New Book on Tort Litigation against Transnational Corporations

In my new book, ‘Tort Litigation against Transnational Corporations: The Challenge of Jurisdiction in English Courts’ (OUP 2024), I examine the rules of jurisdiction under private international law applied by the English courts in corporate human rights litigation.

Transnational corporations (TNCs) have become central players in international trade and commerce, and their considerable size means they can exert a great deal of power and have become comparable in terms of wealth and influence with the nation states. The expansion of TNCs has increased interest in the human rights impacts of cross-border business operations. Several incidents involving western companies have received prominent media attention and public scrutiny, including the chemical gas leak in Bhopal; the use of forced labour in the construction of the Yadana pipeline in Burma; the destruction of the surrounding environment at the Ok Tedi mine in Papua New Guinea; long-term environmental pollution in Nigeria caused by oil spills; the collapse of the Rana Plaza building in Bangladesh.

There has been limited success in enacting binding legal obligations to govern corporate accountability for human rights violations. In response to the existing governance gap, individuals and local communities from host states where alleged human rights and environmental abuses occur have increasingly commenced lawsuits in the Western courts against parent companies of TNCs and their subsidiaries as co-defendants. The prominent feature of these so-called ‘foreign direct liability’ (FDL) claims is a focus on the direct liability of parent companies for harm that occurs through their overseas operations.

The English courts remain one of the principal forums for litigating FDL claims. The fast-developing doctrine of the duty of care has been used creatively by claimants and their lawyers to impose direct liability on English parent companies for the damages sustained in the host states (eg., Lubbe v Cape, Lungowe v Vedanta, Okpabi v Shell, Limbu v Dyson, etc.). At the same time, FDL cases are rarely resolved on the merits, since the claimants must first meet the jurisdictional challenge and establish that English courts are an appropriate forum to resolve the dispute.

Prior to Brexit, claimants from host states widely relied on the general rule of domicile under the Brussels I Regulation, which required an English court to accept jurisdiction over English-domiciled parent companies. Foreign subsidiaries of English-based TNCs were brought under the authority of the English courts on the basis of the ‘necessary or proper party’ gateway. The book examines Brexit’s effects and the consequent return to English common law rules. It explains that the English courts have powers to decline jurisdiction over FDL claims based on the forum non conveniens doctrine and how the position of foreign claimants may, therefore, be weakened in the future.

I want to highlight two narratives I attempt to unveil in the book that could be of interest to the readers of this blog. The first one focuses on the use of tort law to strengthen human rights and environmental accountability. The book demonstrates how the law of civil remedies evolves in response to global challenges and is relied on to address, for instance, the rise of TNCs and the climate crisis. From Lubbe to Okpabi, FDL claims in the English courts developed from novel disputes testing creative arguments on parent company liability to important legal precedents identifying possible routes by which a duty of care may arise. Building on cases establishing parent company liability, lawyers started to rely on conventional tort law causes of action to establish that liability could arise in a supply chain. The recent decision of the Court of Appeal in Begum v Maran about the alleged liability of a shipping company in London for the breach of a duty of care owed to shipbreaking workers in Bangladesh has opened the possibility of relying on the ‘creation of danger’ exception in the context of abusive supply chain practices. While the law is highly fragmented, and there is a lack of jurisprudence establishing clear rules, this is certainly an area to watch.

Second, I attempt to demonstrate that conventional value-neutralism foundations of private international law are undergoing radical changes. The re-conceptualisation of the public/private debate has led to private international law taking a normative disposition towards assessing a larger sphere of action. It is now widely accepted that private international law can serve as a regulatory tool for addressing global governance problems, moving beyond its more traditional, highly formalistic and abstract operation. In the context of FDL claims, the neutrality of the jurisdictional inquiry is challenged both externally and internally. In one respect, the evolution of the business and human rights field and the changing role of home states in responding to corporate wrongdoing call for the corresponding involvement of national courts in redressing the victims of business-related human rights abuses. On the other hand, these external developments align with the recent internal transformation of private international law. The intensification of cross-border business activities necessitates a fresh look at territoriality, a departure from narrow assertions of jurisdiction grounded on the geographical proximity to the events giving rise to the litigation, and an explicit consideration of the real issues and interests at stake.

This book does not argue that home state adjudication of FDL claims is more effective or legitimate than remedies available to the claimants in the host state or any other forum. Rather, this book approaches FDL claims as one of the legal tools to enhance corporate accountability for human rights violations. The UN Guiding Principles on Business and Human Rights acknowledge that judicial remedies are not always ‘the favoured approach for all claimants’, and other remedial mechanisms complement and supplement FDL claims. Home state adjudication of FDL claims and home state regulation as a wider trend, including mandatory human rights due diligence legislation, is not a panacea and will not on its own close the existing regulatory gaps and resolve the problem of corporate impunity. At the same time, it is a vital piece of an overall framework. Home state courts are not designed to serve as world courts. This book acknowledges and appreciates the existing debate about the respective role of host states in addressing corporate wrongdoing and the necessity to strengthen local remedies in the jurisdictions where TNCs operate.

The Bonavero Institute of Human Rights in Oxford will celebrate the publication of the book by hosting the book launch and wine reception on 5 June 2024.

Dr Ekaterina Aristova is the Leverhulme Early Career Fellow at the Bonavero Institute of Human Rights, University of Oxford.