1. Extraterritoriality

Victims of business-related abuses may face many hurdles in bringing claims against multinational enterprises in poor host countries. For example, host States may not have stable judicial systems or they may suffer from corruption, which impacts the judiciary and the rule of law. Additionally, victims and witnesses may face persecution if they pursue litigation for human rights violations against businesses in the host State. When these challenges exist, it is important to have an alternate forum in which to bring a claim for businesses-related abuses. Therefore, litigation in the home State of the business provides an opportunity for effective judicial remedy when host State barriers may be insurmountable.

Some advocates have argued that human rights litigators should focus on bringing cases alleging human rights abuses within the host State rather than in the home State of the business. However, the fact that claims are brought in home States does not mean causes of action in the host State are overlooked. In addition, there may be positive effects from home State litigation, as it can often be the catalyst for initiating proceedings in the host State and breaking the pattern of impunity. Finally, it can be beneficial to bring cases in a forum where actors are able to influence corporate behaviour.

Given its extraterritorial dimension, home State litigation against businesses presents a number of legal and procedural issues linked to liability within corporate groups, jurisdiction, and applicable law.

1.1. Liability within corporate groups

A classic obstacle in transnational litigation against multinational enterprises is that corporate groups are organised as a network of distinct legal entities. One entity – for example the parent company – may exercise variable degrees of influence over the other entities of the group, such as its subsidiaries, business partners, etc. Under the doctrines of limited liability and separate personality, parent companies are protected from liability when their subsidiaries cause harm through their direct or indirect involvement in human rights abuses.

In Europe, whether or not the “corporate veil” can be lifted, and whether or not a parent company can be held liable for the conduct of its subsidiaries that it controls or ought to control depends on the law applicable to the case. However, the principle of limited liability remains the dominant one. The liability of the parent company may not be engaged solely on the basis of the control it exercises on the subsidiary where the latter commits human rights violations or contributes to such violations. Under most legal systems, only exceptionally will it be possible to lift the “corporate veil.” This may make it difficult for victims of the subsidiary’s conduct to seek reparation by filing a claim against the parent company. 

The UN Guiding Principles of Business and Human Rights provide a useful mechanism to alleviate this hurdle: the human rights due diligence. European States should ensure that a corporate group can be found civilly liable for harm caused to others resulting from violations of human rights norms where it has not conducted due diligence to prevent such harm from occurring. This could be extended to all parts and operations of the multinational enterprise’s business.

This concept has been gradually recognized in English tort law. In 2012, London Court of Appeal found in Chandler v Cape plc that parent company Cape plc owed a direct duty of care to the employees of its subsidiary Cape Products. A detailed description is provided in illustrative cases.

In 2013 a large group of French MPs presented a legislative proposal introducing this concept in French civil, commercial, and penal codes. Further details are provided below and in policy developments.


  • Human Rights Due Diligence: The Role of States This report examines how States are using their regulatory authority to mandate due diligence for human rights or areas akin to human rights, such as environmental protection and workplace health and safety. The Report seeks to establish the extent to which the legal systems of States already make use of due diligence to ensure that businesses respect established standards and to describe for policymakers a range of regulatory options they might use to take the next steps in ensuring businesses respect human rights.

VIDEO: French legislative proposal relating to the duty and vigilance of parent and subcontracting companies

Sandra Cossart, Head of the Programme ‘Globalization and Human Rights’ at Sherpa Association, presents the legislative bill introducing the concept of human rights due diligence in French civil, commercial, and penal codes. The bill is currently discussed by French National Assembly.

1.2. Jurisdiction

Given the large hurdles many plaintiffs face in bringing claims against businesses in the host State, the ability of courts in the home State to consider these claims sometimes provides the only avenue towards remedy.

In the European Union, the Brussels I Regulation mandates the national courts of EU Member States to accept jurisdiction in civil liability cases filed against defendants domiciled in the forum State, whatever the nationality of the defendant or the plaintiffs and, in cases of extra-contractual liability, wherever the damage occurred. In recent years, victims of activities of businesses domiciled in the European Union have increasingly relied on the Brussels I Regulation. However, the question of courts’ jurisdiction over businesses that are not domiciled in the European Union, such as foreign subsidiaries of European companies, remains to be regulated by domestic law. To date, Member States have had a diverging approach to this issue.

One alternative could be the introduction of the forum necessitatis doctrine, or forum of necessity, in EU Member States. This doctrine, which already exists in the Netherlands, allows a court to assert jurisdiction over a case when there is no other available forum. The European Union should consider adding a forum necessitatis provision to the Brussels I Regulation. For example, courts of Member States could exercise jurisdiction if no other forum guaranteeing the right to a fair trial is available, and the dispute has a sufficient connection with the Member State concerned. Thus, EU Member States could discharge their duty to provide effective access to justice for victims of human rights violations linked to businesses domiciled in their territory.

