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.