitored daily by the Head of Legal.

Comments added:

• Note also that an indirect jurisdictional pathway to the bringing of proceedings in the European Court of Himan Rights [ECtHR] also exists if the indigenous community first sues the parent company in the UK domestic courts.
  
  If the UK legal system fails to provide a ‘fair trial’ or ‘adequate remedy’, the community can then file a claim at the ECtHR against the United Kingdom as a State for failing its human rights obligations.
  
  The ECtHR only has jurisdiction over States that have ratified the European Convention on Human Rights (ECHR).
  
  Under Article 1 of the ECHR, member states must secure rights to everyone within their domestic territory.
  
  The ECtHR rarely applies ‘extraterritorial jurisdiction’. It only does so if a state exercises ‘effective control’ over a foreign area (e.g., military occupation) or over a specific person. A corporate connection alone does not trigger extraterritorial jurisdiction.
  
  For the ECtHR to eventually gain jurisdiction, the indigenous community must first establish a jurisdictional link through the UK domestic legal system.
• The ECtHR functions as a supervisory mechanism, not an appellate court.
  
  When the ECtHR finds that UK domestic proceedings or laws violated the European Convention on Human Rights (ECHR), it can make the following orders and declarations:
  
  (i) Declaratory Judgments – The court can declare that the UK has breached specific ECHR articles (e.g., Article 6 for a fair trial, Article 8 for respect for private/family life, or Article 1 of Protocol 1 for peaceful enjoyment of possessions).
  
  The court can order the UK government to pay financial compensation for pecuniary (e.g., lost land or property value) and non-pecuniary damages, as well as legal costs incurred.
  
  Under Article 46 of the ECHR, the ECtHR can direct the UK to take steps to restore the applicant’s rights as far as possible.
  
  In land-related cases, this may include ordering the state to facilitate restitution of the land, adopt specific measures to prevent ongoing environmental damage, or halt eviction.

• Because the ECtHR cannot directly nullify a UK court decision, ‘reversal’ is achieved indirectly through the domestic legal system.
  
  The UK is obligated under international law to execute ECtHR judgments.
  
  To fulfil this obligation, the indigenous community or the UK government may apply to the domestic courts for a review or retrial, or the UK Parliament may pass new legislation to give effect to the ECtHR’s ruling.