1.3. Applicable law

When courts consider cases for harm arising in another jurisdiction, they engage in an analysis to determine which law applies to the case. Generally, the result of the analysis affects not only the applicable law for liability but also other aspects of the proceedings, such as time limitations, immunity, and remedy. When a court chooses to apply the law of the State where the harm occurred, i.e. the law of the host State, the result could form barriers for victims bringing human rights cases against businesses. This is particularly true if the law of the host State does not recognize or limits vicarious or secondary liability (including parent company liability), has elements for its torts that are more difficult to prove, or provides for stricter immunity than under the forum State’s law.

In the European Union, the Rome II Regulation on the law applicable to non-contractual obligations applies to civil liability claims presented to EU Member States’ courts. As a general rule, this Regulation designates the law of the State where the damage occurs as the applicable law. In the context of litigation against businesses, civil liability claims are, therefore, decided on the basis of the rules in force in the host State. While this is the general rule, there are a number of exceptions. First, provisions of the law of the forum may apply in a situation where they are mandatory irrespective of the law otherwise applicable to the non-contractual obligation (Article 16). Thus, it is possible to argue that, where the law of the State where the harm occurred is not sufficiently protective of the human rights of the person harmed, the law of the forum State should apply. Second, the Rome II Regulation provides that, in assessing the conduct of the person claimed to be liable, account shall be taken of the rules of safety and conduct which were in force at the place and time of the event giving rise to the liability (Article 17). In the context of global supply chains, this provision implies that where harm occurs in a host State as a result of the conduct of a business domiciled in the forum State, the definition of the conduct that may be considered reasonable shall be defined in accordance with the law of the forum State. Therefore, in a EU Member State where a law provides that a failure to act with due diligence may engage liability, businesses domiciled in that Member State could be found liable on that basis. Third, the law of the State where the harm occurred may not apply if such application is manifestly incompatible with the public policy of the forum (Article 26). This exception might be applied where the laws of the State where the harm occurred are considered to be contrary to the protection of human rights.

An interpretative communication of the European Commission or a European Parliament resolution should clarify that, consistent with Article 16 of the Rome II Regulation, the law of the forum should be applied instead of the law of the place where the harm occurred where the latter law is not sufficiently protective of the human rights of victims. This may be the case, for example, where the law of the State where the harm occurred does not recognize certain human rights, such as core labour rights, or where it severely restricts the ability of victims to bring claims. Furthermore, Rome II Regulation should be amended as to allow courts to apply law of the forum to determine the amount of damages.

The questions of applicable law significantly influenced the ruling of the first instance court in Oguru et al v Shell plc. In January 2013, the District Court of The Hague in the Netherlands, applying Nigerian law, which is rigorous about parent company limited liability, dismissed the claims against Shell parent company, and recognized the liability of Shell Nigeria subsidiary in only one case, dismissing all other claims. A detailed description is provided in illustrative cases.

2. Economic viability

Transnational litigation is incredibly costly, most notably because of the costs associated with gathering evidence in a foreign State to support a claim, the cost of legal and technical experts, and the sheer fact that these cases can take upwards of a decade to litigate. For human rights victims, who may be without many financial resources and who face a powerful counterparty, the cost of litigation can preclude access to a judicial remedy.

This section explores practical and substantive difficulties that victims face in bringing human rights claims against businesses in home States, in particular collective redress challenges and access to legal aid.

The amount of damages that may be awarded to victims has also a significant impact on financial viability of litigation for victims and their lawyers. This question is addressed in section 1.3. Applicable law, because according to existing EU rules, the courts should in principle determine damages according to the rules of a host state.

2.1. Collective redress

Human rights violations frequently involve a large number of victims, for instance an entire village adversely affected by a development project. Such collective violations are unlikely to be remedied adequately through individual complaints. Therefore, the existence of collective redress mechanisms is crucial to ensure that victims have access to a judicial remedy. Collective mechanisms also bring down relative costs of legal action, which is often the strongest deterrent in the cases characterised by signficant power imbalance between parties.

In recent years, collective redress mechanisms have slowly emerged in EU Member States. However, restrictive conditions have usually limited the effectiveness of these mechanisms. The most effective collective redress mechanism is provided in the United Kingdom, where procedural rules enable courts to allow collective actions on an opt-in basis. While this mechanism has enabled some groups to bring what amounts to collective claims, considerable negotiation is required between each party’s lawyers for the process to be effective, and it remains at the discretion of the court to allow it.

