In re BP Plc Derivative Litigation, where?

One of the aims of the Companies Act 2006 (or Company Law Reform Bill as it was known prior to enactment in November last year) was to clarify and simplify existing law, such as the Companies Act 1985, as amended, regarding the derivative claim and shareholder litigation.

As I argued before nonetheless, the Act would not lead to the import of US-style litigation into the UK. Instead, the US would remain the venue of choice for UK institutions: “US plaintiff firms will continue to enforce the law by way of civil actions in US courts against UK corporations on behalf of US and foreign investors, including those situated in the UK.” (Legal Week; PointofLaw.com)

Last Friday, according to the various press reports - for example: here, here and here - the London Pension Fund Authority - with assets of £3.5 billion one of the UK’s largest administering authorities of the Local Government Pension Scheme - brought a derivative action against BP Plc (LSE, NYSE: BP) and its outgoing chief executive Lord John Browne of Madingley in relation to the latter’s pay. The action was brought in the US District Court for the District of Alaska and thus notably not in an English court. The other institutional plaintiff in that action is reportedly Unite Here National Retirement Fund of the US, plaintiffs’ counsel Lerach Coughlin Stoia Geller Rudman & Robbins LLP.

Alaska Court System records however tell a different story: a derivative action was indeed brought against BP there, not last week but four months ago, not by the LPFA and Unite Here together, but Unite Here alone, and on different grounds than Lord Browne’s pay. (Case 3AN-06-11929CI; Complaint; the background)

Asked for comment, the LPFA, which retained Lerach in 2004 to monitor its US holdings, put its position into context, explaining that it had joined the action some time after it was brought and that it was last week that the new allegations regarding executive pay were added to the pending action, but not on its initiative.

The answer therefore to the question whether the new Companies Act has brought about the change it was enacted to bring is, at least on the basis of this case, that it is too soon to tell.

Leave a Reply

You must be logged in to post a comment.