Reacting to news that the High Court yesterday handed down a judgment confirming its earlier decision to refuse ClientEarth’s application for permission to continue a derivative action on behalf of Shell plc, Silke Goldberg, partner and global head of Herbert Smith Freehills' ESG practice, says that "as with the Court's earlier decision, this latest judgment shows that it will be difficult to challenge directors’ strategic and long-term decision making via a derivative action."
The High Court's decision follows ClientEarth's attempt to challenge Shell's directors’ response to the risks posed to Shell’s business by climate change.
Silke continues: "This judgment confirms that the Court is very reluctant to interfere in company management decisions, particularly where they require directors to balance competing considerations. This applies to both the strategy directors adopt and how it is implemented on a day-to-day basis.
"The motive for challenging directors' actions in Court may also be relevant – it is clear that the court is unlikely to allow a derivative action to proceed if it considers that legal action has been brought for an ulterior purpose."
For further details about the judgment view our latest blog.