1 Main findings

This book has questioned whether transnational litigation, and ongoing legal and policy reforms at international, European, and national level, can achieve access to justice and corporate accountability where MNEs cause or contribute to human rights abuses and environmental pollution in host countries. In order to answer this question, a three-stage analysis was carried out.

First, this book set out the legal and social backdrop against which transnational litigation against MNEs emerged. It started by discussing how international and European legal frameworks regulate the activities of business actors in the fields of human rights and environmental protection and ensure access to justice for victims of corporate harm. Given the transnational nature of MNE activities, an internationally coordinated approach appears to be an appropriate way to provide an effective normative framework for the regulation of MNEs and ensure that victims of corporate abuse obtain redress. However, public international law is currently lacunary in addressing transnational corporate human rights abuse and environmental damage. Under the traditional State-centric approach to international law, non-State actors, such as MNEs, do not have international legal personality. Therefore, they have neither rights nor obligations, and they cannot be held liable for violating international human rights or environmental standards. This view has been increasingly challenged by scholars, lawyers, and CSOs over time, and along the way international bodies have occasionally accepted that non-State actors should have international obligations under specific circumstances. However, the dominant legal reality remains that MNEs fall outside the scope of international human rights and environmental regimes. Moreover, under the main international and European human rights instruments, victims of human rights abuse and environmental damage theoretically enjoy a number of rights and guarantees related to access to justice. However, these instruments do not take into account the specific needs required to ensure access to justice in the context of transnational business-related abuse. While the adoption of the UN Framework and the UNGPs represented a breakthrough in the BHR field, both instruments insufficiently fill existing gaps in international law on corporate accountability and access to justice for victims of business-related abuses. Ultimately, at the moment public international law does not offer clear or adapted solutions for addressing the negative consequences of MNE activities, or for securing effective remediation to victims of human rights abuse and environmental pollution caused by MNEs.

This book also provided a historical account of transnational litigation against MNEs by describing the origins of this type of litigation in common law jurisdictions and its progressive rise in European civil law countries. It described how the first transnational claims against MNEs began to emerge in common law jurisdictions in the 1980s–1990s in an effort to hold companies perceived to be directly responsible for abuses occurring in host countries accountable in jurisdictional forums deemed more conducive to the achievement of justice for victims of abuse. In the US, ATS-based litigation held promise for holding corporations accountable for their involvement in human rights abuses abroad. However, since 2010 the US Supreme Court has gradually, and significantly, limited the possibility of using the ATS as a tool for corporate accountability. More generally, tort claims against parent companies of MNEs have been predominant in common law countries. However, jurisdictional issues and application of the forum non conveniens doctrine have limited the prospect that tort claims could lead to corporate accountability. Moreover, at present, the contours of liability in corporate groups remain uncertain. At the same time, recent case law developments in England and Canada have raised some interesting prospects for the development of substantive standards recognizing the liability of parent companies in the context of the activities of MNEs.

Transnational litigation against MNEs is not solely a tort law phenomenon limited to common law countries. On the contrary, it has spread to civil law countries, particularly in Europe, where litigators have creatively used the opportunities offered by and/or worked around the constraints of their legal systems to bring claims against MNEs. In these countries, plaintiffs have initiated civil and criminal proceedings to hold MNEs accountable and seek redress. Litigation culture, legal tradition, and procedural rules that allow plaintiffs to engage and participate in proceedings are significant factors that help explain the different legal strategies used in civil law countries to seek corporate accountability. If tort proceedings appear to be the favoured way to seek remedies and encourage reform in common law countries, criminal and specialized civil proceedings can be viable alternatives to achieve similar goals in civil law countries.