There is a need to reform EU Member States’ laws to enable collective redress mechanisms. These reforms should enable claims to be brought expressly on human rights terminology and by reference to the human rights included in the UN Guiding Principles on Business and Human Rights and in European human rights treaties, including the European Convention on Human Rights, the European Social Charter, and the Charter of Fundamental Rights. This need can be demonstrated by cases such Akala et al v SA COMILOG International. After unsuccessful proceedings in Gabon, in November 2007, around 900 former workers filed individual applications in France against COMILOG Gabon and three French entities of the COMILOG group for breaches of labour law. Because there is no collective redress mechanism in France, each plaintiff had to fill a different lawsuit, complicating handling of these cases and resulting in significant additional costs. The case is described in illustrative cases.

The establishment of harmonised EU rules for collective redress has been subject to a debate in the previous European Parliament and the Commission. The European Parliament supported introduction of such mechanism in a form of a horizontal framework, while the European Commission, eventually, limited its efforts to a Communication recommending EU Member States to have collective redress mechanisms in place to ensure effective access to justice.

3. Evidence

Barriers to effective remedy are also created by the burden the victims carry to prove their case. This is exacerbated by the difficulty of obtaining evidence and by rules of discovery or disclosure of information. In transnational claims, there are particular problems with the admissibility and reliability of evidence.

This section will describe the barriers to accessing an effective judicial remedy caused by the evidentiary burden the claimant must provide, including the difficulty of obtaining evidence and barriers caused by rules of discovery. The specific difficulties associated with transnational claims shall be addressed, in particular the admissibility and reliability of evidence that may have been collected.

3.1. Human rights due diligence

Where cases can proceed, obtaining information about responsibility and control within the corporate group is very difficult for plaintiffs. It is even more difficult when the actions concerned were taken extraterritorially. In some cases, claims were dismissed because victims of business-related abuses were not able to prove the involvement of the parent company in the harmful activity.

The UN Guiding Principles of Business and Human Rights provide a useful mechanism to alleviate this hurdle: the human rights due diligence. European States should enact legislation or give a clear mandate to the European Commission to present a legislative proposal that would establish a presumption for a breach of legal duty where a business does not have, or has not followed, due diligence standards to identify and address deficiencies that may give rise to harm to others. This should apply both to the group headquarters company’s own connection to the harmful operations and to identifying and addressing impacts where they are connected with other parts of the business enterprise.

The sames issues, i.e. parent company responsibility and concept of human rights due diligence, can be looked at from the perspective of developing standards of parent company legal liability. This perspective is described in section 1.1. Liability within corporate groups.

3.2. Reporting

To enhance transparency and accountability, businesses should be required to report publicly on significant human rights risks and impacts, including providing specific human rights impact assessments, in relation to their core business activities, and monitor their compliance with mandatory reporting requirements. In line with the human rights due diligence concept, this includes reporting on their subsidiaries, wherever incorporated and operating, and their business relationships.

The requirement to disclose this information should be subject to an assessment of the severity of the impacts on the individuals and communities concerned, not to a consideration of their materiality to the financial interests of the business or its shareholders. This could be supported by ensuring that data disclosure and whistle-blowing regulations require information about corporate human rights violations to be provided, and support the ability of those who have information to give it without legal consequences or personal security difficulties. This would also be enhanced by requiring businesses to provide these reports and assessments as a compulsory condition to have access to export credits, to be awarded public contracts or to other financial benefits provided by the State.

3.3. Disclosure rules

The ability of victims to access evidence is crucial, because plaintiffs have to provide proof that the defendant business managed, failed to manage, or was otherwise involved in the harmful operation carried out by its subsidiary or other business partner. Such information is, however, rarely publicly available. In most situations, it is in the possession of the defendant. Limited rules of discovery or disclosure of information, or their absence, exacerbate barriers to effective remedy. They have a direct impact on admissibility and reliability of evidence, thus making it more difficult for victims to obtain adequate evidence.

In the European Union, each State defines the conditions under which its courts should assess the evidence with which they are presented. In common law systems, disclosure rules require defendants to divulge information in their possession. In continental European systems, evidence rules may pose a significant stumbling block for plaintiffs in the absence of the equivalent of a disclosure rule obliging the defendant to divulge information in its possession. Furthermore, where an equivalent rule exists, it is typically in an attenuated form only.

To a certain extent, obstacles linked to rules of disclosure may be overcome where the human rights violation alleged by the victim could constitute a criminal offense, which the public prosecuting system may pursue. This allows the victim to rely on the public prosecutor for the collection of evidence. In practice, this option remains theoretical because public prosecutors do not tend to pursue these types of cases. There should be legislative reform across all European States to increase access to evidence and broaden disclosure rules.

