Bhopal: an environmental industrial catastrophe. A toxic cloud escaping from a chemical plant operated by a subsidiary of Union Carbide Company (USA) led to the death of more than 25 000 people. © CC-BY-SA-2.0. / Simone Lippi
Bhopal: an environmental industrial catastrophe. A toxic cloud escaping from a chemical plant operated by a subsidiary of Union Carbide Company (USA) led to the death of more than 25 000 people. © CC-BY-SA-2.0. / Simone Lippi

Presently, it is most common and legally most tenable to seek to hold multinational corporations liable for civil damages through actions pursued at the national level, either in the corporation’s country of origin or in its host country.

In countries where the parent companies of multinational corporations are based, a variety of systems have been used over time to prosecute multinationals for their abuses, despite the complexities of their structures and operations. This is an important development because the individuals affected by a multinational’s activities often have a low probability of obtaining redress in their own country, the host country of an investment. A lack of political will and insufficient legal capacity among local authorities (i.e., inadequate legislation, poor infrastructure, corruption, lack of legal aid, the politicisation of the judiciary), at times due to pressures intended to attract foreign investment, are common in this area. It is not uncommon for a multinational’s implementing local intermediaries (subsidiaries, subcontractors or business partners) to be insolvent or uninsured. Because the parent company often perpetrates the alleged crime, or at least makes decisions that lead to the violation, evidence is often located in the multinational’s country of origin or domicile. Numerous obstacles continue to prevent victims from accessing justice, including issues associated with access to information, the costs of legal proceedings, and both substantive and procedural norms.

In this study, we limit ourselves to the examination of three separate legal systems: those of the United States, Canada and the european Union. 1 Beyond the practical considerations related to the impossibility of conducting an exhaustive study, this limitation is based on three primary factors:

  1. The parent companies of multinational corporations are often located in the U.S., Canada and the eU;
  2. Over the past decade, the volume of legal proceedings brought by victims anxious to see the recognition of and compensation for their injuries has increased in countries where multinationals are domiciled, and
  3. More than those of other countries, these three legal systems have developed specific procedures to hold legal persons liable for acts committed abroad. References to specific cases brought before foreign courts, however, are inserted occasionally in the text.

Courts in other geographic areas have accepted cases against corporations in recent years, and it is anticipated that more cases will be filed against multinationals for human rights abuses in an increasing number of countries. For example, in June 2014, the Thai Supreme Administrative Court accepted a lawsuit filed by 37 Thai villagers against state-owned electricity Generating Authority of Thailand (eGAT) and four other state bodies for signing of an agreement to purchase power from the Xayaburi Dam in neighbouring Laos, which poses a threat to the environment and food security. 2 Villagers from Thai provinces near the Mekong had petitioned the Administrative Court in August 2012, alleging that the power purchase agreement is illegal both under the Thai Constitution and the 1995 Mekong Agreement, approved without an assessment of the project’s environmental and health impacts and without adequate consultations in Thailand. 3 In February 2013, the Administrative Court denied jurisdiction to hear the case. Overruling the lower court decision, the Thai Supreme Administrative Court said it had jurisdiction to hear the lawsuit and ordered the five government bodies, against which the lawsuit was brought, to “undertake their duty under the Constitution, laws and resolutions of the [Thai] Government, through the notification and dissemination of appropriate information, adequate hearing and consultation and further environmental, health and social impact assessment for the Xayaburi Dam.” 4 This is said to be the first case in Thailand to recognize the transboundary impacts of a project being built in a neighboring country, and the first to require a Thai state-owned company building a project overseas to comply with Thai laws. 5 EGAT is supposed to buy 95 percent of the power from the Xayaburi dam under the agreement, and if the court finds the purchase agreement was approved illegally, it could cancel the agreement altogether.

What are the current methods of seeking compensation through suing a multinational corporation in a U.S., Canadian, or EU member State’s civil court when the multinational violates the rights of its employees or the surrounding local community as part of its operations abroad?

Our inquiry looks to private international law as it relates to personal relationships with foreign components. Our situation is therefore subject to the internal regulations of each state. The application of private international law can be examined from two angles:

Jurisdictional conflict

  • International jurisdiction : In which courts will the matter be considered? Which state will have jurisdiction?
  • Recognition and enforcement of foreign judgements: This point concerns the recognition and enforcement of foreign judgements issued by the forum court. It involves determining the binding effect and enforceability of a foreign authority’s legal decision. Because this guide focuses on ways to file suit against a multinational corporation for human rights violations, the recognition and enforcement of foreign judgements will not be discussed herein.

Conflict of laws:

What law will apply to the case at hand?

The EU has issued several community regulations which standardize the rules governing conflicts of jurisdiction and law within the EU’s 28 different legal systems. These EU standards are compulsory and applicable in all Member States immediately upon publication. This study is devoted primarily to these community standards and their application in EU Member States. 6