The book also explored the socio-legal dimension of transnational litigation against MNEs by examining its links with social movements and cause-lawyers, and how activists of the corporate accountability movement have used legal mobilization as a political strategy to hold MNEs accountable in the public sphere and to trigger legal and policy reform. It showed that, in both common law and civil law jurisdictions, efforts to litigate against MNEs and hold them accountable have strong ties with the broader corporate accountability movement that developed at the beginning of the 21st century as a result of perceived increased corporate power, as well as limited results of CSR initiatives to effectively prevent MNE human rights and environmental abuse. The corporate accountability movement is characterized by various national, regional, and international coalitions specifically dedicated to the pursuit of corporate accountability through legal and policy reform, awareness-raising, and advocacy. The existence of law firms and legal NGOs dedicated to ensuring corporate accountability has provided the main impetus for the development of transnational litigation against MNEs. These actors have used legal mobilization not only to gain access to remedy for victims and hold MNEs liable for human rights abuse and environmental damage, but also to raise awareness and initiate legal and policy reform. While legal victories in courts have so far been rare, litigation has produced other legal and non-legal benefits. Litigators have obtained successful judicial clarification on a range of legal and procedural issues, such as court jurisdiction to hear transnational claims raising liability within MNEs. Legal mobilization has also contributed to improving the visibility of the corporate accountability movement, especially in the context of campaigns against specific MNEs. Moreover, the difficulties faced by victims in relation to access to justice have provided a legitimate justification for calls for legal and policy reform by CSOs. However, the conclusion of confidential out-of-court settlements between complainants and corporate defendants has occasionally been a source of tension within the corporate accountability movement that can be detrimental to the cohesion of activist networks. Furthermore, such settlements may prevent the development of binding corporate accountability standards.

Second, this book identified how French and Dutch procedural and substantive laws affect the opportunities for access to civil and criminal justice for business-related abuse in these particular jurisdictions. The study of transnational claims against MNEs in France and the Netherlands has shown that victims face a number of procedural and practical hurdles that prevent them from seeking redress for the damage they have suffered as a result of harmful corporate group activities. There is an asymmetry between victims and MNEs in terms of financial and human resources or access to the information needed to support their arguments when entering into litigation. However, in civil litigation, rules relating to the production of evidence and legal costs are inadequate to remedy this asymmetry in court proceedings. Similarly, there is insufficient development of collective redress mechanisms to facilitate claims from communities or employees that have suffered the same damage. Other obstacles may result from EU harmonization, particularly in the field of private international law. While EU law makes it easier for the French and Dutch courts to exercise jurisdiction over parent companies established in their territories, the Rome II Regulation prevents French and Dutch law from applying to key substantive and procedural aspects of litigation, such as corporate liability, evidence, or financial compensation. In criminal litigation, the traditional criminal law jurisdictional principles appear to be inadequate for ensuring the prosecution of MNEs when they commit crimes in an extraterritorial or transnational context. Furthermore, public prosecutors in France and the Netherlands have generally been reluctant to sue MNEs for human rights abuse or environmental pollution taking place in host countries. However, French law allows victims and NGOs to play a significant role in criminal proceedings. At EU level, the Victims’ Rights Directive has, to some extent, reinforced the role and ability of victims to participate in criminal proceedings. Ultimately, French and Dutch civil and criminal law and procedure are unfit to confront the challenges posed by human rights abuses caused by powerful economic actors in a transnational context.

The existence of standards of liability to punish abuses in the context of corporate group activities is crucial to the success of transnational claims against MNEs. However, under French and Dutch law, the lack of legal personality of the corporate group, and the application of a separate legal personality and limited liability to entities of the corporate group make it almost impossible for victims to hold the parent or controlling company liable for human rights abuses and environmental pollution resulting from group activities. This situation effectively shields the actual perpetrator from liability and encourages companies to carry out hazardous or imprudent activities through complex and opaque group structures. Nonetheless, a study of liability regimes in various areas showed that statutory rules and court doctrines may, in certain circumstances, allow the parent company to be held liable for the harm caused by its subsidiaries. In particular, opportunities arise where the parent company has committed a fault. Courts are also willing to punish fraud and abusive arrangements where the parent company seeks to avoid liability by subsidiarizing an activity. However, there are still no clear standards for parent company liability for human rights abuse and environmental pollution. Judging from the few transnational claims against MNEs that have reached the merits stage, courts remain reluctant to hold a parent company liable for harm arising in an MNE context. In the absence of hard legal standards, plaintiffs have had to rely on soft instruments, such as voluntary codes of conduct. French and Dutch courts have rarely accepted that the breach of voluntary commitments of companies could lead or contribute to the liability of parent companies in the context of group activities. The courts’ anecdotic and cautious use of these soft law norms as a basis for corporate liability has impeded the ‘legalization’ of such norms. Ultimately, there is a pressing need for the adoption of binding standards that impose clear human rights and environmental obligations on MNEs, in particular parent companies, and that allow victims to hold them liable for infringing such obligations.

