Will BP Derivative Suit Become the U.K. version of Caremark?

A U.S. District Court has dismissed a BP shareholder derivative suit claiming that BP's directors and officers breached their fiduciary duties to the corporation when they "engaged in a pattern of disregard for the safety of BP's energy exploration operations."  The PDF of the opinion is available here. The opinion explains that the basis for the suit is the United Kingdom Companies Act of 2006, "which governs the fiduciary duties that officers and directors owe English companies." Law.com reports that the Act is "a relatively new statute with little case law interpreting it."

So, we'll see how this proceeds in the United Kingdom. If the case were in the United States, it would be an awfully tough one to prove, anyway.  As Professor Bainbridge has explained,

Shareholder losses attributable to absent or poorly implemented risk management programs are enormous [and e]fforts to hold corporate boards of directors accountable for these failures likely will focus on so-called Caremark claims. The Caremark decision asserted that a board of directors has a duty to ensure that appropriate "information and reporting systems" are in place to provide the board and top management with "timely and accurate information." 

Furthermore, in the Caremark decision, Chancellor Allen explained that such claims are “possibly the most difficult theory in corporation law upon which a plaintiff might hope to win a judgment.” In re Caremark Intern. Inc. Derivative Litigation, 698 A.2d 959, 967 (Del. Ch. 1996). With the law still evolving in the United Kingdom, it should be interesting to see what the U.K. version of Caremark looks like.

--JPF