The business judgment rule and the liability of directors for the environmental damage caused by the South African mining industry

Abstract

The South African mining industry is viewed as the locomotive of the economic development in South Africa and has been a leading contributor to the economy for more than a century. However, the price paid for economic growth has left South Africa with a "mining legacy" and mining companies now face an upsurge of politically and regulatory induced challenges. Directors of mining companies have to act with a certain level of duty of care, skill and diligence in order for them to navigate through these various challenges. The heightened awareness of environmental degradation caused by mining has seen a rise in stricter mining liability legislation in South Africa, with a specific focus on company and director liability. The result is that directors are now faced with the possibility of personal liability when performing their executive function. According to the business judgment rule, directors will be shielded from liability if they acted with the necessary duty of care. The objective of this dissertation is to examine to what extent the business judgment rule will offer protection to a director of a mining company where the director caused environmental damage. The analysis of this study will be conducted in the context of the environmental damage caused by a mining company due to the decision making and 'governance' of the mining company's director or directors.