Third, this book assessed ongoing legal initiatives at national, European, and international level to create corporate obligations towards human rights and the environment and their contribution to improving access to justice. The first set of initiatives revolves around the adoption of mandatory HRDD standards requiring companies to identify potential human rights and environmental risks in their activities and prevent those risks from materializing. Although HRDD legal regimes are not generally intended to address obstacles faced by victims seeking redress, they can nonetheless have a significant impact on access to justice. In particular, they can make it easier or harder to establish corporate liability or obtain adequate remedies where human rights abuses occur. In Europe, a growing number of countries have adopted, or are considering adopting, mandatory HRDD standards. The French Act on the Duty of Vigilance is the most notable example of HRDD legislation adopted so far. It requires certain large companies to identify human rights and environmental risks and prevent those risks from occurring in the context of their group activities. Importantly, it provides that failure to comply with due diligence obligations can engage the company’s liability where this failure results in damage. The inclusion of this provision is important progress from an access to justice perspective, as it provides a clear cause of action for victims of MNE misconduct. However, in practice it is unclear which improvements this provision will bring, as victims still have to face many of the same procedural obstacles that have plagued transnational litigation against MNEs, such as the burden of proof and access to evidence. Furthermore, the Act does not provide remedies appropriate to the nature of the damage caused by companies to human rights and the environment. More generally, the effective implementation of the French Act on the Duty of Vigilance has proved to be problematic as a result of its lack of effective monitoring and enforcement mechanisms. The shortcomings of the French experience should be taken into account in the context of other mandatory HRDD legislation initiatives. In the EU, the EC will soon propose a piece of legislation imposing mandatory HRDD on companies that is supposed to include provisions on access to justice.¹ Given that a large number of MNEs are headquartered in the EU, such an instrument could have a major impact on corporate respect for human rights and the environment, both in and outside the EU. Therefore, the future EU HRDD instrument must require Member States to ensure that companies can be held liable for their failure to respect and/or protect human rights as part of their HRDD obligations. Having said that, while the inclusion of provisions on liability or access to justice in mandatory HRDD instruments is laudable, it is important to bear in mind that these instruments are insufficient to address all procedural and substantive issues that may arise when victims seek redress for human rights abuses in the home country.

This brings us to the role that a future international BHR Treaty could play in addressing procedural and substantive barriers in transnational litigation against MNEs and, more generally, in triggering necessary domestic legal reforms to provide corporate accountability and access to justice. The ongoing negotiations on a BHR Treaty at the UN are partly the result of the recurrent dissatisfaction of many actors, including CSOs and States from the Global South, with the UNGPs, the lack of robust international corporate accountability standards for human rights and the difficulties for victims to obtain redress in both home and host States, as well as at international level. However, there has been a lot of resistance from home countries to the BHR Treaty project. To date, the drafters of the BHR Treaty have placed a strong emphasis on access to justice. This has been demonstrated by the development of provisions on aspects such as victims’ rights, jurisdiction, and applicable law. Various drafts of the BHR Treaty have also addressed, to some extent, the sensitive question of corporate human rights obligations, and have included provisions on liability of business actors both in general terms and in the context of HRDD. However, the 2020 Draft still needs improvement. In particular, it fails to consider several aspects that exacerbate asymmetry between victims and MNEs (eg forum non conveniens; access to evidence; burden of proof). Furthermore, the looming threat of lack of buy-in from States, either through refusing to ratify the future BHR Treaty or by simply failing to properly enforce it, could turn the Treaty into a sword of Damocles. As it stands, there is a great deal of uncertainty whether the future BHR Treaty will be capable of effectively improving corporate accountability and access to justice.

2 Looking forward

To date, transnational litigation against MNEs has yielded few direct results for plaintiffs. As a result of the various procedural and substantive barriers outlined in this book, most of the claimants were unable to obtain redress for the harm they suffered. Having said that, this type of litigation has indirectly contributed to increasing corporate accountability by exposing harmful business practices and the limits of legal and judicial systems to ensure access to justice. This exposure has, in turn, reinforced and legitimized the arguments put forward by corporate accountability advocates for binding standards and justice reforms.