In Oguru et al v Shell plc the Dutch court rejected requests of plaintiffs to access evidence in defendants’ possession, in order to avoid “fishing expeditions.” As a result, it was particularly difficult for plaintiffs to demonstrate the involvement of the parent company in the commission of the tort. A description of this case is provided in illustrative cases.

4. Criminal liability

In some jurisdictions, victims can bring a criminal complaint to a public prosecutor or use a criminal proceeding to assist with potential civil recovery later. In other jurisdictions, this is not possible and the only option is to bring a civil claim under general tort law. In some instances, businesses have argued that they cannot be criminally liable for violations of international human rights law because they are not natural persons. Major issues in relation to criminal law relate to the criminalisation of human rights violations, existence of corporate criminal liability, and reluctance of prosecutors and judges to hear criminal claims against multinational enterprises for extraterritorial human rights abuses. 

4.1. Corporate crimes

EU Member States still have widely divergent approaches to the question of criminal liability of businesses for human rights violations. The law of some European States allows businesses to be prosecuted for extraterritorial human rights violations. However, experience shows that public prosecutors, with whom the decision to proceed with cases rests, are generally hesitant to pursue prosecutions. The situation is more complicated in the United Kingdom where, in principle, there is no specific statute providing that prosecutors can be relied on with respect to criminal liability of businesses for human rights violations committed outside the United Kingdom. Furthermore, some countries do not provide for criminal liability of legal persons, which limits opportunities for victims to bring claims against multinational enterprises.

EU Member States should make it a criminal offense for businesses domiciled in their jurisdiction to contribute to human rights violations, including violations taking place outside their national territories. Ideally, EU Member States should also act collectively and explore opportunities to adopt a EU-wide legislative proposal in this area. Action at the EU level would avoid a situation in which action at the Member State level would be discouraged because of the fear of distorting competition. EU instruments adopted to date illustrate the potential for the European Union to adopt legislation making it a criminal offense for businesses domiciled in the European Union to contribute to certain human rights violations, even where such violations take place outside the European Union.

In 2014, the International Corporate Accountability Roundtable launched Commerce, Crime, and Human Rights project that will map the prosecution gaps that currently exist in this area and will develop recommendations for State practice in addressing these prosecution gaps for corporate crimes.

4.2. Raising awareness

In many European States, the prosecution of criminal offences is the exclusive prerogative of the public prosecutor. However, where it is possible for businesses to be held criminally liable for human rights abuses committed overseas, prosecutions remain rare. For a number of reasons, linked either to the legal systems concerned or to the attitude of the prosecuting authorities, and because of the complexity of these cases, lack of resources and know-how, as well as lack of mandate, public prosecutors do not pursue cases involving corporate complicity in human rights violations that occur abroad.

In Nestlé case, for example, which involved investigation into the of the Columbian trade unionist, Swiss prosecutor first passed over the case to another Swiss canton, which invoked various formalities to delay the proceedings until the matter was claimed to be statute-barred, a decision later confirmed by the Swiss Federal Supreme Court. A detailed description is provided in illustrative cases.

Governments of States in which such prosecutions are possible should ensure that prosecutors and judges are better equipped to deal with cases brought before them. This could be achieved through a range of practical measures such as providing training and sharing expertise, as well as providing public prosecutors with clear mandates and resources to enable them to pursue these cases.

How does the map work?

Victims of business-related abuses face a number of obstacles when they seek to gain access to a judicial remedy in the home country of European businesses. This map presents these various issues, including the extraterritorial challenges linked to the international activities of multinational enterprises, economic viability of cases against European businesses, obtaining the adequate evidence to prove corporate involvement in human rights abuses, and hurdles linked to criminal liability within corporate groups. By clicking on each bubble, the reader will be presented a short explanation of issues at stake. 

What is the problem?

Under international law, victims of human rights abuses have the right to access an effective remedy. Nonetheless, home States of Multinational Enterprises have, in general, failed to fulfil their duty to protect human rights by ensuring that victims have access to effective judicial remedies for business-related human rights abuses occurring abroad. The situation has a considerable impact on the effective exercise of human rights. In 2011, the UN Human Rights Council unanimously endorsed the UN Guiding Principles on Business and Human Rights, including the third pillar, which addresses access to remedy. Despite this, the existence of legal, procedural, and institutional barriers still prevents victims of corporate abuses from gaining access to an effective remedy in home countries.

Recommended actions for the EU

The EU's Business report recommends a number of actions to be taken by the EU and its Member States to address these barriers. The report summarizes the outcomes of a series of high-level conferences held in 2014 in Paris, London, Berlin and Brussels by Frank Bold, Association Sherpa, CORE Coalition, the European Center for Constitutional and Human Rights, and the European Coalition for Corporate Justice.