South African Claimants Briefed on Cape Asbestos Settlement
A conditional agreement which could secure more than £21 million compensation for foreign asbestos claimants received judicial approval in London shortly before Christmas, 2001 (see Compensation for South African Asbestos Claimants). The historic out-of-court settlement with Cape plc, formerly the UK’s second biggest asbestos group, will provide a modicum of financial recompense to thousands of injured workers and local residents in the Northern Cape and Northern Province, South Africa. Solicitor Richard Meeran, whose firm Leigh, Day & Co. represented the majority of the 7,500 plaintiffs, travelled to South Africa on 13 January to explain the terms and conditions of the negotiated end to years of legal manoeuvres, public and trade union protests and political lobbying. During a whirlwind five day trip, he communicated with most of his clients, spoke at five public meetings, gave twelve media interviews and held discussions with officials representing provincial and national governments. Frequently asked questions included:
how much will various claimants receive?
when will payments be made?
will current asbestos victims who were not part of the class action be able to seek compensation? What about future asbestos victims?
who will administer the Trust being set up to distribute the compensation awards?
will the Cape Board honour its financial commitments to the South African claimants?
Conditions of the Agreement
Although Meeran and his team had been confident of winning the April, 2002 trial, the precarious nature of Cape’s financial position created serious concerns about the company’s viability should they lose the case. "In those circumstances," Meeran said "the only real achievement might have been to set another legal precedent with the victims receiving virtually nothing. This would have been a ‘hollow’ victory for the victims."
During the South African meetings, Meeran explained that prior to any money being disbursed, several conditions must be met:
the South African Government must agree not to hold Cape liable for the clean-up of former sites;
the South African Government must agree that it will not finance future legal actions against the company;
the Cape Board must obtain approval for the negotiated scheme from its shareholders and bankers;
the UK law firms of Leigh, Day & Co. and John Pickering and Partners must agree not to represent any more South African victims;
that Cape raise the funds required to comply with the settlement terms.
If all goes well, Cape will pay a sum of £11 million pounds to a Trust Fund by 30 June, 2002; the remaining £10 million will be paid to the Trust at the rate of £1 million a year. Money will only be forthcoming as long as the company remains solvent; Meeran pointed out that the claimants’ compensation is "inextricably bound" to Cape’s economic well-being. If Cape defaults or if any of the conditions are not met, the case will proceed to trial.
Corporate Shake-up Facilitated the Negotiations
The lawyers for both sides had gotten to know each other well during years of meetings, hearings and discussions. To say there was no love lost between them is an understatement. The defence team developed a dislike for Leigh, Day’s solicitors, singling out Richard Meeran for special attention. They went so far as to accuse him of "an abuse of process," alleging that by bringing only five cases initially, the Court had been misled into believing that this was the totality of the asbestos claimants in South Africa. The climate changed following the 1 November, 2001 purchase of further Cape shares by the Montpelier Group (MG). With 29.9 percent of the shares, the MG became Cape’s biggest shareholder. Michael Langdon, Cape’s previous Chairman, was replaced by Paul Sellars, Montpelier’s Managing Director. Sellars knew that a comprehensive settlement of the South African case would impact positively and brought an open-minded and fresh approach to the negotiations. As late as 19 December, court proceedings were adjourned to deal with last minute hitches. Eventually, Sellars’ determination prevailed. Had Sellars lost faith or deviated from his purpose, there would have been no agreement for the court to approve. Had this happened and a settlement not been reached before Christmas, it is almost certain that the case would have proceeded to trial.
Implications for Multinational Companies
From its incorporation in Britain in 1893, Cape plc (formerly the Cape Asbestos Co. Ltd., Cape Industries Ltd. and Cape Industries plc) played a leading role in the British asbestos industry. The company operated nationally and had manufacturing or processing facilities in Barking, Hebden Bridge, Uxbridge, Manchester, Glasgow, Newcastle, Liverpool, Belfast, the Isle of Wight and elsewhere. Cape and its subsidiaries also had interests overseas. In 1915, a report by the Government Mining Engineer of South Africa noted: "The history of the asbestos industry in the Cape has been, until quite recently, practically that of the Cape Asbestos Company, and that corporation still controls the great bulk of the production ... (Cape) is also much the largest European manufacturer of blue asbestos goods." On 9 November, 2001, 50 MPs signed an Early Day Motion (EDM 394) which called upon London-based Cape "to act responsibly in the interests of its former workers and show respect to South African victims and their families by offering a just and equitable settlement."
The obstacles faced by the South African claimants were huge; they included problems arising from funding, jurisdictional issues and difficulties arising from the necessity of piercing the corporate veil. Had the case proceeded to trial, it would have been necessary to show that health and safety policies being followed at Cape’s South African subsidiaries had been dictated by the parent company in London. According to Richard Meeran: "Central to the Cape case was the principle that multinational companies undertaking hazardous operations overseas, should be held legally accountable for resultant injuries. The largest multinationals are wealthier than many nations, yet unlike states they are not subject to international law. This settlement is an example not just of Cape being held to account by these victims, but also a salutary warning to any multinationals which apply 'double standards' in developing countries. They must now face up to their responsibilities or bear the financial and other consequences."
As the case against Cape reached a resolution, another South African asbestos company received the first summons from an asbestos claimant; it is widely believed that hundreds of similar claims could be in the pipeline. The Griqualand Exploration and Finance Company (Gefco), a subsidiary of Gencor, is being sued in the Johannesburg High Court by the widow of Jan Visser, a Gefco boilerman, who died of mesothelioma in 1998. Solicitor Richard Spoor says that problems relating to this case include a 3 year statute of limitations and the terms of the Compensation for Occupational Injuries and Diseases Act which precludes employees from suing their employer. Spoor commented: "it would be absurd that South Africans can sue an English company but not a South African one. We know we have a strong case, at least as strong as [that against] Cape." Because Gefco’s funds are limited, it is imperative to bring its insurers and parent company into the litigation. It seems that the hard-won victory achieved by the Cape claimants and their UK lawyers will reverberate for years to come.
February 1, 2002