During the research for this book, despite existing obstacles, the number of transnational claims against MNEs has increased in a growing number of home countries. These claims are unlikely to run out of steam; in fact, they appear to be evolving in order to shed light on the need to protect a variety of interests from corporate harm. In particular, climate change litigation against MNEs, which is emerging in various home and host countries around the world, is a major development that should influence the development of corporate accountability norms in the next decade.² Furthermore, the transnational nature of climate litigation against MNEs, due to the global threat of climate change, poses legal and procedural challenges that are similar to those encountered in the litigation at stake in this book. For example, one challenge for plaintiffs is to prove causation between current and/or future human and environmental damage resulting from climate change and MNEs’ acts or omissions. Another difficulty arises in having access to evidence to show the misconduct of companies in the production of the damage. Such obstacles are likely to give rise to calls for climate justice reforms that take into account the needs of a new generation of plaintiffs. Moreover, the digital revolution currently under way is creating new human rights issues relating to the protection of freedom of expression, privacy and personal data, or labour rights in the context of increasing robotization and use of artificial intelligence.³ Given the global nature of these issues and the role of the private sector in promoting and developing digital technology, transnational claims could also emerge as a tool for holding businesses accountable in the absence of adequate standards to prevent business interference with human rights.

This leads us to question potential future regulatory developments. Since the adoption of the UNGPs almost a decade ago, legal and policy initiatives within the BHR field, both private and public, have developed at an astonishing pace. At present, we are at a decisive turning point in the normative development of BHR-related standards. The keen interest in the adoption of mandatory HRDD standards at national and supranational level and the current BHR Treaty negotiations offer unparalleled opportunities to fill the gaps in the current regulatory framework governing corporate accountability and access to justice in BHR. It is crucial that these initiatives do not exist in a vacuum and that they complement each other to create a more coherent legal framework to reduce the occurrence of corporate abuse and improve access to remedies for victims. Furthermore, the enforcement of new binding BHR norms and instruments is likely to be an important challenge for the coming years. The effective implementation of rules through adequate monitoring and sanctions in the event of non-compliance is often overlooked in many pieces of legislation, however progressive they may be. In order to ensure that mandatory HRDD instruments and a future BHR Treaty do not become dead letters, they should provide for robust enforcement mechanisms designed to induce compliance and monitoring mechanisms to check the progress and effectiveness of these instruments. Reflection on this issue is particularly needed among BHR practitioners and scholars.

Having said that, mandatory HRDD instruments and the future BHR Treaty are unlikely to be sufficient to address all the issues that have generally hindered access to justice and corporate accountability over the last two decades. Mandatory HRDD instruments are not intended to create a general obligation for all companies to respect and prevent human rights abuses. They could potentially frustrate long-standing efforts to improve corporate accountability by providing companies with a defence when they comply with weak HRDD obligations, even though harm still occurs. Furthermore, they are also not envisioned as tools for the advancement of access to justice in general and cannot address the procedural and substantive issues affecting access to courts, equality of arms, and a fair trial. Similarly, it would be overly-ambitious to assume that a single international instrument such as a BHR Treaty can fix all the procedural and substantive issues affecting domestic access to justice in the BHR context. It is therefore crucial that legal reform efforts do not focus solely on the adoption of due diligence norms and on an international BHR Treaty. Equally important is the need for domestic reforms of justice systems – reform of company laws that were originally designed to shield companies from liability and of liability regimes that neglect impacts on humans and the environment. Such reforms are needed in order to protect and empower those individuals, workers, and communities most vulnerable to the damaging impacts of globalization.

However, the recent economic and social turmoil caused by the global COVID-19 pandemic risks diverting attention from corporate accountability and access to justice concerns. The pandemic has already posed serious threats to the progress made in embedding respect for human rights throughout business activities.⁴ Every day brings its share of business-related human rights abuses that directly and indirectly result from the COVID-19 crisis: companies are using force majeure to withdraw from contracts in ways that contribute to serious human rights risks; workers, such as those in the clothing sector, are left without jobs or are due large amounts of unpaid salaries; infringements of health and safety standards have increased; human rights defenders, including union leaders, are increasingly being threatened.⁵ There are also legitimate concerns that environmental commitments will be swept aside to revive the economic activity that has suffered from the successive lockdowns enforced to prevent the spread of COVID-19.⁶ In such a context, there is a risk that governments and international institutions will not prioritize long-awaited reforms of justice systems and corporate accountability. It is therefore now more important than ever to close the regulatory gap that has led to corporate impunity over the last decades. Arundhati Roy recently wrote this in an essay on the COVID-19 pandemic:

The possibility of imagining a new world resonates with the desire of many stakeholders for a change in the way businesses, particularly MNEs, are regulated, and to move away from a ‘business as usual’ ideology which has placed supremacy on business interests over those of society and has led to the design of legal and policy tools that frustrate the protection of human rights and the environment. In this sense, the current context provides a historic opportunity to re-envision and adopt laws and justice systems that effectively put people and the environment at the heart of our societies.